Brian Thuer is an entrepreneur based in West Chester, PA who writes about alternative investment vehicles. In other articles, Brian Thuer has mentioned the use of platforms like Masterworks, which allow people new to the art space to invest in world-class contemporary art. In the following article, Brian goes into the details of entering the world of art investing.
When the average person invests their money, they usually stick with stocks, mutual funds, real estate and, to a lesser extent, perhaps even precious metals. Brian Thuer explains that it is not uncommon in the upper echelons of society for patrons to invest in the arts. Unlike stocks and bonds, art rarely falters, instead increasing in value as artists become more well-known, respected, and sought-after.
Brian Thuer explains that art is not generally a short-term investment, but for those with the cash to spare and an eye for talent, with luck and the right timing, investing in art can be astronomically profitable. Let’s take a closer look at how art investing works and examine some of the finer details that make it such a niche investment market.
Is art worth it?
Ask that question to a Wall Street day trader and they’ll likely tell you that the risk doesn’t justify the reward. But what they really mean is that investing in art doesn’t pay off as quickly as a run on the stock market. But that’s not to say art is a bad investment. As Jay-Z put it in his 2017 hit single “The Story of OJ”:
“I bought some artwork for a million; two years later, that [expletive] worth two million; a few years later that [expletive] worth eight million.”
The transformation doesn’t happen overnight, but Brian Thuer reports that with time and patience, his investment has grown by more than 800%. The same effect can be observed in the real world. For example, Jean-Michel Basquiat sold his first painting for just $200. Today, Basquiat holds the record for selling the most expensive painting by a Western artist in Asia, with a single painting selling for $50.8 million in Hong Kong.
Brian Thuer explains that while the chances of discovering the next Jean-Michel Basquiat are slim, that doesn’t mean that art is worthless. Art just takes time to age like fine wine, and with patience it can pay off more than any stock or bond.
What makes art so valuable?
Brian Thuer says the most important factor in any art investment is the artist. A Van Gogh or a Rembrandt will always be worth more than an unknown artist, no matter how good their work is. This is because the artist’s name is the main driver of the work’s value. With enough time and dedication, the artist becomes the brand and the name alone drives the price up.
The second most important factor is the piece itself. A Van Gogh landscape will be worth more than a Van Gogh still life because, frankly, there are fewer of them. The same can be said of any other artist. Brian Thuer says that a Picasso sculpture will be more valuable than a Picasso painting simply because he made fewer sculptures than paintings.
The third factor is the origin or history of the piece, says Brian Thuer. A painting that has been in a large museum will be worth more than a painting that has been in a private collection because more people have seen it. The more people have seen the play, the better known it will become and the more valuable it will become over time.
In addition, scarcity is a factor that can add significant value to a masterpiece. The artist Jean-Michel Basquiat is a perfect example of this. Only 27 years old, the available number of paintings by this artist is relatively small. Coupled with the high demand for his work, Basquiat’s art has generated some of the highest returns on the market over the past 40 years, with average annual returns approaching 20%!
Arguably the most famous painting in the world, the Mona Lisa attracts millions of visitors every year. It meets all three standards – rarity, fame, and Leonardo Da Vinci’s reputation – and is therefore estimated at a staggering $900 million.
The risks of investing in art
Brian Thuer explains that investing in art is not for the faint of heart. Unlike stocks and bonds, art is a very illiquid asset, which means it can be very difficult to sell. It can take months or even years to find a buyer who is willing to pay the price you want for your piece. Even then, you’ll likely have to pay for auction fees and marketing.
Another common risk in the art world is counterfeiting. Because art is so valuable, Brian Thuer says there’s a huge market for copies, and many scammers spend years perfecting their techniques so that a fake can look more real than the real painting. So it’s important to do your research and make sure you’re buying a piece from a reputable source.
The final result
Brian Thuer notes that investing in art isn’t for everyone. It’s a high-risk, high-reward investment that requires a lot of patience and research. However, for those with the money and the eye, art can be a very lucrative investment. The trick is to work with an experienced art collector who has a proven track record of discovering what could one day become incredibly valuable, or work with a platform like Masterworks that makes it easier to get started in this area. It’s important to remember that not all artworks become the next Mona Lisa.