Five theories explaining why on the art market can not collapse
I found you article, I think, quite interesting. Title it, as you can see, very optimistic, but do not hurry to rejoice - this is known as one session of black magic and its exposure))
It was published in an American magazine, but unfortunately I lost her address, and no matter how I tried - can not find it. So you have to do without guidance publications.
The five theories explaining why on the art market can not collapse
Walk down Chelsea - and you'll hear the sound of money in the air. GOD galleries, such as Marx, Matthew (Matthew Marks) and Uildenstayn Pace (Pace Wildenstein) increased their empire by opening additional vystvochnye halls. A young and aggressive dealers - Leo Koenig (Leo Koenig) and Casey Kaplan (Casey Kaplan) - ripe to move to more prestigious and spacious rooms. And nearly every weekend somebody's former hired art director opens opens his own gallery.
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There is all this not only in Chelsea. All red-hot contemporary art market is white hot. Playing on the spirit of competition in today's collectors, they were offered three types of passes on inauguration «Armory Show»: a complimentary ticket for the $ 1000 given the right to attend the exhibition and sale at the outset, with 17.00; ticket for $ 500 they passed for half an hour later, at 17.30, for 250 dollars they could go to the exhibition, starting from 19.00 hours. But 17.00 displays the most most popular dealers were already crammed with dozens of collectors and art critics, who owners of stands were invited to the very opening, held at noon. Many of the most famous artists have already been either sold or reserved (some have even set aside twice).
The same thing happened in last year's auction bidding: the first works of postwar and contemporary art have shown themselves full-fledged competitors historically dominant trading impressionism and modernism. Certainly, b of Most of the proceeds from the auction had been received from the sale of works clearly recognized artists such as Roy Lichtenstein, Andy Warhol and Willem de Kooning. But prices for "young" are growing even faster. For example, in October last year, using the fact that collectors from different countries gathered at the fair «Frieze Art Fair», Christie's managed to organize an event dedicated to contemporary art. Two paintings by the representatives of the Leipzig school, Tim Eitel and Matthias Vayshera, has already caused a sensation at the pre-order now.
A few years ago, before the Leipzig School has become a cult phenomenon, such work could be bought for only 4000 dollars, and to «Frieze Art Fair», none of these artists have never exhibited at the auctions. Sale of Eitel for 212,000 dollars - three times higher than the preliminary assessment - has caused some surprise. But the highlight of trading was Vaysher: estimated at 31,000 - 38,000 dollars, his painting went for 370,000 dollars, becoming the initial measure of the price level to an already overheated market of contemporary art.
In the ecstasy of such a space rising prices, active collectors and dealers prey in exotic countries (currently China and Poland are the favorites) and at local art schools for the new names. In January, the venerable dealer Jack Tilton gave in his gallery on the Upper East Side of Manhattan exhibition of the works of students receiving a master's degree at Yale, Columbia and Hanterskom universities. Sales were very successful, despite the apparently high prices and the fact that the works were created by students.
Such an atmosphere is too familiar to Mark Glimcheru, president of Pace Gallery Uildenshstayn and dealer in second generation. "Like all of society, art art market is cyclical," - he explains. "There are times when people have money that is not basic necessities. Art Market rises as demand increases. Collectors vie with each other. The prices of works of art are growing faster. More and more young artists are making it into the group's most expensive . The market is thriving. The market encompasses a sense of euphoria. And suddenly there comes chaos, and everything begins to fall. " Such pessimism expressed publicly, is very rare among the dealers, because if the art itself is based on an image, idea or object, then the trade is based on the art of words - written and oral statements designed to entice buyers and convince them to pay for its acquisition of more and more . Some words are pronounced only in the back rooms of galleries, wherever placed in quarantine, the commercial part of gallery business, that it is not dirtied in the halls of art galleries. Here are three words that are pronounced with all the B of have greater disgust - correction, reduction, collapse.
