How art gets generated.
A wide range of art dealers, advisors, collectors and academics spoke at Art Market Monitor’s Artelligence conference in New York on September 13, 2012, which was all about understanding art as an asset.
Here is some of the top advice they had for those thinking about buying art as an investment:
1. Although the market for contemporary art is huge today, the actual number of contemporary artists that sell for high prices at auction all over the world is pretty small. “People look at artists like Jeff Koons and Damien Hirst and the impression is that the international contemporary art market is very wide and very deep,” said Michael Findlay, director of New York‘s Acquavella Galleries and author of The Value of Art, published earlier this year. “I think that impression is largely created by marketing.”
3. Some auction data, such as the percentage of an artist’s work that sells successfully at auction, can be useful. “Very few artists have sell-through rates of over 80% at auction. One of those artists is Alexander Calder,” said art advisor Todd Levin, who has built a large Calder and Gerhard Richter collection for a client since 2009. “Calder is nearer to 95%, which is kind of unheard of.” He added that he also looked at artists where their work consistently sells for over the auction house’s high estimate. “That tells me that demand is still greater than supply.”
4. Record-breaking sales do not necessarily have a huge impact on prices for that artist. According to Findlay, that even applies to the sale of Edvard Munch’s The Scream, which became the most expensive art work ever sold at auction this May. “I’m not sure what all the hoopla actually accomplished. It didn’t do anything to values in the rest of the Munch market,” said Findlay. “I don’t look at record prices,” said Levin. “There are always going to be a couple of really rich people that just want that thing. They are essentially divorced from the broad-based market.”
5. Comparable sales data only tells you so much about what art works will be sold for in the future. “Even if you take two Picasso paintings of the same size, concerning the same subject and made in the same week, one might be worth $5 million while the other is worth $20 million,” said Levin. “Data will not tell you that. That’s a question of taste, which comes from a long-term immersion in the market. The meaning of art is collapsing under the brute weight of data.”
6. Although art usually becomes more valuable the more rare it is, there are exceptions. When artists such as Calder, Richter and Andy Warhol produced enough works to become a brand in their own right, they became more valuable. “It gives inherent comfort to the market when art by a certain artist is bought and traded at a consistently high value on a regular basis,” said Levin. Gerhard Richter has been the top selling artist in post-war and contemporary evening auctions so far this year, with over $139 million of Richter works sold, according to ArtTactic.
7. Contemporary art fairs are a great way to find out about new artists. “You can’t go to all the fairs, but establish the sort of art that you are most interested in and go to the fairs that will tell you most about that,” said art advisor Thea Westreich. “Sit with the dealers, talk to them about their new artists. If they are there, talk to the artists. That is priceless. It’s very unusual for us to walk away from an art fair without discovering an artist we think has great potential that we want to tell our clients about.”
8. Most importantly, if you want to build an art collection, you should think long term and only buy the things you love. “We’ve always been interested in art that bothers us. If it’s easily accessible, that’s a whole different story,” says Arthur Goldberg, an avid art collector for over 35 years. “We’ve always bought new artists too, because we wanted to be involved with the art of our generation.” He added that is how he and his wife Carol had come to buy some of a young Cindy Sherman‘s photos many years ago. The cost? Between $50 and $100 each.
By Kathryn Tully, Forbes.com, 9/14/12
For the original article, please click here: http://www.forbes.com/sites/kathryntully/2012/09/14/eight-tips-for-would-be-art-investors/