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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Jonn Elledge and the Young Hagrid Audition

I auditioned for Harry Potter and the Chamber of Secrets, for the part of “Young Hagrid”. Except I didn’t.

I’ve been dining out for years now on the fact I auditioned for Harry Potter and the Chamber of Secrets, for the part of “Young Hagrid”. It’s one of those funny stories I tell people when a bit drunk, under the no doubt entirely wrong impression that it makes me sound like I’ve lived an interesting life.

Except, when I came to write this thing, I realised that it’s not actually true. I didn’t actually audition for the part of Young Hagrid at all.

Technically, I auditioned to be Voldemort.

Let’s start from the beginning. In November 2001 I was in my last year at Cambridge, where I split my time roughly equally between pissing about on a stage, writing thundering student paper columns about the true meaning of 9/11 as only a 21-year-old can, and having panic attacks that the first two things would cause me to screw up my degree and ruin my life forever. I was, I suppose, harmless enough; but looking back on that time, I am quite glad that nobody had yet invented social media.

I was also – this is relevant – quite substantially overweight. I’m not a slim man now, but I was much heavier then, so much so that I spent much of my later adolescence convinced that my mum’s bathroom scales were broken because my weight was, quite literally, off the scale. I was a big lad.

Anyway. One day my friend Michael, with whom I’d co-written quite a bad Edinburgh fringe show eighteen months earlier, came running up to me grasping a copy of Varsity. “Have you seen this?” he panted; in my memory, at least, he’s so excited by what he’s found that he’s literally run to find me. “You have to do it. It’d be brilliant.”

“This” turned out to be a casting call for actors for the new Harry Potter movie. This wasn’t unusual: Cambridge produces many actors, so production companies would occasionally hold open auditions in the hope of spotting fresh talent. I don’t remember how many minor parts they were trying to cast, or anything else about what it said. I was too busy turning bright red.

Because I could see the shameful words “Young Hagrid”. And I knew that what Michael meant was not, “God, Jonn, you’re a great actor, it’s time the whole world got to bask in your light”. What he meant was, “You’re a dead ringer for Robbie Coltrane”.

I was, remember, 21 years old. This is not what any 21-year-old wants to hear. Not least since I’d always suspected that the main things that made people think I looked like Robbie Coltrane were:

  1. the aforementioned weight issue, and
  2. the long dark trench coat I insisted on wearing in all seasons, under the mistaken impression that it disguised (a).

Most people look back at pictures of their 21-year-old self and marvel at how thin and beautiful they are. I look back and and I wonder why I wasted my youth cosplaying as Cracker.

The only photo of 2001 vintage Jonn I could find on the internet is actually a photo of a photo. For some reason, I really loved that tie. Image: Fiona Gee.

I didn’t want to lean into the Coltrane thing; since childhood I’d had this weird primal terror that dressing up as something meant accepting it as part of your identity, and at fancy dress parties (this is not a joke) I could often be found hiding under tables screaming. And I didn’t want to be Hagrid, young or otherwise. So I told Michael, quite plainly, that I wasn’t going to audition.

But as the days went by, I couldn’t get the idea out of my head. This was an audition for a proper, actual movie. I’d always had this idea I must have some kind of talent*, and that Cambridge was where I would find out what it was**. What if this was my big break?*** What if I was being silly?****

So when it turned out that Michael had literally started a petition to get me to change my mind, I acceded to the inevitable. Who was I to resist the public demand for moi?

And so, I graciously alerted the people doing the casting to the fact of my existence. A few days later I got an email back inviting me to go see them in a room at Trinity College, and a few pages of script to read for them.

The first odd thing was that the script did not, in fact, mention Hagrid. The film, I would later learn, does include a flashback to Hagrid’s school days at Hogwarts. By then, though, the filmmakers had decided they didn’t need a young actor to play Young Hagrid: instead that sequence features a rugby player in a darkened corner, with a voiceover courtesy of Coltrane. The section of the script I was holding instead featured a conversation between Harry Potter and a character called Tom Riddle.

I asked my flat mate Beccy, who unlike me had actually read the books, who this person might be. She shuffled, awkwardly. “I think he might be Voldemort...?”

Further complicating things, the stage directions described Riddle as something along the lines of, “16 years old, stick thin and classically handsome, in a boyish way”. As fervently as I may have denied any resemblance between myself and Robbie Coltrane, I was nonetheless clear that I was a good match for precisely none of those adjectives.

I’m not sure what I was expecting when I went to the audition. I don’t suppose I expected Chris Columbus to be there, let alone Robbie Coltrane ready to embrace me like a long-lost son.  But I was expecting more than a cupboard containing a video camera of the sort you could buy at Dixons and a blonde woman not much older than me. She introduced herself as “Buffy” which, given that this was 2001, I am not entirely convinced was her real name.

“My friends always tell me I look like Robbie Coltrane,” I told her, pretending I was remotely enthusiastic about this fact. 

“Oh yeah,” said Buffy. “But he’s really... big isn’t he? I mean he’s a huge guy. You’re more sort of...”

Or to put it another way, if they had still been looking for a young Hagrid, they would have wanted someone tall. I’m 6’, but I’m not tall. I was just fat.

If they had been looking for a Young Hagrid. Which, as it turned out, they weren’t.

The section I read for was included in the final film, so with a bit of Googling I found the script online. It was this bit:

TOM RIDDLE Yes. I’m afraid so. But then, she’s been in so much pain, poor Ginny. She’s been writing to me for months, telling me all her pitiful worries and woes. Ginny poured her soul out to me. I grew stronger on a diet of her deepest fears, her darkest secrets. I grew powerful enough to start feeding Ginny a few secrets, to start pouring a bit of my soul back into her...

Riddle, growing less vaporous by the second, grins cruelly.

TOM RIDDLE Yes, Harry, it was Ginny Weasley who opened the Chamber of Secrets.

I mean, you can see the problem, can’t you? I don’t remember this many years on what interpretation I put on my performance. I suspect I went beyond camp and into full on panto villain, and I dread to think what I may have done to communicate the impression of “growing less vaporous”.

But what I do feel confident about is that I was absolutely bloody awful. Five minutes after arriving, I was out, and I never heard from Buffy again.

So – I didn’t become a star. You probably guessed that part already.

In all honesty, I didn’t really realise what a big deal Harry Potter was. I’d seen the first film, and thought it was all right, but I was yet to read the books; three of them hadn’t even been written yet.

I had some vague idea there was an opportunity here. But the idea I was missing a shot at being part of an institution, something that people would be rereading and re-watching and analysing for decades to come – something that, a couple of years later, at roughly the point when Dumbledore shows Harry the Prophecy, and a tear rolls down his cheek, would come to mean quite a lot to me, personally – none of that ever crossed my mind. I’d had an opportunity. It hadn’t worked out. Happened all the time.

I do sometimes like to think, though, about the parallel universe in which that audition was the start of a long and glittering career – and where the bloke who played Tom Riddle in this universe is scratching a living writing silly blogs about trains.

*I don’t.

**I didn’t.

***It wasn’t.

****I was.

Jonn Elledge edits the New Statesman's sister site CityMetric, and writes for the NS about subjects including politics, history and Daniel Hannan. You can find him on Twitter or Facebook.

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