Investment Art: A Beginner's Guide

Forget your shares portfolio - the recession-dodging art market is increasingly proving to be the most profitable place for high-stakes investment

Oscar Wilde may have been mistaken when he claimed “all art is quite useless”. A new use for art has been emerging in recent years, and it may be the most pragmatic of all – as a solid investment. In a time when stock markets are sinking, debts are rising and the looming threat of double-dip recession cannot be entirely eliminated, the art market still sporadically dazzles with record-breaking profits. The unique economic buoyancy of art has long caught the eye of not just aesthetes, but also discerning investors.

Art now falls under the category of the "SWAG" asset. The term, coined by analyst Joe Roseman of Investment Week denotes "alternate investments" which manage to defy economic gravity – namely silver, wine, art and gold.

As well as being decidedly sexier than the FTSE 100, the trend of investing in luxury assets makes a lot of economic common sense. SWAGs often outperform other equities in times of economic downturn for several logical reasons. Firstly, they benefit from the uniquely profitable principle of "scarcity economics" (their value is related to their rarity). Secondly, in an unsteady market, people are drawn to stability, and all the SWAG assets are durable – they have a historical precedence of desirability and can be bought and stored almost indefinitely. Lastly, as their returns are not related to the patterns of the stock market, they add a sensible diversity to any portfolio, the literal asset equivalent of not keeping all your eggs in one basket.

So, we’ve all been there - you’ve got a few spare million in the savings account and you can’t decide whether to invest in the Damien Hirst or the Château Lafite. Luckily, help is at hand. The art market’s unique ability to maintain a bubble of prosperity amidst a global recession has given rise to a new type of business – the art investment advisor.

Businesses of this sort were virtually unheard of a decade ago, and yet the demand  for art purely as an investment has seen a proliferation in recent years. As well as increasing numbers of private banks offering advisory services to their clients, specialist companies such as Fine Art Wealth Management and The Art Investor exist to assist buyers on making choices for bespoke portfolios which can maximise returns. Perhaps most significant in this field, however, is The Fine Art Fund. Set up just over a decade ago by Philip Hoffman, this was the first business of its type to invest in art as an asset. Currently, they manage more than $150m of assets and achieved a net annual return of 6.34 per cent over the past eight years.

Hoffman recently told the Sunday Times, “In the old days people invested in bonds, stocks and cash, and now they’re investing in ten different subject headings and art is just one of them ... People don’t look at their gold bars and, in some cases, they treat art in the same way.”

The rise of these businesses is necessary because the unregulated nature of the art market means that it still straddles an awkward line between solid economic sense and a frantic, wild gamble. On one hand, there are plenty of promising statistics: in 2011, the Financial Times reported that the art market made an 11 per cent return to its investors, a frantic outstripping of stock market return. This year, sales have been promising, with impressive prices achieved at Art Basel in June, and there is a wealth of evidence that the top end of the market has been immune to the turbulence underneath it. In fact, over half of the 20 most expensive auction sales of all time have been completed since 2008, indicating an economic buoyancy which overcomes even the recession.

So far, so lucrative. Yet, the mechanics of the art economy are governed by strange, volatile forces which means that it is never a safe bet. Charles Saatchi himself noted “Art is no investment unless you get very, very lucky” in his 2009 book My Name is Charles Saatchi and I am an Artaholic. In many ways the art market is an economist’s worst nightmare. It is wholly speculative and subjective, and therefore constitutionally unpredictable. The valuation of contemporary art, in particular, is based on a collection of changeable and changing opinions. It is constantly affected by external circumstances, and trends are capable of crashing out of fashion just as swiftly as they crashed it. Additionally, it is fundamentally impossible to confirm the value of the market as a whole. Private sales comprise approximately 75 per cent of the total market, and these are almost always undisclosed. “The art market is the most illiquid, opaque market in the world,” explained Jeff Rabin, quoted in The Art Newspaper. Given this, manoeuvring within it is always going to be a guessing game.

Other industries have, too, sprung up in reaction to the demand of fine-art investment, notably the specialist storage port. Investment art is, emphatically, not bought to be hung on the wall. Instead, collectors are increasingly storing their assets in state-of-the-art warehouses. Christies are currently expanding their "Fine Art Storage Service" due to increased demand, and new ports are due to open in Singapore and Luxenbourg, adding to existing onces in Geneva. These large-scale warehouses offer highly regulated storage controls with humidity and light protection as well as extensive on-site security. They also have a notably appeal to the money-minded collector in that they allow the temporary postponement of VAT and customs duty payments.

The implications of this are vast. Not only with regards to the valuation of art, but with an entire overhaul of its purpose. Art bought as an asset and stored, indefinitely in a warehouse, far from the damaging light of day denotes a new mode of art ownership – one where the object d’art is reduced to a purely monetary transaction.

“It’s a depressing thought,” comments Connie Viney, a London-based artist who regularly exhibits at The Vyner Street Gallery, “Just recently there was the news that Sotheby’s have once again broken their auction record by selling a Rothko for £47.3m. By all accounts, it seems that that price will just increase once again next time it’s sold. With sums like that, how can people think of art becoming anything but a get-rich-quick scheme?”

