Art as an Investment

The single most important thing to remember when discussing the subject of investment in art is that no one can ever promise an increase in value. There is no crystal ball to foresee what the value of any work will be in the future.  

Does this mean that artwork should never be discussed as a "good investment?" Well, that depends on who you talk to.

There are museum curators, media art critics, and art history scholars—the elitist portion of the art world—who totally debunk art ownership for investment. "One should collect art only for one's intellectual and sensual enjoyment . . . Spiritual enrichment should be the true goal of collecting art."

Okay, tell that to the savvy thirty-something collector who picked up a Jean-Michel Basquiat drawing for a song twenty or so years ago . . .

This collector probably didn't purchase the artwork with the idea of making money, however, like most of us, secretly hoped that the art would prove to be a winner and perhaps skyrocket upward in value over the years. The Basquiat collector liked the art, wanted it in his life and could afford it. The fact that it turned out to be a superb investment was icing on the cake.

The questions you have to ask yourself are: Do you think of art investment as a speculative investment in which you are betting that the artwork will yield a profit in the immediate future? Or, are you concerned with investment as a preservation of capital in which you expect the artwork to maintain its value in the foreseeable future with a potential profit down the road?

If your answer is speculative investment you'd probably be better off investing in the stock market or commodity futures. And presumably you wouldn't be framing a stock certificate and hanging it on the wall. At least then you wouldn't have to look at your mistakes.


Investment-grade Art

What constitutes investment grade art depends on who you talk to. Art dealers and collectors use several buying strategies. Some advise purchasing paintings and prints of established masters such as Rembrandt, Raphael, Vermeer, Renoir, Matisse, Picasso, Chagall, etc. Other experts suggest that you are better off by investing in young emerging artists. You can often find very fine work being created by young, relatively unknown regional artists. Buyers will thus have the opportunity to obtain good value at bargain prices if they invest in the work of exceptional artists before they reach the peak of their career.

Whatever your strategy, most art professionals agree that you should purchase only what you like. If the value goes up, well then you've made an intelligent investment. If it does not, then you and your family can still enjoy the aesthetic pleasure that prompted you to buy the art in the first place. In either case you will still have something valuable to show for your money.


Old Masters

A group of about 250 Old Master painters remain a good investment, but the prices are extremely high. These Old Masters range from the paintings of the Italian Renaissance—Leonardo di Vinci, Botticelli, the Bellinis, Raphael, Titian, Tintoretto, Giorgione, to the brilliant canvases and wood panels of the Flemish and Dutch geniuses—van Eyck, Memling, Bruegel the Elder, Rubens, Rembrandt and Vermeer. Certain French and German engravers and painters, as well as the Spaniards El Greco and Goya, are included.

Keep in mind that a number of these old masters also made prints. These etchings, woodblocks and engravings are still relatively inexpensive despite their extreme rarity. In the opinion of many art dealers and knowledgeable art collectors, these old master prints offer some of the best investment potential in the art market today.

WARNING! Stay away from "restrikes," where the plates have been reworked by someone other than the original artist. If the dealer doesn't know what edition or "state" the impression is from, don't buy it.


New Masters

French Impressionists such as Renoir, Manet, Monet, Pizzaro, Mary Cassatt, and Post-Impressionists like Cezanne, Van Gogh and Seurat and are extremely valuable in today's art market. Some of these Impressionists also produced a relatively small body of graphic work. These rare, elegant etchings and stone lithographs are, like many of the Old Masters graphics, still relatively affordable.

Twentieth Century Masters

Included are the works of Picasso, Miro, Chagall, Matisse, Jackson Pollack, and even Andy Warhol and command especially high prices. However, the investor must be careful when it comes to acquiring Modern Art. The art movement known as "Modern Art" has often been lacking in direction and quite vulnerable to the influence of well-orchestrated promotional campaigns. Skyrocketing prices into the millions for still-living artists are always in danger of market corrections.

WARNING! Don't buy with your ears instead of your eyes. Purchasing trendy art is usually like investing in penny stocks—it's a dangerous game.


