From Delancey Place:
Investing In Art
Today's encore selection -- from The Value of Art by Michael Findlay.
When the economy is booming, well-heeled investors are often offered the opportunity to invest in "art investment funds" -- money pooled to buy art that is then expected to appreciate handsomely. But according to renowned art dealer Michael Findlay, these funds rarely perform well. One of the few exceptions was a 1904 fund that helped make the reputation of a very young Pablo Picasso:
"There is an adage among old hands in the art world that the emergence of art investment funds signals that a boom is over. This was true in the late 1980s and again in 2006-08. The wisdom is based on the fact that art investment funds are usually created by and designed to appeal to individuals with limited experience in the art market. And indeed, the setbacks that some parts of the art market suffered as a result of the global financial meltdown in the fall of 2008 were not predicted by the most recent crop of art-fund promoters. For them, the art market defied gravity, and they ignored its historically cyclical nature.
"Strong prices, high-profile big spenders, and glittering openings make good copy. The media carries the message that 'art is hot' far outside the art world, and people like me start getting calls from financial reporters anxious to file stories about one or another aspect of what is to them a novel phenomenon. These stories inspire entrepreneurs to use art to approach individuals, insurance companies, and pension funds with billions of dollars but no passports to the seductive world of art investment.
"The basic premise of virtually all art funds is that you put up the money and someone else chooses and buys works of art that are warehoused until sold. Then the profits are shared. ...
....MUCH MORE
