In just two weeks this month in New York, the auction houses Sotheby’s and Christie’s sold over $2 billion in art, a record for major New York fall auctions. …
The lofty sums stunned even longtime art market watchers. “It’s phenomenal,” said Michael Moses, a founder of the Mei Moses Fine Art Index, a widely followed measure of art prices, and a retired professor at the New York University Stern School of Business. “At the Christie’s postmodern and contemporary sale, the average compound return was 20 percent annualized. That’s amazing.” …
This month’s record sales left some dealers and collectors talking about irrational exuberance and a potential bubble, especially in the soaring contemporary-art market. But Evan Beard, who leads Deloitte’s art and finance practice in the United States, said he didn’t agree. “If you were seeing second-rate works selling for huge values, then you’d say there’s dumb money out there,” he said.
“But the works selling for these high multiples are important works that art historians have deemed innovative and have had influence. People want to own original works of genius.”
…He noted that it was contemporary and postwar works that had shown the biggest gains. “The single most surprising change in the art market is the relative increase in the value of recent art,” said David Galenson, a professor of economics at the University of Chicago who has done groundbreaking research into valuations in the art market.
More money than sense. New Money. A fool and his money are soon parted, etc.
While some art historians, curators and dealers bemoan the emergence of fine art as just another economic asset class, “art and money have always been joined by an umbilical cord of gold,” Professor Galenson said. “The Renaissance ideal has gone the way of the dodo bird. I say, Get over it. Steven Cohen doesn’t make any pretense of being an art history major. Maybe he’s the Andy Warhol of collectors.”
In a recent survey of art professionals by Deloitte, 76 percent said collectors viewed art, at least in part, as an investment — up from 53 percent two years ago. And 72 percent said their clients’ primary reason for buying art was related to the “social and networking scene” and the status associated with buying art, compared with 59 percent in 2012.
emotion, great reason behind investment decisions
Given the money involved, it probably shouldn’t be surprising that bankers are treating art like any other asset class, which, in turn, is helping drive up prices and create a more liquid market. More banks are lending against art as collateral. Some are even starting to create collateralized debt obligations with art as the underlying asset — much as bankers packaged subprime mortgages before the financial crisis.
As the commenter says, This will end well.
The soaring prices are being driven by market forces rather than any aesthetic or artistic awakening, Professor Galenson said. “Aesthetics have nothing to do with it.”
Commenter: That was the conclusion of Tom Wolfe’s “The Painted Word” in 1975, that the real creative artists weren’t the guys holding the paintbrushes, but the critics holding the pens who explained why you were supposed to care about one guy and not about another guy.
^ And that is why it is doomed. Downward spiral.
“A lot of contemporary art is aggressively ugly,” Professor Galenson said. “That doesn’t matter in terms of its value.”
It bloody will.
Commenter: We live in a world of 7 billion people so there are 7,000 individuals with one-in-a-million artistic talent. There are a lot of very talented artists out there right now making a decent living selling beautiful art to millionaires.
First part is true, second is not. That is the problem.
C: So maybe that helps explain the mystery of why billionaires are so much more enthusiastic about contemporary painting these days than non-billionaires: because the paintings are just embodied metaphors for buying and selling. And billionaires love buying and selling. Buying and selling has been very very good to them.
A product without value.