Skip to main content

That booming art market

The contemporary art market boom continues unabated, as a wave of liquidity washes over the globe, lifting prices of assets and collectibles along the way. Last week, as a series of contemporary art auctions were set to hit New York, Barron's featured another article by Suzanne McGee chronicling the rising tide of art prices that has helped fuel some artists' rising stars.

How did the action unfold? Artnet reports, "The day sale of contemporary art at Sotheby’s New York on May 11, 2006, totaled $56,348,201, almost double the $23.8 million presale high estimate."


In fact, Sotheby's was not the only auction house that fared well in recent days. Phillips capped off the week with a crowded contemporary sale that collected $29.5 million dollars. High prices were also seen at Christie's, where works by contemporary artists such as Mike Kelly and Damien Hirst achieved noteworthy prices. According to the International Herald Tribune, Christie's Tuesday evening sale of "Post War and Contemporary Art" brought in $143 million dollars.

Refco was able to get a small piece of financial relief, thanks to their "long position" in one hot segment of the art market, contemporary art photography. From Chinapost.com:


Refco Inc., the bankrupt futures trader, may have done better collecting art than trading futures.

The cream of its corporate art-photography collection sold Friday night for US$5.4 million at Christie's International Plc in New York. A confluence of big-name photographers and a mania for contemporary art provided a smidgen of relief for Refco's creditors, who were owed more than US$16 billion as of October. The results more than doubled the presale low estimate and bodes well for future contemporary art auctions at Christie's and Sotheby's Holdings Inc. in New York.

"It's a taste of things to come next week," said Matthew Carey-Williams of the Gagosian Gallery.

Meanwhile, seasoned collectors and advisers were quietly muttering about lunatic prices paid by naive collectors with more money than sense.

The art craze is not limited to Western works or the appetites of Western buyers. Russian buyers continue to emerge as a formidable buying bloc, and interest in Russian art has spurred organizers to try and build on Moscow's reputation as an art capital. Interest in the art market has also extended to Asia; Christie's will sponsor an upcoming Asian contemporary art sale in Delhi later this month. Excitement over some of the region's contemporary art was evident at recent New York sales. As reported in a recent New York Times article,

"Works by emerging Chinese artists have recently received a lot of attention; in April Sotheby's devoted most of an Asian art sale to them. Last night Phillips included several works by some of these artists to see how they measured up alongside their American and European colleagues. Their performance was staggering."

Some observers expressed continued amazement over the appeal surrounding currently in vogue artists such as Donald Judd, whose box sculpture arrangements were a hit in Christie's contemporary sale last Tuesday. Reviewing a catalogue description of the artist's work, International Herald Tribune reporter Sourem Melikian noted that the value of some works seem to hang precariously on current fashionable interpretations of their meaning and importance.

Interestingly, some segments of the market continue to be ignored. Following Christie's evening sale of Modern and Impressionist art, The Jerusalem Post's Meir Ronnen remarked, "The lovely late Gauguin flower piece, a true masterpiece, was knocked down at $4m., even though Christie's had flashed an estimate of $7m.-$10m." The writer also noted that although sales totals for that evening's auction had approached 1990 highs, the equivelant value may not have been approached due to the decline in the dollar since that time.

While auction totals may not have surpassed their highs in terms of real dollars, individual works from sought-after artists might be doing the trick. Of course, it would be difficult to isolate how much of the return from a sale price is a by product of inflation and how much is a function of increased demand for a particular item. Market observers and academics have often preferred to track artworks by classification groups and judge performance of art indices or constructed "portfolios" over various time periods. For a past look at art's ability to perform as an inflation hedge and investment class, please see "Art as Investment, Inflation Hedge".

Will the booming art market continue to surprise observers and sceptics alike? While currently favored contemporary artworks could suffer from a dropoff similar to one that befell the Impressionist market after 1990, prices for artworks in areas of relative value might be kept aloft in an inflationary tide. As a continually surprised onlooker, I think I'll leave it to hindsight and art experts to figure this one out.

Popular posts from this blog

The Dot-Com Bubble in 1 Chart: InfoSpace

With all the recent talk of a new bubble in the making, thanks in part to the Yellen Fed's continued easy money stance , I thought it'd be instructive to revisit our previous stock market bubble - in one quick chart. So here's what a real stock market bubble looks like.  Here's what a bubble *really* looks like. InfoSpace in 1999-2001. $QQQ $BCOR pic.twitter.com/xjsMk433H7 — David Shvartsman (@FinanceTrends) February 24, 2015   For those of you who are a little too young to recall it, this is a chart of InfoSpace at the height of the Nasdaq dot-com bubble in 1999-2001. This fallen angel soared to fantastic heights only to plummet back down to earth as the bubble, and InfoSpace's shady business plan , turned to rubble. As detailed in our post, " Round trip stocks: Momentum booms and busts ", InfoSpace rocketed from under $100 a share to over $1,300 a share in less than six months.  In a pattern common to many parabolic shooting stars, the s

Jesse Livermore: How to Trade in Stocks (1940 Ed. E-book)

If you've been around markets for any length of time, you've probably heard of 20th century supertrader, Jesse Livermore . Today we're highlighting his rare 1940 work, How to Trade in Stocks (ebook, pdf). But first, a brief overview of Livermore's life and trading career (bio from Jesse Livermore's Wikipedia entry). "During his lifetime, Livermore gained and lost several multi-million dollar fortunes. Most notably, he was worth $3 million and $100 million after the 1907 and 1929 market crashes, respectively. He subsequently lost both fortunes. Apart from his success as a securities speculator, Livermore left traders a working philosophy for trading securities that emphasizes increasing the size of one's position as it goes in the right direction and cutting losses quickly. Ironically, Livermore sometimes did not follow his rules strictly. He claimed that lack of adherence to his own rules was the main reason for his losses after making his 1907 and

New! Finance Trends now at FinanceTrendsLetter.com

Update for our readers: Finance Trends has a new URL!  Please bookmark our new web address at Financetrendsletter.com Readers sticking with RSS updates should point your feed readers to our new Finance Trends feedburner .   Thank you to all of our loyal readers who have been with us since the early days. Exciting stuff to come in the weeks ahead! As a quick reminder, you can subscribe to our free email list to receive the Finance Trends Newsletter . You'll receive email updates about once every 4-8 weeks (about 2-3 times per quarter).  Stay up to date with our real-time insights and updates on Twitter .