Of course, these words are never used in most of the press, devoted to contemporary art markets. Instead, dealers recite the mantra of the market: the demand, supported by the globalization of the market, is growing. The fall of the New Economy and the catastrophe of September 11 led only to a small pause in the growth of the market. Art has become a luxury. New millionaires and billionaires need it for viability. But there, in the back room, do not always think so optimistic. Even Zach Fejer, a star among the dealers of his generation, in its 27 years was prepared for the worst. Despite its success. Before you decide to implement any financial investment, Fejer develops all economic hypotheses with brutal criteria. "I need to know what would happen if sales decrease by 50%" - he explains. "What will happen if they dropped by 80%?"
In the art world is a clear trait separates those who survived the last crash in the early 90's, and those who had not seen him. "The current market is supported by collectors, who do not know that such a correction," - says art adviser Darlene Lutz, rabotayuschay in this market with the 80-ies. Generations that lived through it, looking at everything that happens in disbelief. But these newcomers, they - like teenagers who do not use contraception, believing that they are something never get pregnant. And then - oh, oh -- What happened? "
But the history of the art market crashes, as well as contraceptives, is not a secret. Even the casual researcher of the history of world art can tell about the collapse of Soho in the early 90's - the stars of world art, Julian Schnabel, Sandro Kia and Enzo Kuchchi not find a buyer, the legions of the most prestigious galleries, finally closed its doors, and general sense of despair and fear gripped the entire quarter . In 1993, critic for The New York Times NR Kleynfild analyzed the level of desperation dealers Soho. Bargaining, as if he bought a used car, every time he gets 20%discount - such discounts now available only to very large collectors and museums. In the gallery of Leo Castelli, he was offered 270,000 dollars for Lichtenstein sculpture, a year ago has cost $ 400,000.
Not surprisingly, most people do not want to think about the possibility of such a catastrophe in Chelsea. "Over the past hundred years, prices for contemporary art is constantly overestimated in comparison with the works of old masters, although there is no guarantee that if you buy the work for $ 200,000, it will be anything worth fifteen years", - said Daniella Luxembourg , a former auctioneer, who in 2004 founded the Geneva ArtVest investment firm specializing in the art. "Everything suggests that market growth will continue. And when he ceases to grow, everyone will be shocked. And still later, everyone will be screaming:" I told you that this can not go! "
The sages of the art market loudly predicting the market a long period of prosperity, explaining that at this time in front of us - a steady, but not swollen bladder. These predictions are refuted uymoy explanations, each of which sounds logical. Here's an approximate description of some of them:
THE THEORY OF MARKET Unbreakable number 1
Enlarged world of art
All ideas about the invulnerability of the market in varying degrees derived from a single fact: the history of the art world has never been so great as now. No one puts this fact into question - from the 1990 world market has increased twenty-fold. "Two years ago, all I know dealers are preparing for a correction," - says one American collector who wished to remain anonymous. "Now they say:" The market is growing, and the correction will not. "Indeed, in recent years, a new class of people who purchase works of art. Maybe it's the biggest economic shift is the same as that which occurred in the postwar period when America caught the Art Market in Paris. But when they say that due to this shift, the collapse is impossible, I remember the New Economy 1999. "
The analogy just seems strained. Just as the capitalization of the campaigns of the New Economy was a disproportionately exaggerated in relation to their real value, fashionable young artists can quickly reach the level of prices of artists who have behind them the experience of many years and has long proved its worth. "Today's buyers mostly ill-informed" - says veteran consultant Thea Uestreych. "People get together in groups and syndicates, and then bought a work of art, galloping running through the fairs and a cursory glance at the pictures, but this is the surest way to make a mistake. Artworks they choose on the basis that their ears to hear, not what they see them eyes, and decide to buy them on the basis of market trends, and not in accordance with the criteria of art history. "
When I presented the case of the internal stability of the market by the media in Los Angeles, Dean Valentine, from surprise, he loses his voice. "The assertion that the fast-growing markets are more stable, economically quite wrong" - he says. "Just now, a significant number of buyers agree to pay more for a work of art, which distorts the scale of values.