Is this the real status of art in today's world? Elite, out-priced, stored out of site and endlessly circulated in a micro-economy closed off to all but the super-wealthy? "Art for art’s sake" is a 19th century concept. "Art for the people", too, is becoming swiftly outdated. The motto for our times, it seems, is "Art for the 1 per cent".

Auctioneers place bids during the Damien Hirst's Beautiful Inside My Head Forever, at Sotheby's in 2008. (Photo by Daniel Berehulak/Getty Images)

Kamila Kocialkowska is a freelance journalist based in London.

@ms_kamila_k

 

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Do the abusive messages sent to One Direction members reveal a darker side to fandom?

Incidents like this are often used to characterise all young female fans, but this isn’t about fandom. It’s harassment. 

One Direction’s Niall Horan is the internet’s favourite innocent blond goofball. He spends his days tweeting platitudes about golf and the weather, Snapchatting his reactions to whatever is on his TV, and thanking his fans for everything they’ve done for him. His social media presence is generally one of cheerful bemusement.

So, last night, the web went into maternal #ProtectNiall mode when he took to Twitter to highlight the darker side to fame.

A group of “fans” got hold of Niall’s number, and started frantically texting, WhatsApping and calling him. After two weeks of constant abusive messaging, despite requests to stop, Niall tries to use his platform to get them to stop.

Around the same time, screenshots of the supposed messages started to circle online. (I certainly can’t prove whether they’re real or not, but they first surfaced before Niall’s tweets and feel genuine.) The pattern that emerges seems to be one of frantic, attention-seeking messaging, extreme shock and surprise when he writes back, and, when Niall only requests that they stop messaging him and respect his privacy, the really nasty stuff starts. Messages range from “You invented cancer” to “If [your nephew] was my kid I’d sell it”; from “You’re so stupid and r*tarded” to “I hope your house blows up”.

Niall’s responses are extremely Niall in their politeness. “Why do I deserve to have a bad day?” he asks one. “You guys are bullies,” he tells them. “Go away please.”

As soon as the screenshots emerged, so did suspicions about the identity of the individuals in question. A set of five or six Twitter handles were circled by fan accounts, encouraging people to block and report the usernames to Twitter. Some of the owners of these accounts themselves claim to have been part of the conversations in question, to varying degrees. These account owners are seemingly women, under the age of 18, who have supposedly been involved in other recent One Direction harassment incidents.

One of those incidents came just days before Niall’s tweets. A person suspected to be a member of this group of “fans” got hold of another band member’s phone number: Louis Tomlinson’s. You can listen to a recording of the phone conversation between them that leaked online. After telling him her Twitter handle, Tomlinson asks the caller how she got his number. “You’re a fucking bitch and I hope your baby dies,” she says. Louis responds with a variation on the ancient proverb, “Lawyer up, asshole.” He seemingly tweeted about the incident later that day – and Niall retweeted him.

Fan accounts insist that the same Twitter users were also involved in hacking the iCloud of Anne Twist, Harry Styles’s mother, and leaking hundreds of photos of her son online.

The whole situation is a complicated mess. Parts of the messages feel as though they have been influenced by the style of accounts desperately trying to get the attention of celebrities on Twitter. If you look at the top reply to any tweet from a celebrity with millions of Twitter followers, the responses are calculated to shock the most in an attempt to get noticed. Maybe it’s a weird combination of sexual and violent imagery, or a sexist or racist slur. This is harassment itself, but its ubiquitousness can make it seem less offensive or extreme. Perhaps this kind of behaviour is easier to ignore on Twitter or Instagram – if you have millions of followers, you presumably can’t be notified every time one of them interacts with you online. When it moves into your private sphere, I can image it becomes more terrifying than annoying. Maybe these girls were simply swept up in the cultural moment, and failed to grasp the consquences of their behaviour.

Is it a damning indictment of the hysteria of teenage girls? The scary state of twenty-first century fandom? The problems of anonymity offered by the internet? It’s true that the internet has offered new ways for fans and celebrities to have a more direct connection with one another: for the most part, a mutually beneficial arrangement.

But the revelation of the internet has also been that it is a tool through which fundamentally human behaviours are expressed. Over the last few decades, we have learned that aggressive behaviour online is not limited to largely non-existent stereotypes of spotty virgins in their mothers’ basements, or teenage girls developing “dangerous” sexuality. Grown men and women, mothers, fathers, daughters, sons all do it. It’s also not a behaviour that is inherently connected to online spaces: children and teenagers might experiment with moral boundaries through cyberbullying, but they also might do it via anonymous notes in lockers or whispers in school corridors. People of all ages, professions and genders harass others.

The real problem is not celebrity culture or the concept of teenage fandom or social media. As Louis Tomlinson rightly identifies, it’s that our laws have failed to catch up. If we continue to treat harassment as harassment, in all spaces and by all perpetrators, we’ll have a better chance of minimising it.

Anna Leszkiewicz is a pop culture writer at the New Statesman.