American Masters

Traditional, Regional, 20th Century Realism and Western American art is just now beginning to attain its own national significance. A substantial portion of all American art is sold here in the United States. In comparison, only about a fifth of French art is sold in France. The educated guess of many in the art world is that within the next ten years American Art will become internationalized, broadening the market and rewarding early collectors.


Prints

Price up-trends have been very evident in prints. Recently, a Rembrandt etching fetched over a million dollars at auction. Many artists from the Old Masters to the Contemporaries approached printmaking as a challenging art form, equal in significance to their painting, drawing, or sculpting.

Remember, just as you would with any investment, "buy low, sell high" still holds true. That's easy to say and much harder to do but here's a tip. The closer you get to an artist's "stomping grounds" the larger the collector base will be resulting in greater demand. This often means higher prices. When selling, you may wish to focus on an area close to the artist's home base. Conversely, when buying, you might look further afield where the artist is less well known, thus the demand is less and the prices lower.

Obviously, to realize a profit you have to sell your investment. But what if there is a market turn-down? After all, the art market is subject to ups and downs just like the stock market.

The answer is: buy something you love and can afford. If you are sure of the work's quality, have checked its provenance and authenticity, and are happy living with it, no worries. You can ride out the downturn and wait for a more opportune time to sell.

With all this discussion of art as investment it is important not to lose sight of the true value of fine art. Art is about beauty, passion, drama, memory and other intangibles. You should always buy a work of art because of how it makes you feel, and on a personal level, what it means to you.

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Collectors and Collections: Welcome to the Club

There was a time when collecting art was solely the province of princes and kings and lords of the church—only the aristocracy need apply. Mid-19th century America changed all that. Among the merely super rich, collecting art came into vogue. Collecting was not based on need but on desire. These collectors were not so crude as to collect art for money, but status and the guilty pleasure of mingling with "bohemians" were surely involved. As a result, museums mushroomed in growth in the 1870's, enriched with the treasures of the wealthy collectors of the time.

Fortunately for us all, art collecting has become democratized. Anyone can become a collector as long as he or she has some money and a passion for art. One thing has not changed since the 19th century, however. Collecting art is still based on desire, not on need.

Need and desire are what distinguish art buyers from art collectors though many an art collector started out as an art buyer. The art buyer has a specific location or need in mind, décor for example. In searching for a seascape to hang behind the sofa, the art buyer becomes increasingly exposed to art. With this focus on art, no matter what the motivation, a shift occurs and the art buyer becomes moved by desire rather than need— the hallmark of the collector. The art collector often can't say what enticed him or her to buy a particular piece in the first place. The only explanation is, "I just had to have it."

There are as many reasons a collector collects as there are people. It could be the need to surround ourselves with beautiful things, or a means of defining our personalities. Some people buy for investment or a wish to leave a legacy. Others may simply want to support emerging artists or assist in the recording of history. What all art collectors have in common is that their tastes and preferences are personal, unique to them, and their pursuit brings them first and foremost, pleasure. All true collectors—young and old, rich and not so rich—have a passion for art.

The collector revels in the thrill of the chase, the search for the perfect addition to his or her collection. The process of viewing, learning and acquisition is a joyful one and doesn't feel like work. If it does, it's not for you.

There is a cohesiveness implied in the term 'collection' and the most interesting collections are built around a theme, reflecting the vision of the collector. An eclectic grouping based on personal meaning can also have value as an entity, for the glue that holds it together—in this case, personal meaning—is there.

You may look to museums, both in their permanent collections and special exhibitions, for examples of themes. A theme can be something as straightforward as the work of a single American artist or as whimsical as the portrayal of cats in art. It can be as elegant as a Japanese woodblock print or as stylized as an Art Deco magazine cover. Some collectors are attracted to the three-dimensional and tactile qualities of sculpture. There is ethnic and folk art to consider. The possibilities are endless.
Conceiving the theme of the collection and executing that vision is the responsibility of the collector. By developing a coherent vision and point of view, a collector can create a collection that is more than the sum of its parts and actually enhance the objects in it. Collecting art is an art in itself.

