Art as an object of investment and speculation

Art as an object of investment and speculation
(Computer translation from English)

According to the 1997 Princeton University WordNet 1,6 dictionary definition of conditions of investment and speculation are as follows:
Investments:
`Law and practice of purchasing land, commodities, stocks, etc., in anticipation of selling at a higher price, or selling in hopes to buy at a lower price, trading on anticipated fluctuations in prices, unlike trade in which the expected profit is difference between retail and wholesale prices, or the difference in prices in different markets.
Item value acquired income or capital. '
Speculation is:
`The contribution, which is very risky but could yield great profits; involved in risky business transactions on the chance of quick or considerable profit. '
In accordance with these definitions speculation just one form of investment, but with great risk. Further separation of these two terms, consider speculation as a direct, quickly resold for profit, when the buyer is not related to profitability, stability, long-term prognosis. Investment, on the other hand is a long-term profitable tool, based on the theory, a fairly safe and very high yields, but with capital gains.
"The statement that" art is a good investment 'usually means' Some works of art were very profitable speculation "(Chanin, 1990, p.79). This quotation reflects the meaning of the above definitions rather briefly.
According to Hughes, "... the idea of using art as a form of investment was not disclosed in the eighteenth century, and even barely discussed, except for a few pictures, dealers, in the nineteenth" (Hughes, 1990, p.392). This statement shows the relative freshness of the idea of investing in art and its relationship with the emergence of the modern art market. Artificially created trust, as mentioned above, brought public opinion to this level of faith. To the extent that in 1970 Eagle advised, "Investing in art for the future. It is virtually inflation proof, and the total cost of some parts has increased 2400 percent since 1951 - compared with the fourfold increase in stock market prices" (Eagle, 1970 , back page). To some extent there
20 elements of truth in that statement, some works of art was such growth rates and even more. Alternatives to this ever, and does not occur on a regular basis for every artist in the 1980's worldwide recession, art prices have fallen sharply in a short period of time.
Attempts to invest in art on a grand scale were made, not always satisfactory initially. There is an example of the British Rail Pension Fund, which decided in 1974 to invest long-term works of art, purchased specifically for profit. While the meeting criticized the decision to diversify its investment portfolio, investing about 40 million pounds sterling, British Rail retained Sotheby's as a consultant to the Fund. In 1980 fund has sold about 1000 items totaling $ 24 million, returning about 11%per annum. But in April 1989, the Fund sold 25 Impressionist and modern artworks at Sotheby's auction sale and realized US65.58 $ million, representing 20%annual return. Maurice Stonefrost, executive director of the foundation, said: "Impressionist and Modern pictures was the best investment I had in my book." (Chanin, 1990 p.83). While the Impressionist and modern works would eventually make money for the Pension Fund, they are only one fragment of their total portfolio. Watson makes this clear, stating that "... with net income of equity invested in the stock market, only a few sectors of the arts do better than conventional investments' (Watson, 1992, p.426).
According to many art dealers that the main difference between investing in art, and investments in securities (shares) in the case of market collapse that: "Actions ... Once dead, gone forever. All you have to look at the left of the certificate ... - a small consolation compared to the picture hanging on the wall. "(McLean, 1995, p.4) However, there are some fundamental differences in trading on the market and the art market.
The main difference between the share market and the art market:
• art market is divided into "a series of several small fragmented markets under the influence of such factors are not quantifiable, like fashion, the degree of restoration and aesthetic choice." (Chanin, 1990, p.77). There are significant differences between the markets for paintings and prints, contemporary art and paintings by old masters. In any case, prices for each specific issue.
• Hard to standardize - works of art are unique and virtually unquantifiable.
• Consequently, the impossibility of standardization, there is no reliable sources of support for investment in the arts.
21 • The Art of possession carries some costs (eg, restoration, framing, insurance, freight, etc.) that are irrelevant to the action.
• The art has no geographical boundaries (people tend to buy the art of their country, and often underestimate the foreign art), when the shares have equal value at the international level.
