Investing in crisis

[LCR]

This is the material placed on the site Almanar dedicated to investments in the sector of art.
http://www.almanart.com/investir-en-...omique.html#90


Investing in times of crisis

How much impact the crisis on the art market? For how long reigned in this crisis?

Each time the occurrence of economic crisis there is still the same question: "Does the crisis will affect the art market and the affect if, when, or the market behaves independently of the real economy?"

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So, in late 2007, all remembered the crisis of 1990. When, after three years of insane inflation rates on the art of suddenly collapsed. Choby try to understand what awaits us, you need to go back and analyze the crisis in 1990.

As in 1990. Indicators show that the current situation is likely to be protracted and last at least 2-4 years, even if mondializatsiya somewhat mitigates the crisis. Another hypothesis, which protects the newspaper "Les Echos" predicts offensive stagflation, as happened in 1980 as a result of the oil crisis in 1979
So, instead of stagflation depression? It vozmozzhno, since the summer of 2008 there is a decline in prices for petroleum products, reducing inflation, the rise of the dollar - the elements that allow some moderate pessimism.

But the main question that occupies us - this is the behavior of the art market

The financial problems became apparent in late 2007 and grew into an economic crisis, can not have a significant impact on the art market. What elements are visible today?

Will the current crisis to develop to the same laws that the crisis in 1990?

Before attempting to formulate a hypothesis, will investigate what happened in 1990

Arguments in favor of the answer:

• In a moment of crisis in 1990 the structure of the art market is fundamentally different from the present: mondializatsiya was still at its initial stage, and therefore, the compensation between national economic systems did not function;
  
• Modern Art was interested in only a very small connoisseurs, whereas now it attracts a huge number of buyers from all over the developed world;
  
• The speculative part of the art market because of lack of cash in the overwhelming majority financed by bank loans, now is the time of this shortage is not observed.

Arguments in favor of the answer:

• As depression and stagflation lead to loss of purchasing sposobyunosti;
  
• The most affected sectors will be the average prices, ie the sector, which were particularly active, enlightened collectors are sensitive not only and not to the investment aspect of art, much to its aesthetic component, as they will be forced to exercise for all purchases more otsorozhnost and store products, are already in their collections, respectively, the volume of transactions greatly diminished, and most galleries and auction of medium size can not help but feel not imagine the results of the deceleration
  
• Branch of the most expensive works of art will also be affected: many of the American and Russian collectors often make their acquisitions in Europe this fall, lost their status, so the market will only buyers from Asia and, to some extent, from Europe .
  
• Section of the lowest prices suffer, of course, most, but on the art market its weight in financial terms is negligible.

Is it true that on the art market depression occurs with a delay?

Yes, the truth of this assertion has been tested in practice, a matter of fact, we can assume that it has already touched the art market:

Sales of works of art to October 2008 reached record prices, while all other sectors for a year were affected by the economic crisis;

This scheme repeats the scenario of 1990 - the stock market crash in 1989 affected the art market only after 2 years when the market suddenly collapsed, losing 40%. The fall was so dizzying that even now, 17 years, quote some of the artists have not yet reached the level of 1990; statistically average quotation was restored only in 2004 This fact podtverdzhdaetsya many participants in the secondary market, Mr. Arnould member of the director of the French gallery owners, notes that "the summer of 2008 the most extravagant prices for works of art before 1990 has not yet been achieved.

One reason for this delayed effect may be slowing the pace of transactions: when the indicator is "consumer sentiment" is lowered, buyers begin to exercise greater caution and reflection time increases, which reduces the number of transactions.

Is the art of "value-haven»?

Some argue that in troubled times, when the behavior of the exchange, real estate, commodities, currencies unpredictable prices for art sranitelno decrease slightly, as it plays the role of "asylum". However, between aspiration and reality is a difference that must be considered:

• Desired:
  
• In early 2008, the auction houses were too optimistic: the end of June 2008, Mr. Gene from Arkyurialya said that "in the auction room packed, unsold remains no more than 30-40%- the normal ratio. The fact that in 2007 these lots were not more than 10-20%, it was quite extraordinary, unprecedented event. " The results for the first semester of 2008 were positive. Galleries also did not know any anxiety - all rejoicing has been that demand for art. But in July 2008 was a pronounced tendency to delay purchases of works of art for the future.
  
• Valid:
  
• The art market professionals are deeply concerned about: from the end of 2007, gallery owners confidentially share their concerns with a reduction chasla potential buyers. There was also an increase in the number of unsold lots, as well as lowering of the provisional ratings will go up for auction poizvedeny. Most art fairs (except fair in Basel) in 2008 also took place far from brilliant.

Does the choice of the artist?

• Of course! Choice works, artist, artistic direction, the era have first-class value:
  
• Must distinguish between two categories: artists, quotation which flew like an arrow, and can just as quickly collapse, and artists, whose quotation has steadily grown without excess - these artists are not likely to lose in price. Guided by two basic principles of investment in the arts:
  
• Quality: artistically or historically significant works which appear on the market, always retain the quotation, but in an economic crisis required the ability to wait.
  
• Rarity: the less there is a high-quality works of the artist, so they are more expensive, on the contrary, all the edits work loses in value.

Tips: How protivopostoyat crisis?

1. Increase its level of acquisitions:
2. are required to distinguish the highest level of artistic works, which serves as a "safe haven" from the crisis of the middle and lower levels, which lost much in price.
   
3. Do not sell:
4. period 1990-1994 has taught us a brutal lesson: art collectors have found that sell their art, even at the purchase price is very difficult due to lack of customers (with the exception of historically significant works), the term "asylum" is only valid if you do not hurry up with sale.
   
5. Approach to shopping critically:
6. Take up 2 criteria: quality and rarity of works, in every segment succumb only real artistic value, the most recent, speculative work will fall. "Art Marketing" may even temporarily disappear.
   
7. Be alert, look for a successful occasion arises:
8. , subject to the above criteria, lowering the price of works of art gives the opportunity to make purchases for speculative purposes. It is necessary to obtain competent advice.
   
9. Do not spray:
10. for the last 5 years, contemporary art new competitors - a primitive imskusstvo, design (in 2008 and Tazhan and Arkyurial opened the specialized departments of design, there were galleries, selling only the design), comics, ceramics ... This spray, which generally hurt the art market, can reduce the coherence of the meeting.

Positive wrong side of the coin: it is possible that the art will regain the prestige lost to them for 6 years unbridled speculation.

[Wladzislaw]

So-so paper.

In the new issue of Russia's Forbes (November), several articles to the topic of art and the crisis. The overall mood - during the crisis need to buy

[Евгений]

Сообщение от Wladzislaw

during the crisis need to buy

Not at auctions .. It is desirable from the heirs, or first-hand.

[Wladzislaw]

Сообщение от Eugene

Not at auctions .. It is desirable from the heirs, or first-hand.

The main thing is not who, what and for how much. At a French auction where I bought the painting, not to sell stock de Vlaminck over 40 thousand, it is nothing and undoubted original. At Sotheby's, where there will be many "Russian", de Vlaminck at least 60 thousand is not rated. Money and tumble! ...