Art: profits can be sketchy
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October 23, 1996: 4:53 p.m. ET
The biggest return on investments in art may be its beauty, not its worth
From Contributing Editor William S. Rukeyser
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NEW YORK (CNNfn) -- The art market had a productive run in the 1980s, and some investors believe this particular market is due for a resurgence. However, the big picture for many art investors is simply not pretty.
"How good an investment is art? In general, bad," said John Train, the author of The Craft of Investing, money manager, and art connoisseur.
Train refers to a study that included more than 300 famous painters and 1,305 of their works which were purchased during the past three centuries and held for at least 20 years.
"The real return net of inflation on that whole kit was one and a half percent compounded; over a similar period, government bonds have returned slightly higher than three percent." (213K WAV) or (213 AIF)
But that's not even the worst of it. Train stated that the return on an art investment could be even lower if the investor happens to select artists who are the current "best artists," rather than those with "staying power."
He listed a number of artists to illustrate his point: all were recipients of the prestigious Rome prize a century ago, and their works brought in top-dollar prices -- now, they are mostly forgotten.(2.3MB QuickTime Movie)
In today's market, some bargain hunters are focusing on certain crafts that are becoming more accepted as art forms, like tile from Turkey, and currently out-of-fashion styles like so-called WPA paintings from the 1930s.
Whatever art form you select, you may be able to improve the return on your investment by haggling on the price of the work before you purchase it.
According to Mitchell Algus, owner of the Mitchell Algus Gallery in New York, "You can argue prices very well. Don't be put off -- if you ask what the price is and they say $5,000, chances are you can get the painting for less."(213 WAV) or (213 AIF)
And don't be in a hurry to sell.
As Train quipped, the payoff for art investments has to be that you love the stuff, because living with it may just be your sole reward.
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