• There is often a significant financial loss from the commission dealers or auctions, the sale of paintings (by 10-50%), but no sale no money can be obtained (very rarely money can be loaned to the security of art, but not a high percentage of real prices).
• Art does not generate a regular income in the form of annual income, as opposed to shares.
• There are many rights concerning the features (tax deductions, the loss of deductions, tax credits, etc.), which differ from investments in shares and art investment.
"Art as an investment is a delusion that lies on false premises, as an aesthetic and financial. The Art of the issue judgments. The word" art "is a neutral value" (Chanin, 1990, p.79). This statement is in direct correlation with the concept of Marx's "Nothing can have value without being subject to utility" (Marx, 1867), which was mentioned in the chapter on `the commodification of art, and it appears that Marx did not contradict himself.
Art, however, proved unsuitable as a financial tool, not only because of illiquidity, but because they simply do not have real art Around "(Feigen, 2000, p.114). In the pre-crash 1980's, when art and stock markets were booming, a lot of `art 'with little or no aesthetic or art historical quality manufactured and sold. Not everyone in oil painting is the subject of art, sometimes it is only the second side of the canvas, which are less than completely new. Quality standards were pushed to the point of barely existing.
The above clearly explain why traders almost do not recommend buying art as an investment but also willing to deliver to the buyer, many 'realistic' data published in many `reliable 'sources, as the art auction Records, Art Auction indexes, price guides, etc.
There is a huge gap between the collection and the art of investing in art. For the pure collector, the price appreciation of art is one of the less important benefits and pleasures.
Watson states bluntly: "Forget 'investing' in art. If money is all that you are interested, look at the art market, as market speculators's. Wait for the boom, and then act quickly. This may not be very attractive position to take, morally or aesthetically, but is that evidence suggests "
22 (Watson, 1992, p.432). Thus, according to Watson, there is money to be on the art market, but it should not have any illusions.
However, money can be made on the art market. Not to mention the constant growth (sometimes difficult to predict how long, to what extent, and often depends on the mode) the price of work or any other artist, there are several ways to earn money. Very often the misfortunes of others.
To earn profits, need to buy:
against the fashion in recession
Auction sleepers, Post auction sale, real estate auctions
from inexperienced sellers, the lack of knowledge (or the seller in Squeeze desperate to sell)
sometimes results.
Speculator, from angry Keeton definition is: "... a person who buys the painting for the sole purpose of sale [is it art dealer]. He or she is usually what I call the dealer` yard ', unreliable Nighter, unprofessional `professional 'or' fast-Buck operator ', and, unfortunately, many of them in the field of art." (Keeton, 1986, p.30). He also said that `the speculators do not care, they see the client again, and often their Rip Off by selling poor quality pictures at very high prices.
This may well be Keeton opinion, but it is not a true statement. Work on the art market of New Zealand thus virtually impossible (Keeton, a New Zealander should understand this). Art market is so small that all market participants are immediately aware of any `Funny 'transactions, and this" operator "goes out of business once and virtually forever. So-called `speculator must have a thorough knowledge of the local art market, with a` good eye for art, and top-selling abilities. "Speculators" are often not only financial benefits, but the excitement of hunting, and their attempts to find a real nugget in tons of garbage. In this framework, to open such a nugget they often sifting through mountains and pointless pieces of poor quality, do some service to the community with their more spectacular finds.
23 Keeton emphasizes the difference between art dealer and art speculator: "speculator said that he is a collector and dealer will tell you my profession go. (Keeton, 1986, p.31). This, however, does not explain the differences. There is a fine line between business and speculation. None of the dealers refused to be quickly and very lucrative deal. Not all the art sold by dealers are of high quality. And again, the standard of quality, above all, a matter of taste.
The motto of `buy cheap, sell dear" are accepted in any business, it is in art.
In conclusion, we recognize that it is very difficult to put a clear boundary between art and the art of investment or speculation among art dealer and art speculator. All participants in the shifting sales and, hopefully, profit from the sale of art.
Research shows that art does not always serve as a good investment, but can sometimes yield good dividends in the art speculators.