November 23, 2008

Invest in Art -Reason #2 (or not): Speculation

"Like the share market, many factors can affect the price of an investment: a retrospective exhibition, biography, major art prize and death (which caps the stock available) inflate an artist's prices, while auction or gallery disappointments deflate them. So too does a general perception that prices have gone too far too fast or the work has become formulaic."
-David Tribe, Sun Herald

Art returns have been proven to be more in boom times and lower in crashes according to experts at Yale. Fortunately for speculative art investors, delay of up to 2 years can be possible based on the late 80's market crash, when Sotheby's and Christies achieved record prices. The market only crashed at the beginning of the 90's and paintings by art stars Sandro Chia, Julian Schnabel and Enzo Cucchi became unsellable. And that's another story for another day.

Bullish stock markets, low interest rates, growing investors wealth and confidence are conditions in which speculation thrives. Recently art speculation has been boosted by increasing availability of comprehensive information from the media and internet followed by transparency which is positively helping to define art as the new kid on the asset block.

Proceed with Caution...
Note that the art market like most fixed assets are not liquid compared to equities due to lower turnover rates and subjective pricing. Art also has no income streams, are unregulated, difficult to compare and are susceptible to fads. In addition, necessary agent commissions may be high and tend to offset short term gains. A certain amount of holding power is required.

Although there are some hit and run success stories, speculative art investment should be avoided by novices, because most people who who make money, have not made it by purchasing art as short term investments. The key elements to a strong art investment portfolio is not unlike any other; -knowledge, quality and diversification, the bonus will be getting to enjoy its beauty.


Anonymous said...

bravo,psst! I see that you've been burning the midnight oil to attain some really good articles. keep it up. what i would like to stress most after reading this article is that one needs info. where can one obtain such info? Can you name me some Malaysian artist whom you'd think are good investments.

yusof said...

jalaini abu hassan and Ahmad zakii Anwar are the safest bets but they are expensive. If money is an issue go for the younger up and coming artists like, Nurazmal, Ilham Fahdli and Kharina Kamarrudin

psst! said...

I think Khalil Ibrahim, Daud Rahim & Yeoh Kean Thai are good bets too. Oh, and so is Yusof Majid ;)

zarina said...

i see there is quite some interest developing here. well this is my 2 cents worth:


My advise is, firstly go to a specialized dealer that can sell you a good piece at a good price and most importantly give you additional service by providing you a venue to sell. As far as i know, there's only one good one in PJ Jln Gasing which i use and have obtained results. Don't be alarmed if you find that they are not a true and true high end gallery. they are more like a hypermart for malaysian arts. they know their stuff. that's more important. it's amazing what you can find there. i believe they are more comprehensive than most self proclaimed galleries combined.people there are ever willing to explain who's who in the art scene and best of all they do not discriminate.even my teenage son was entertained for an hour. now he knows more about malaysian artist. he purchased his first maamor jantan and made some money. he used the money he obtained to purchase and sell a khalil. now he eyes a jai or a zakii.

secondly, know exactly what you like and want. no point going into a outlet not knowing which artist you like and what series of his or her you are looking for. do your research first.

local artists i think are sound investments:

tajuddin ismail, awang damit, khalil ibrahim, yap chin hoe, lee weng fatt, j-cent mu, jai, zakii

mrs low said...

i know them. they are a framing outlet cum gallery. really amazing collections. i too have explored investing with them to some success. just sold my zulkifli buyong. made some. look for cliff when you're there. i am sure he'll take time off to help you. a nice person that really knows his stuff. single too i heard.


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