THE THEORY OF MARKET Unbreakable number 2
The world of art has become a global
Historically, the major collectors of contemporary art have lived in Western Europe and the U.S. Now he's buying fans from around the world - from Brazil (steel magnate Bernardo Paz), from Mexico (heir to the empire, producing juices, Euhnio Lopez) and South Korea (wholesaler C and Kim) Among the art dealers constantly discussed, where will the next major group of collectors - of course, from Russia and China, but do not forget neither India, nor of the various Arab Emirates.
Head of the department of contemporary art at Sotheby's Tobias Meyer recently told New Yorker magazine that the emergence of buyers means that the market growth has only just begun. History says: "The secret is that this market is international." In 1988 the president of Christie's, John Floyd told Newsweek magazine: "When the dollar falls, yen and mark are raised. Less than two years after this statement of work as the new stars (Schnabel), and the recognized masters of the past (Clifford Steele) could not find a buyer even at auctions.
And though since then the art world irrevocably entered the era of globalization, not necessarily that it is a guarantee this stability. No one knows how deep saturability of new markets. How many collectors of contemporary art will set up private museums and reservists to fill in where all the walls of their houses will be bought immi hung with paintings? "If European and U.S. demand will weaken, China, Japan, Russia and others will not be able to keep the market at current levels - says Anders Petterson, a former treder in the bond market, and now - the owner of London-based company ArtTactic, specializing in the analysis of the art market.
THE THEORY OF MARKET Unbreakable number 3
Art as Investment
Over the past few years a large number of articles in which he stated that works of art are a component of any sophisticated investor's portfolio. Many of these articles are based on a study prevedennom economist Michael Moses and Mei Dzhianping from the University of New York. Using the Case-Shiller methodology, originally developed for understanding the real estate market, the scientists traced the fate of works of art sold at auction in New York. It was found that the works of art regularly generate revenues slightly below the stock market index S & P 500, but higher than the income from any type of bonds.
The study was published in the American Economic Journal "(The American Economic Review), and its conclusions have spread like fire. "Madhouse" - says Moses. "Before this study, all that we knew was out of legends, but this work of art put on a par with other financial instruments. This type of investment, representing hundreds of billions of dollars, largely operates as a real estate". Recently, Moses Valley from teaching to devote himself to Beautiful Asset Advisors - a campaign that specializes in the financial annex of the study Mei-Moses.
Of course, to the researchers distributed criticism. They criticized the fact that the data do not include information on the unsold works, as well as "hidden" costs - insurance and transportation, not to mention the grandiose commissions auction houses. But in fact most of the criticism is not aimed at the study, and the circumstances which are beyond the control of scientists: it is negligence, which is often, and journalists, and the art world itself in relation to any numbers, falling into their hands - in this case, lack of rigor in the use of Mei-Moses index to prove that works of art, in principle, are a reliable investment. "As an economist I do not care" - Moses said - "because I absolutely do not know anything about the situation at the out-of-auction market, prices are not available to researchers.
Worse: the conclusions of the market of contemporary art, which allows us to formulate the use of Mei-Moses index, investors do not promise anything good. Seeing how much buyers are focused on contemporary art, the researchers examined the results of the London auctions and a fairly complete database to analyze the market of the postwar and contemporary art. This market is much more like a small company of the New Economy than the S & P 500. Return on investment can be very high and very high but volatile. In other words, this casino.
THE THEORY OF MARKET Unbreakable number 4
Diversification as a safety valve
This theory is more credible, because it does not predict a permanent boom. Its basis is a diversified market that resulted from the growing number of galleries and collectors, as well as market penetration of art forms that had previously remained outside of it. First of all, this video and photography. By this logic, the art market is not like a monolithic sector (eg, the oil market), but is the sector with the internal diversification (energy sector, including all sources - from oil and coal to attempts to use solar energy).