One of the most brilliant and visionary collectors of the twentieth century was the industrialist and philanthropist Norton Simon. His accomplishments as an art collector rivaled his extraordinary achievements in business. He began collecting in the 1950's with the impressionist works of Degas, Renoir, Gauguin and Cezanne. In the 1960's he amassed a collection of works by Old Masters. During this time he also added to his impressionist collection and expanded into modern works.

Norton Simon's marriage to actress Jennifer Jones in 1971 was a turning point in the direction of his collections. With a few exceptions, his acquisitions until then were most definitely European. During the couple's honeymoon trip to India, Mr. Simon began to explore Indian art. This led to his first purchase of Indian art, a Mughal ivory chess set and, more importantly, to a respect for South Asian art. This admiration occupied a large part of his collecting interest for the rest of his life.

Norton Simon's influence in southern California led him to be the catalyst in the creation of the Los Angeles County Museum of Art. He also developed his own "museum without walls" concept in which he lent his art collection to museums throughout the world. In 1974 his vast collection, considered by many to be the finest private art collection in the world, found a permanent home in Pasadena where it now resides in the Norton Simon Museum—a true masterpiece.

Obviously, most people don't have the deep pockets of a Norton Simon, a Guggenheim, or a Getty, but there are ways to build a significant collection without tons of money. Take for example the classic story of contemporary art collectors Herbert and Dorothy Vogel, a middle class Manhattan couple who have been avidly collecting the most avant-garde art of their time for the past 35 years.

Herbert Vogel is a retired postal clerk who made $16,000 a year and his wife Dorothy was a librarian. In 1965, they befriended the important conceptual artist Sol LeWitt, and after his first show, bought their first piece of art. Early on they decided to use Herb's salary for collecting and Dorothy's to live on. Over the years, they have amassed a collection of over 2,000 pieces by the most important artists of the 70's and 80's including Christo, Warhol, and Tuttle.

Herb Vogel took art history courses and introduced Dorothy to painting after they were married. They both stopped making art because they came to understand that they were better collectors than painters.

Their collecting reflects teamwork although each has a different approach to visiting galleries, museums, and artists' studios. He likes to move slowly and can stand for hours in front of a painting, communing. She walks quickly, makes up her mind about a piece, and moves on. Whatever the method, the objects in their collection were not chosen by consultants or considered "good" because they were expensive, but were the product of the Vogel's unique and personal point of view.

Their tiny one-bedroom apartment is festooned with art which is a result of their excellent and consistent eye for the cutting edge, a reflection of their intellectual journey and their specific sensibility. Each individual piece has more power as part of the collection than it would have on its own. The collection is its own work of art because it creates a context, in this case a specific period in contemporary art, and reflects the collector's concept of what art is.

Not satisfied to just to buy the art, the Vogel's made the art world their life. They made friends with the artists of their time and gave them emotional support, attending gallery openings, exhibitions and events. The art world became their home, enriching their lives visually, intellectually and socially— all on $16,000 a year.

The Vogels have no desire for their passion, their collection, to share the unhappy fate of other exquisite collections—sold at auction for enormous sums but disassembled in the process. While together, these works had been an extension of the collectors' personalities and a reflection of their passion for art and artists. Once the collection was scattered, the collectors' vision and its strength became just a memory.

For this reason the Vogels are gradually giving the National Gallery of Art every piece they have acquired over the years. In return, they receive an annuity, a considerably smaller amount of money than if they had sold the work at auction.

When the Vogels—he is in his seventies, she in her sixties—are gone, their collection will remain together under the stewardship of the National Gallery. It will document a significant period of art making in the United States during the last four decades of the 20th century, and it will also clearly describe the two people who brought that work together.

Now the question is: should YOU consider becoming a serious collector? Here are some things to think about:

Are you willing to keep an open mind and expect the unexpected? Do you look forward to filling your life with visual and intellectual stimulation? Are you amenable to educating your eye and navigating the substantial learning curve involved?

Do you look forward to meeting people–artists, dealers, collectors—who are fascinating, passionate, and often eccentric, but who are typically generous with their time and anxious to help you learn? Do you have a theme in mind for your collection, something that expresses your own vision?

I'm willing to bet the answer is yes.

Being a part of the art world can be a fulfilling addition to your life. Your life will do nothing less than change (but in a good way).

