03/20/2024

News/Events/Exhibits

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Unfiltered #4 - Investing in art, urban legend ?

Here's a topic that truly needs to be addressed, clarified, if not demystified... The pervasive belief that art is a solid investment is deeply embedded in our collective consciousness.
Visitors to galleries consistently inquire about an artwork's investment potential, turning a passionate art enthusiast turned gallerist into what feels like a financial advisor, wealth manager, or even a stock trader. Everything seems tailored to link art with investment, profit, and speculation. Media often highlights record-breaking auction sales, tax scandals, or when some lucky person unearths a Rembrandt in their attic or at a flea market. And isn't art reputed to be a safe haven in times of crisis, like gold? As a result, for many people, buying a work of art is seen as an investment with a probability, or even a hope, or worse, a desire to make a profit. My firm belief remains unchanged: purchasing art is an emotional, pleasurable, and love-driven encounter.

After all, would you marry someone solely because they are "bankable"? It is time to dispel misconceptions and shed light on this matter.

#1 ART AND INVESTMENT: COLLATERAL DAMAGE

Let me clarify – I am not dismissing the potential for profit in art; in fact, I will address the opposite later. What I am saying, however, is that seeing and perceiving it as an investment is a mistake... to the detriment of art itself.

 

  1. The complexity of expertise
    Associating art with investment dissuades many from buying an artwork due to a perceived lack of expertise. If one is unfamiliar with the stock market, investing a substantial sum in stocks would be a daunting prospect. Non-initiates tend to hesitate when considering purchasing art, a question that rarely arises when buying other items such as a sofa that costs 2,000 euros.

  2. The elitism conundrum
    Discussions about art often revolve around pieces with prices unattainable for the majority, and this perpetuates the perception that art is reserved for a financial elite and is unattainable. This notion is false, as all artists who now sell at high prices were initially “affordable”.

  3. The art of speculation
    Nevertheless, making a profit on a work is possible. Worse, the market is structured (and not at all regulated in the way the stock market is) in such a way that manipulating an artist's value is possible and can be very profitable. However, because of this, artists who "rise" may not do so necessarily for their talent but because they are bankable. The speculation around the "financial product" that art has become propels artists based on their network rather than their artistic acclaim.

     

#2 INVESTING IN ART: LUCK, PATIENCE, AND/OR STRATEGY

Purchasing art is fundamentally about pleasure, the primary purpose of art. Even if it doesn't yield a financial return, the joy derived from contemplating the artwork adds intrinsic value. If, despite everything, you wish to combine pleasure with a potential financial benefit, here's what you should know.

 

  1. Emerging artists: It's a hit or miss!
    Investing in emerging artists offers accessibility, lower starting bids, and the potential for rapid value increase. However, make sure that the artist is backed by at least two or three professional galleries. It is the promotional work of these galleries (through art shows, fairs, exhibitions, and networks) that will increase the artist's visibility and recognition in the market, and the artist’s valuation.

  2. "Safe bet" artists: Be patient !
    These are artists who are in multiple galleries, and are already represented on an international level. The downside is that their artworks have already reached prices often unaffordable for many people... unless you choose to invest in smaller formats or drawings rather than paintings. And professional galleries and knowledgeable collectors contribute to their value, albeit gradually. This assures an upward trajectory, and consequently, the worth of the artwork in your collection. But a word of caution—art's history is shaped by trends and periods. Over an extended period, an artist may see their value decline if they no longer align with the prevailing market "trend."

  3. Speculative "Bankables"
    I can't stress this enough: if the art market were regulated like the stock market, there would be plenty of insider trading and collusion... But that's not the case, and as a result, it is extremely simple to boost an artist's value, provided you have the financial means to do so.Sometimes, all it takes is a celebrity acquiring a piece, posing with it on social media, and mentioning the artist's name to trigger a market frenzy—a jackpot scenario. But to navigate this terrain successfully, one must be well-versed in market intricacies, attuned to trends, and alert to strategic tips that exploit windfall effects and manipulations, distancing us considerably from any genuine artistic considerations.

 

#3 IN SUMMARY: KEY TIPS TO BEAR IN MIND

 Buy art for personal enjoyment; profit is merely the icing on the cake.
Noteworthy artists often began with modest prices – but you need either a discerning eye to detect talent, a stroke of luck, or insider information regarding the artist's “potential”.
Purchase from reputable galleries with a proven track record in talent promotion. Factors which influence an artist's value : their talent, and/or their network (or that of their galleries), and/or the number and quality of collectors supporting them, entry into the permanent collection of an institution (museum, foundation...), and unfortunately, death.

 

CONCLUSION 

There was a time when an artist's success and valuation were determined by talent and rarity, shaped by galleries and art institutions, combined with art-loving enthusiasts.
But that's no longer the case.
In today's world, thanks to the internet, globalization, and the art market's total freedom—things have grown more intricate and somewhat artificial. As mentioned before, this complexity doesn't always serve the noble essence of art.
Remember the fundamental principle: your primary consideration should be making art about pleasure and choosing art that deeply moves you. And if you wish to "buy wisely” on top of it all, it will require a bit of perspective, research, and I invite you to read Psssst 3, as it delves into this topic!

 

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Article published by Julien ARBELAITZ