This paradigm is constantly exposed to a mini-correction, depending on the changing popularity of genres. Today's example - artists of the Leipzig school, catching championship at the Dusseldorf Academy of many photographers such as Andreas Gursky and Helguera Esser. In the 90 years without their work could not do no self-respecting art fair. And now? Not really. Similarly, the noise died down around the Japanese artists. There was a time when every season of auctions held on the twenty works Murakami and Naras - Lutz says. And suddenly they became much smaller.
Can cooling market to a certain sector is the safety valve, periodically producing enough steam and not giving the bubble burst? "In no case - says Moses. A rising tide lifts all boats, but the tsunami drowns everything too. Look at the stocks and bonds, with their enormous diversification. When NASDAQ collapsed, there are one or two winners - and lots of losers. Has the art market is somewhat more stable due to the greater diversity? Certainly. But no chance that the total collapse will not take place because of diversification, no.
THE THEORY OF MARKET Unbreakable number 5
Japanese
Last - and least logical of the theories - the theory of yellow fever. It lies in the fact that the latest boom in the art market due to Japanese investors buying fever, and a subsequent drop in the market - its sudden disappearance due to the deafening crash of real estate market in Japan. Now, when their behavior has changed, the market is safe. This theory ignores the fact that in the 80 years the Japanese were buying Impressionist, not stars Soho. And in any case, the market is full of big money, not connected with Japan. For example, only the last three days, two major art consultant told me: "The owners of hedge funds - are the new Japanese."
"Right now, many people list the reasons for which the current situation differs from the last boom. But the functioning of the art market is not changing - the artist creates a work, we hang them on the gallery, and people buy them" - says Glimcher.
Predict when the market slows down, it is impossible, but it is safe to say that when prices start to soar at speeds of missiles, and the number of first-time buyers will decrease, the situation becomes explosive.
When a discussion starts disaster scenarios of developments on the art market, its direct participants always begin with a hypothesis of failed trades in both Christie's and Sotheby's. These auctions, once to sale not earlier than ten years after their creation, is now exhibiting works of emerging from the artist's studio three or four years ago. "Perception of reality is more important than reality itself" - says one expert of the art market, stressing that the auctions still represent a very small part of the activities on the market today - "If it sells for less-than-expected price, all the nervous people say, "Good God! - All bursting at the seams! ".
In part this is because in contrast to the weak sales of the artist at fairs and in galleries, which are easy to disguise, the failure of the artist at auction is very obvious. "I was scared herd instinct among collectors" - says Amir Shariat, an expert on international capital markets and one of the most active young collectors in London. "And I ask myself the question - whether the unsuccessful sale at an auction of several famous artists to provoke a collapse?"
in terms of investment capital of art is extremely illiquid. People do not realize that in the case of the collapse of "illiquidity" does not mean "lowest price". This term refers to "the inability to sell at whatever it costs".
If the market starts to fall, we can assume that by the day it will be very fast, because the lightning - defining feature of the contemporary art world. At present I know no more than three or four collectors are able to resist buying a painting which had seen only in the format J-PEG - said Javier Perez, the owner of galleries in Los Angeles and Berlin. At one time, my grandfather and grandmother had reserved Picasso, but did not dare to buy it until six months later did not go to Geneva and did not look work. Now, with the ever growing market, decisions must be made very quickly, but it means that the market collapse will also be a lightning-quick.
At the first sign of a serious market downturn pure speculators immediately disappear at the same time come out of the game legions of private dealers and consultants, which are so far removed from the cream of the commission of a bustling market. "In the late 80-ies on the market was a lot of private dealers, but suddenly all these people disappeared somewhere" - recalls a former stockbroker and now a London dealer on the art market Kenny Schechter. "I know some of them - some were gemologists, others have shifted to the real estate market. The most important issue in the case of failure, it is - how soon will leave the speculators?" The mentality of the market says - "cut your losses". But most of the speculators will find that can not sell their work - either through the galleries, suffering from a lack of cash, or at auctions, preferring not to take unsaleable works. "From the standpoint of investment art market remains completely opaque, too prone to taste and fashion and extremely illiquid - the Sharia states. People do not realize that in the case of collapse, "illiquidity" does not mean "lowest price". This term refers to "the inability to sell at whatever it costs.