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Where to Acquire Art?

You've visited the vast store of riches museums have to offer, wandered through numerous art galleries, perhaps taken an art history course or two and you've gotten a handle on the type of work that speaks to you. You're ready to take the plunge. Now the question is: where do you buy? Let's examine your options.

Commercial Art Galleries

As you know from your preliminary visits, art galleries come in all shapes and sizes, from the highly commercial to the personal, the elegant to the funky. Just as you did when you visited museums, take your time and have a good look around. If something grabs your attention, don't hesitate to ask the gallery staffer about the work. Some valid questions are:
1. Can you tell me something about the artist?
2. What do you know about this particular piece?
3. How much is it?
4. Do you have anything else by this artist?

It is important to see a body of work by the artist so you can differentiate between the mediocre, the merely good and the excellent. Not everything an artist does is wonderful; even Picasso had his bad days. By examining a wide range of an artist's work, you will get a better feel for what is his or her best effort.

Galleries may focus on showcasing established artists or prefer to represent new ones. They may even have a collection of work by departed "masters." When faced with the choice of buying a so-so work of an established artist or a masterpiece by an emerging artist, you're better off buying the best work of the new artist. You always want to acquire the finest the artist has to give.

Keep in mind that a gallery is still a store and the sales staff, sometimes referred to as "art consultants," are there to make a sale. Most work on a commission basis and are trained to mirror your interests and close the sale. There is nothing wrong with saying, "I'm just not ready to buy at this time."

Even if you have taken up a lot of the art consultant's time, do not feel guilty about not making a purchase. Buying a piece of art is a big step, and not just because of the financial outlay. It's like inviting someone into your home—for an extended stay. You have every right to be sure the work of art will benefit your quality of life before you issue the invitation.

If you are not ready to buy, but have established a rapport with an art consultant who has been helpful and patient, the right thing to do is to take that person's card and ask for him or her should you decide to make a purchase later. Remember, most art consultants work on commission, so if you were to return to the gallery and buy from someone else, it would be discourteous and demoralizing to the person who worked hard to gain your business and your trust.

Before visiting galleries be sure to check newspapers and art magazines (a subscription is not a bad idea) which have up-to-date information on current exhibitions. If an artist you favor is having an exhibition, you'll want to attend, for this is an excellent opportunity to view a larger than normal body of the artist's work. Exhibitions also present an opportunity to meet the artist as well as other collectors.

Most galleries have "guest books" for you to sign. This will put you on their mailing list for future shows. There is no need to feel intimidated by attending art openings even if you are a novice. People are relaxed and friendly and share your interests, a good place to start.


Art Dealers

If you think you might like to work with a single person to help you build your collection, a private art dealer can fill that role. Private dealers may be found through ads in arts publications and directories or word of mouth from other collectors. Artist guilds, museum curators and gallery personnel are also good resources for referrals. Most art dealers worked in galleries at one time or another and decided to strike out on their own.

Art dealers are usually art collectors as well and are in the business because of their passion for art. While they don't have gallery space to show an artist's work, they often display art in their own homes. Part of the motivation of being an art dealer is to have the "loan" of work which they might not ordinarily be able to afford.

Art dealers often broker sales between one collector and another, or between an estate and a collector. Many dealers prefer to represent proven artists over new artists because new artists have not yet benefited from gallery exposure, making the dealer's job more difficult.

The advantages to working with a dealer are that you can see the art in a domestic setting and build a friendship with someone knowledgeable who is willing to share that knowledge with you. Once a dealer gets to know you and your tastes, he or she can guide you in building a cohesive collection and provide you with companionship in the art world.

Should you visit a dealer's home (by appointment) and not be enamoured by his or her taste, don't worry, there's no obligation. It's okay to say, "Thank you for your time. It's just not for me."


The Artists Themselves

Many wonderful artists are not affiliated with galleries or dealers but sell directly to collectors instead. This could be because the artist is new and undiscovered, or conversely, because the artist is well established and has a large enough collector base and reputation to allow him or her to disconnect from the middleman. The successful artist probably has a spouse, other family member, or trusted friend to handle business affairs, artists being notoriously (fairly or unfairly) regarded as not doing well in that area.

