Alternative Asset: Art

With the official status of “earliest” Art being somewhere on the cave walls in Maltravieso in Spain dated 64 thousand years old it is tempting to start any conversation regarding Art with our prehistoric predispositions. Yet on this fine note let’s skip dozens of centuries – into the Now.

Now Art is everywhere. Even economics is a new kind of Art, you could easily say. You have plenty of data lined up in tables, formed into beautiful graphs, so clear, crisp and easy to comprehend. Statistics is like a palette knife and big data is the oil paint and the arising image pinpoints that Art has long surpassed humble artist studios and now constitutes a sizable asset class with a yearly global turnover of 60+ billion dollars so it comes as no surprise that…

If we take a closer look at the latest trends … they suggest the emergence of a financial fine art market where fine art is considered as a new asset class.

Adriano Picinati di Torcello, Deloitte Luxembourg

Ok, so let’s take this understanding back 50 thousand years into your spacious Neanderthal cave (f.y.i. – that’s the equivalent of living in a private mansion in the middle of Central Park on Manhattan). You’ve got this major asset of huge Hands and Mammoth paintings on your walls. That’s great. You can practically do nothing with it except amaze your guests and yourself, then rip it off the wall and sell it to get something new. And guess what – that’s pretty much the same thing you’re gonna do with Your Art today, too. So that’s not new.

What is new, though, are your abilities to be informed and to actually buy and hang the Art, take it off the wall and sell it. If you have the wall space and the storage capacity then you won’t be bothered that Art is still not the most liquid of all assets. Yet it is hard to disagree that it has never before been possible to buy and sell Art worldwide as simply as it is today. That makes all the difference.

Established auctions, galleries, fairs, dealers, middle men, critics, art lovers, investors and aficionados alongside numerous artists themselves have done a great job in popularizing, sustaining and developing the art market and created milestones like the Salvator Mundi and Balloon Dog sales that pretty much anyone has heard of. They are the magnets for people’s attention and pillars of Art.

Yet, it is a sharpshooter that makes the kill – or as they say in Russian: Who doesn’t risk, drinks no champagne! Attractive is the investment that pays a lot and to hit it big it’s vital to get access to artworks that are significantly undervalued. To establish a measurement of value and to enter the art market playing field, let’s assume the following to be true: the hypothesis that artist popularity is more important in driving the price of artworks than any qualities intrinsic to the art.

Surely among the top names will be Van Gogh, Picasso, Doig and Richter, Rembrandt and even Basquiat but this can be something of a double-edged sword for many investors, as it makes the financial barrier to entry extremely high. The blue chip names are very few and the opportunity to “democratize” a hyped-up segment of the art market has been the breeding ground for all sorts of projects and art-funds. But the thing is that these names are made already and even though their perception is “less risky”, this benefit is often annulled by gallery commissions, fund management fees and auction premiums. In addition to that, You don’t get even the slightest chance of making a “discovery”, which is the holy grail from a culturally conscious perspective on Art investing (unless You plan on operating your own museum, storage, preservation and restoration works, which is another holy grail). But there is a problem of over-valuation at work here, which is mainly due to the numerous people involved for a cut over and over again.

On the other pole, there are the yet to be known, independent artists, that have all the potential on the popularity spectrum measuring stick in front of them – open to all artistic and market achievements with nowhere to fall and everywhere to go. No doubt, you’ll have to first find such artists – and you’re not alone looking – but here you are – in the best place to be on this journey, because this website is the place to discover true gems to adorn your walls and find something truly distinct, worth all efforts. An artist that pushes with continuous effort his art onto the market, reinvests, builds a brand and to enhances the value of art that you own will definitely enjoy success in realizing the many goals of his own and of the investor.

Direct relationships between collectors and artists deliver meaningful investment on the primary art market. Due respect must be given to the individual, living artists for whom Your cash flow is vital. Investment that is meaningful in the wider cultural perspective, because it allows for art and culture to be created. This benefits society at large and maximizes your value and your gain. And while we keep calm and collect Marlinski we keep in mind that…

With financial markets in turmoil, art as an alternative asset class is being incorporated into portfolios in the interest of diversification. Art’s low correlation with the equities market and desirable risk and reward ratio, as price appreciation defies all logic, makes it an attractive investment.

Giampiero Favato, Kingston University London

The Art market is mostly a long and quiet game where you quite possibly can hit the jackpot. Art is more stable than a fiat currency and if You like the idea of diversifying and enjoy Art, then You are on the right track.

Success in the art of diversification of Your portfolio comes with a certain degree of risk and we claim that blue chips artists should be avoided in favor of focusing on placing discovery bets on lesser known names. The most promising will be independent names that gain ever more leverage with each year of their independence and artistic development. If you’re looking for the real deal down the road – that independent artist is your best bet. Being the early adopter in the life cycle of a promising artist career has the biggest potential economic gain.

Whether the potential will be realized – is the question, though. It’s a whole system of projects and focused effort that builds and engages the community of art aficionados that react to meaningful artworks. It also delivers transparency and long term perspectives that the art world often lacks, yet, enjoys and uses every bit of it. An artist creating within a gesamtkunstwerk format with planned works for 3-5 or 10 years is hard to find, so act fast – when you see one.