It is known that "snimateli cream" come out of the game immediately, but the situation with other players is much less clear. "It will be the same as that in the early 90's, but at a much more ambitious level, because ever since the world of art has expanded - predsazyvaet Uestreych. Glimcher echoed him without a quiver in his voice. "Good artists and good picture disengage the side. Vykorchuyut the underdog, like weeds, but unfortunately, the same fate befall some of the strongest.
All these expensive new gallery in Chelsea, renting luxurious accommodations for the monstrous money, can quickly go. In the early 90's it was the first to shut down dealers who recently greatly expanded its exhibition space. Much will depend on the reputation of the gallery for serious collectors. "When fashion changes, the curators of the museums first clean the work to the store" - explains the Berlin dealer Matthias Arndt. "But collectors continue to buy and display the artists whose work they personally find interesting. Thus, the new galleries, which are so greatly complicate the lives of collectors now, may suffer more than anyone else later."
Galleries, which will survive, expect radical changes. The reason for this - a taboo art market to reduce the already established prices for the work of each artist: these prices are justified by the alleged place of the artist in the history of art, not a passing fashion market, which means that their decline can not be explained by definition. The market has created a mechanism to find a way out of this situation - is the period when the artists are relatively painless transition to one gallery to another, and prices adjust to new market conditions.
What artists will be in the best position in the case of correction, compression or falling market? We can only speculate about this, and no one answer from below should not be considered as investment advice. But it is difficult to resist, not to offer a few hypotheses.
"Personally, I have compiled a list of twenty artists whose work I believe will survive the collapse" - said the young London-based private dealer Nicholas Framm, who often participates in the auction bid, which represented the most expensive contemporary artists. "But from my list, I am fully confident only in the work of five to eight artists." Although Framm not going to release his list, he made it to the logic of traditional experience. Only artists whose work is superficially attractive and relevant in the history of art through the technical or conceptual innovation, survive the crash. "These guys from the hedge funds are not particularly versed in the art. Of course, they buy a lot of beautiful pictures - said Valentine." But look at the stars 80 years who has maintained its value? Gober. Koons. Maybe Cindy Sherman. Perhaps Richard Prince. "
Uestreych bought the work of these four artists at an early stage. "The big idea, thus longevity career, because it makes art enriching and rewarding," - she said. "I never trust the phenomena that appear in large numbers, because the market learns the most radical ideas of the slowest. In today's fashionable circle of artists, she puts on such rational brain of artists such as Simon Starling, Keith Tyson and Jan De Cock, who are constantly playing with the boundary between art and other areas such as science and architecture.
By the same logic should be in good shape of the recently deceased German artist Martin Kippenberger - the sensitive artist, who was until recently the market is not especially recognized - but it certainly is a key figure for the European modern art, like Joseph Beuys in the previous generation. Similarly, among photographers, Thomas Ruff is more reliable than Andreas Gursky, because Raf persisted beyond the boundaries of his medium (and also because the name is inextricably linked with the Gursky photo-boom of the late 90's).
It is hard to predict what will happen to the works of Damien Hirst On the one hand, he flooded the market with his works, mostly produced by his assistants, and the prices of these works have reached astronomical levels. In addition, it is difficult to find a critic who would be willing to openly praise his recent work. On the other hand, is the leader of "Young British Artists" (Young British Artists), inherited from Warhol's status of "icon" of the art world, so that it can not be discounted. Similarly, the situation seems ustroychivym Murka - not so much because of the quality of his art, but because of its role as the representative of Japan on the world market. "I think that Murakami - a larger figure than the Hurst" - said Valentine - "because, just as Warhol, Koons took the ideas and changed our outlook on art, Murakami has used the idea of Koons and went even further. And the objects of his attractive.