If an artist is not with a gallery, how do you find him or her? You may cross paths at non-gallery affiliated art shows such as municipal exhibitions, local juried exhibitions at guilds and museums, artist collectives, art school exhibits, fairs, charity fundraisers, and, by chance. Note cards bearing reproductions of an artist's work usually have contact information on the back. Internet searches of artists in your area can also bear fruit.

(Note: It is not ethical to seek out artists whose work you have seen in galleries with the objective of dealing with the artist directly. For the artist to sell to a person who was exposed to his/her work in the gallery first is called "taking the client out the back door," and is a risky practice for artists, with both their reputation and gallery representation on the line. If all artists did this, galleries would be out of business.)

Once you have tracked down an artist whose work interests you, an appointment may be made to visit the artist's studio. The exciting thing about a studio visit is not only do you get to meet the artist and have him or her all to yourself, but you get to see work in progress, and in the artist's own space at that. Valuable insight into the artist's work can result from this experience.

There may be cost savings in dealing directly with the artist as well. With no middleman to pay, the artist can afford to charge the collector less (galleries have overhead, commissions, advertising costs, etc. and take from 40% to 70% of the selling price). If an artist is not established, how much he or she charges for the work can depend on how much money is needed at the time. If the artist hasn't sold in a while, the price could go lower to make the sale. There is a real downside, however. If the pricing on an artist's work is arbitrary and inconsistent then it is difficult to affix a real value to the work and sustain that value over time.

If you have something to offer besides money, emerging artists are sometimes open to trading their work for goods or services. This is especially true if you are yourself an artist or craftsman. Or maybe you are a massage therapist—artists spend a lot of time on their feet and can get aches and pains in their arms and shoulders from holding a brush aloft for long periods. Perhaps you own a boutique with an outstanding collection of vintage Hawaiian shirts or run a fabulous restaurant. Whatever the commodity, once you get to know the artist well enough, you might suggest a trade.

Another way to acquire more of an artist's work once you have established yourself as a collector is to introduce the artist to other collectors. If the artist sells a number of pieces because of you, you just may be rewarded with a painting for your efforts.

In any case, studio visits are fun, singular experiences. The atmosphere is casual, relaxed, and pressure-free. There is the opportunity to get to know someone worth knowing and find something unique and wonderful for your collection with pleasant memories attached.


Other Collectors

For one reason or another, a collector may want or need to divest himself of art. Sellers often advertise in the classified sections of art magazines or newspapers. Sometimes they make the rounds at art shows in order to establish contact with other collectors. They might put the art up for bid on eBay.com or seek representation by a dealer. This is called the "secondary market" and refers to the reselling of art.

If a collector is selling because he or she wishes to make a profit on investment, it is unlikely you will get a bargain. If, however, the collector is in financial trouble, you might get a great deal. A good practice is to always apply the principles of evaluation (which will be discussed in another section) no matter where you purchase the art. Don't assume anything.

When buying on the secondary market you should pay close attention to the condition of the art. This is especially true for prints and other fragile works on paper. It is not a good idea to buy work sight unseen without adequate safeguards, no matter how good the price. If you are dissatisfied, you may have little chance of getting your money back.

You should also insist on documentation, whether the work is an oil on canvas or a graphic. Provenance is essential to a collector. We will discuss this at length in the section on documentation.

Non-gallery Affiliated Shows and Exhibitions

This could be an art show sponsored by a city or county and held in a municipal building. It could be an exhibition of student work at a local college or university. An art dealer might mount a show in a hotel lobby, showcasing his or her stable of artists, built perhaps around a particular theme. Many cities and towns boast "artist colonies" that hold street fairs featuring arts and crafts.

You get the picture. These are excellent places to see diverse kinds of work and prices are usually affordable. If you are looking for emerging artists and want to get in on the ground floor of an artist's career, these exhibitions are great hunting grounds.

Several artists may be included in an exhibition. Consequently, each artist may have only one, two or three pieces in the show. This does not give you enough exposure to an artist's work to judge the relative quality of a particular piece. Sometimes artists carry portfolios containing photographs of their other work. This can be helpful in determining if the artist is for you. It is, however, no substitute for seeing the art in person. If you are interested in an artist's work, it's a good idea to arrange a studio visit if possible.


