I have always loved those “Dogs Playing Poker,” paintings that are usually bought by people who love kitschy art. “Dogs Playing Poker,” were actually a series of 18 paintings drawn by C.W. Coolidge for an advertising campaign at the dawn of the 20th century. You could easily buy a replica or reprint for a few bucks to hang in a mancave, or, as a conversation starter in your living room.
The point is that for many years, I never understood what constituted, “art,” relative to another painting which may be, “kitsch.”. However, as with most things, beauty and art is in the eye of the paying beholder. Two anonymous people paid over $600,000 for three of the original 18 “Dogs Playing Poker,” paintings by Coolidge. Who knew kitsch was so high end?
Think that is a lot of money? In May 2019, someone paid $91 million for a metallic, mirror-reflective sculpture that resembles an Avant Garde representation of the Energizer Bunny. It’s a sculpture called, “Rabbit,” by artist Jeff Koons. It’s the most money ever paid for a work of art created by a living artist. I don’t understand how, “Rabbit,” represents high art, yet, “Dogs Playing Poker,” represents high kitsch. I am no art critic.
What I am learning is that investing in art, like you would in stocks or real estate, may not be the best financial bet. Also, reselling art to break even on an investment is basically impossible. The secondary market is bloated with people trying to do the same thing.
High Risk Investment with Improbable Returns
Most beginner art collectors, outside of the 1% of people with unfathomable wealth, usually buy art in the $5,000 to $10,000 cost range. The value of art is based on current social trends, the buying trends of the uber-wealthy, and being in-the-know about the latest art talents. Or, the current spiking value of art belonging to a deceased artist. Most artists only become famous, and their art valuable, posthumously.
The point is the value of “art,” is usually dictated by the tastes of one-percenters. Also, there is an obscenely small group of living artists whose works are deemed valuable only by the wealthy. In other words, a very small, elite group of art collectors vie for the works of a small group of artists. You have to know what the wealthy consider valuable relative to art; and even then, tastes are fickle.
The High Cost of Reselling
OK. Now you have a $5,000 or $10,000 painting. You realize that it may not accrue in value unless a small group of Scrooge McDuck-type collectors arbitrarily decide its value. So, that means that there is a lot of valuable art out there sitting in expensive, temperature-controlled storage units waiting to be sold. The secondary market is so full of people with valuable paintings no one else wants to buy that it can take years or decades for a few valuable paintings to sell.
Only about 0.05% of paintings are ever resold on the secondary market. Most people need the help of a broker or auction house to gain access to rich buyers. So, you can count on a broker or auction house commanding as much as 50% commission on any sale.
No Guarantees in Art Investment
If you are insistent in investing in art, keep in mind that its inherent value is dependent on factors you can never control or predict. Like the art tastes of super-rich people, social trends, and the whims of the secondary market. There are also many costs related to maintenance, taxes, and insurance to consider. You may better offer investing in reprints of kitschy art for decorative purposes. Investing in fine art for hopes of a fat return later on is a big gamble likely not to pay off.
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Allen Francis was an academic advisor, librarian, and college adjunct for many years with no money, no financial literacy, and no responsibility when he had money. To him, the phrase “personal finance,” contains the power that anyone has to grow their own wealth. Allen is an advocate of best personal financial practices including focusing on your needs instead of your wants, asking for help when you need it, saving and investing in your own small business.