Miner, closely describes the work of some artists, tend to believe that the work of Richard Artshvagera and John Baldessari succumb to the case of recession wound. "Their large-format paintings can still be bought for U.S. $ 100000-200000" - he says - "against the background of the current market, they clearly underestimated.
He is afraid of artists whose work is rapidly recruited prices at auctions - eg John Karrina and Elizabeth Peyton. "I'm not sure that even now, these prices take hold" - he says - or look at the Cicely Brown, she a talented artist and nice person, but for me it works - just an imitation of de Kooning. " Of course, it is well known that miners likes to shock the market such statements, for which he was and loved and hated. But, asking not to be named, one dealer in the galleries of high class lists my current darlings of the market, disparaging comments about many of them. "Marlene Dumas? - No. John Karrin? No. Chris Ofili? - No. Elizabeth Peyton? - This is interesting, but not at current prices.." Peter Doig? - No. Gursky? - In any case.
Of course, opinions differ. "I am ready to prove that Karin - outstanding American artist" - says Valentine. "I think he is at least as deep as some modern conceptualists. But I'm extremely skeptical of the Leipzig school. Most of the curators of museums do not take them seriously." Shakhtar also skeptical of the Leipzig School of painters: "I do not understand how these artists can meet the expectations created by the astronomical prices for their work."
I have a whole stack of excellent work and is full of cash, and I can not wait for these idiots have disappeared from the market.
Even the chief dealer to sell works Leipzig School Gerd Harry Libke recognizes the existence of the problem. "We saw what happened with the works of artists such as Schnabel, and not particularly raise prices in the gallery" - he explains. But the secondary market - it is quite another matter. As soon as the demand becomes too high, even for such mothers to the dealer, as Libke, easy temper enthusiasm of its customers collectors.
Many of the art market will suffer if he is braking, but the complete cessation of the sale will only vsemirnyya disaster. In the early 90-ies of some artists continued to be sold at auction for record prices. One of the largest contributors to the music world, David Geffen, has collected most of his collection, considered one of the best collections of American art at this time. "I have a whole stack of excellent work and is full of cash" - said another collector world level - "I can not wait for these idiots have disappeared from the market." Many veterans of the art world say they are tired of the market, where power belongs to the seller. "Competing for the work in this market with people who buy art for the sake of social status or for financial reasons, it is extremely unpleasant" - explains Valentine. "It would be much better if the market has leveled off. Why Mathias Vaysher should be sold for the same price that Richter?".
Even Glimcher, the seller in the market sellers, a little tired of this situation. "Last summer, in the VIP Lounge at Art Basel fair, I heard the young dealers, who have had booths at the fair, said that they will do when the market collapse - one would like to become a Hollywood prodyuserom, another - the agent and etc. " - Said Glimcher, along with the fury and humor. I turned to him and said: "good riddance!" Let's shove off! "
Yes, the art market shrinks, but it will never become so narrow, which was in the early 90's or even during the boom of the late 80-ies. The reason is that if the market - it is bubbly, it lives inside the nucleus of higher density, and this nucleus also increases. It consists of people, collectors all my life, and institutions whose funds do not depend on external factors. But while the bubble will not burst, it is difficult to determine the size of the nucleus.
At a time when the curse monotony Armor Show (Armory Show) and the Whitney Biennial (Whitney Biennial) has become the favorite pastime of New York salons, so comforting thought: Stories in a bad market has always produced the best art, because art is less temptation to work for the market. In addition, they are dealing only with collectors and galleries who are trying to survive tough times. Fejer, explains: "In 1999 when I started, I learned to contain a gallery at all without the money. It is very difficult, but possible. At the very least I've always had the opportunity to sell work at home".
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For interior decoration agree ..
If the collection .. here other approaches and rules, but about this several times already written, I will not be repeated ..
14.07.2008, 13:39
Five theories explaining why on the art market can not collapse
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