The Internet

The internet is a great place to conduct a search if you know exactly what you are looking for, i.e. 19th century Japanese woodblock prints, and have had direct exposure to them in the past. It is not a good idea, however, to purchase art online if you have not seen the artist's work in person before.

Exercise caution when buying art on the net, just like you would in buying any other high ticket item. Make sure safeguards are in place (i.e. credit card purchase with a buyer satisfaction clause; verifiable testimonials from other satisfied customers) to make sure you don't get burned.


Auctions

Auctions are not good places for the beginning collector. Only an experienced collector who has a handle on current market values should partake. He or she is aware of the fluctuations in the art market and the variables that effect market valuations. Often thousands of dollars (even millions) are at stake and the experienced collector knows the factors that determine the value of a given work—its condition, whether or not it's been restored and the extent of the restoration; when in the artist's career the work was created and if collectors are favorably disposed toward the artist's work at this point in time.

Bidding is a specialized skill, learned over time, and with much observation. Savvy collectors attend pre-auction viewings and talk with other people. They closely examine the condition of the work in which they are interested and, in the case of a framed print, may even ask to see the piece out of the frame to determine its condition. The lesson is—never bid on anything at auction unless you are certain about its condition and its value.

The beginning collector is on pretty safe ground at small country auctions where there is little chance of getting burned. Not so the big auctions. The danger for the novice is that it's far too easy to get caught up in the excitement of the moment and buy on impulse. The beginner's best bet is to go to the big auctions only as a spectator.


Estate Sales

At estate sales and even garden variety yard sales serendipity can come into play. We've all seen that someone on Antiques Road Show whose mother bought a folk painting or some such at an estate sale for $10 that turned out to be early American primitive worth thousands.

Odds are you won't find something of such great value for a pittance, but can it happen? Yes, indeed. It's sort of like buying a lottery ticket. It's fun, and you probably won't win, but there is a chance, albeit a small one, that you will.

The only problem with estate and yard sales is you have to buy the item then and there. There is no time for evaluation and research. You have to go with your instincts.

Yes, by all means prowl estate and yard sales as part of your quest. Prices are traditionally low, so a purchase won't break the bank. You might even get lucky.

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Art Collection Software-Keeping it Simple

     What is the best way to manage your art collection and what is the best software for your art collection?  Clearly this is a personal thing but there is always some functionality that you want to have included and other features that you may not need at all.   There is a big difference between what a single collector needs and what a museum or gallery needs.

     For example, if you are a collector you may just want to have a system that tracks your art and its value, has many photos of each piece and, MOST IMPORTANTLY, is complete enough to convince an insurance company, in the event of a catastrophic loss, to pay you what it is worth.  As a collector you might also want to be able to print a portfolio of your collection for any number of occasions.  You might want to keep a bio on each of the artists that you collect.  On the other hand, if you are a large museum or gallery where you need to manage a lot more details than the average collector, you may want to have things like accounting functions built in.   As a collector, accounting features are generally unnecessary and overkill.  Why pay hundreds of dollars more for features and functionality you do not need?
   
     From my perspective the key element for a collector is to not over pay or get over featured with things you do not want or need, because that may make the whole experience of documenting your art collection more of a hassle than an enjoyable escapade.  This is why My Art Collection's motto has always been "keep it simple."  Personally I really dislike overcomplicated software. I say this because if the software is difficult to use, I probably won't use it even if I have already paid for it.  WIth My Art Collection you can try it before you buy it.  http://www.my-artcollection.com/download/try.html

     When you consider the wide range of pricing that various software's like My Art Collection and others offer, it really becomes an issue of "what do I really need, and how much do I have to pay for it?"  

     My Art Collection starts at $199 for a standard version, $249 for an advanced version and Systems that start at $499 for professional versions that can be used in local area networks by multiple users.  Currently we have a coupon code that will give you 10% off the cost of any of our systems.  Use the code "artbook"

     I always say, keep a record of your art collection, make sure it has visual as well as technical data and keep it up to date.  You'll be happy you did.