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Art Investment Out Performs S&P, DOW and NASDAQ

CNN Moneyline with Lou Dobbs reported that investments in fine art have outperformed the S&P, DOW and NASDAQ indexes over the last 2 years. This means just blue-chip art, old masters, know (deceased artists), etc. "Trendy" art is not being purchased, only art that has been already recognized by the passage of time. The art has not only kept its value but has increased in value over the last 2 years. As happens when the markets are down smart investors put their money into fine art. The auction houses at first worried about 9/11, found that their business did not suffer but actually increased, as people preferred these more secure investments. They also mentioned that art should only be purchased because one actually enjoys the artwork and has pleasure living with it.

Here is the actual transcript of the show on Aug. 5, 2002:

DOBBS: Well, if your feeling a little battered by the stock market, perhaps even the real estate market, let's turn to something you might appreciate: the art world. Benefiting for--from all of these problems, many investors are looking for tangible places in which to put their money. Sales of top-quality art is rising, and the pieces are holding their value.
Kitty Pilgrim has the report.
(Begin Video Tape) KITTY PILGRIM, CNN FINANCIAL NEWS CORRESPONDENT (voice-over): Don't put it in the mattress, hang it on the wall.
Art sales are booming. Quality art is selling as briskly as ever. Trendy is out. In art, the blue chips -- old masters, impressionists, quality drawings are selling. In New York the spring auctions broke records.
Citigroup advises on art purchases these days as investors look to diversify their assets.
SUZANNE GYORGY, CITYGROUP ART ADVISORY SERVICE: What we are seeing now is -- and which we've seen before -- is there's a trend when the equities market is down people tend to put their money more into art or into real estate. And I think that's a lot of what were seeing now.
PILGRIM: Art experts are happy to tell you high quality art holds its value. This chart form April 2000 shows an art index outperforming the DOW, S&P, and NASDAQ over the last 2 years.
GAVIN SPANIERMAN, SPANIERMAN GALLERY: I think that people are sick and tired of the roller coaster ride in the stock market. I think that people are looking for a place to put their money that is safe, that's tangible, they know what they have. It's there on their wall, it's not going anywhere.
PILGRIM: Art experts were concerned the economy and the psychological effects of September 11 would dampen the art market.
In fact, just the opposite has happened.
MARC PORTER, INT. MANAGING DIRECTOR., CHRISTIES: What we've found day in and day out is that people continue to return to objects of great beauty or historical importance to give them comfort, to remind them of about what the culture is all about. And it remains one of the places that people love to put their money.
PILGRIM: Investing in art is tricky. Art experts say avoid trends and fads, but only buy what you love. That way even if the painting does not appreciate as much as you want, at least you have the joy of hanging it on your wall.
Kittie Pilgrim, CNN Financial News, New York

Editorial Comment:

What is interesting to note however is that over a period of time these investments, although secure do not usually yield the high profits associated with a bull market. The only way to truly profit from investing in art is to purchase emerging or living established artists and then take the gamble that their work will appreciate rapidly. How to make that decision has been a difficult one until now. As investors shy away from "Trendy" art because of the process used in its selection, they now have a much more viable alternative.
Throughout history fine artists have always known who they were and which ones of them were more advanced. The problem until now is that artists have not celebrated themselves but compete with each other and denigrate the others style or technique. These self-serving modes of behavior have left a bad taste in the mouths of most of what should be the art buying public, leaving just a small group of dedicated collectors who are inundated by art and need the "experts" to help them decide who's who.

-Dennis Paul Batt