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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“Trump is a great opportunity for us writers": Zadie Smith on fighting back

The author of Swing Time on Michael Jackson, female friendships and how writers can bring down Donald Trump.

In a packed college lecture hall at the Cambridge Literary Festival on 22 November, Zadie Smith joined me on stage to talk about her fifth novel. Swing Time is the story of an unnamed narrator and her childhood friend – “two brown girls” – which begins at a church hall dance class and never quite lets them go, throughout their divergent lives. Despite being a little jet-lagged from her flight from New York – where she lives with her husband, the poet and novelist Nick Laird, and their two children – Smith spoke with the cool, lucid intelligence familiar from her essays and criticism as well as her fiction. “You’re so quiet compared to American audiences,” she said to the crowd. “American audiences say thing like, ‘Uh huh! Yeah!’ just randomly in the middle of things.” Met with reverential silence, she was free to navigate fluidly between racial identity, female friendship, Barack Obama’s legacy and her love of Mad Men.

New Statesman Swing Time is about many things, but it is dance that gives the story its rhythm and arc. What’s your own relationship with dance?

Zadie Smith For me, it’s a joy. I’m a 41-year-old woman; I don’t dance that much any more. My children don’t enjoy me dancing in any context, but I love to watch it, and I found out writing this book that I love to think about it.

 

NS As a child, the narrator is absorbed by classic musicals and through them she discovers a handful of black dancers – the Nicholas Brothers, the young Jeni LeGon – who take on huge significance for her. Did these figures have that kind of impact on you?

ZS No, Jeni LeGon is someone I only found out about writing this book, so I had to construct what it would have been like to know about her aged five or eight; it’s like a fake memoir. But I loved that kind of early dance, and I recognise the instinct a lot of black and Asian children of my generation might have: the sense of counting the brown faces wherever we saw them, in a slightly desperate way. I definitely did that, in my everyday life, switching on the BBC and hoping to see Daley Thompson, or whoever – this kind of search for a reflection.

 

NS There were major black stars in the 1980s: the narrator’s friend Tracey idolises Michael Jackson and Prince.

ZS Michael Jackson’s a really interesting example, because he’s such a traumatising figure for a whole generation of kids! You were offered him as this wonder – this incredible black dancer – who then you had to watch throughout your childhood become un-black. You had to have this magical thinking and believe that he had a mysterious skin disease that does not manifest in that way in any other human on Earth, and that all this surgery also had nothing to do with it. It required a great deal of denial, and I think it did something very odd to a generation of children. He certainly loomed large in my mind as a figure of such penetrating self-hatred and self-disgust. Perhaps I have a suspicion of role models exactly for that reason, that you’re offered something – a model of behaviour or thought – but it can only ever be narrow. And then, when it goes traumatically wrong, as it did in poor Michael’s case, you’re left slightly rudderless.

 

NS You wrote that the Nicholas Brothers remind you of a line that a mother tells her daughter, that she needs to be twice as good as the other kids. This sentiment crops up in NW and in Swing Time, too.

ZS When I meet black British kids of my generation, that’s what all their mothers said to them. But with the Nicholas Brothers, I was also thinking about talent, because the novel is about different relations of power: in friendships, in families, between countries.

One of the things power is based on is the feeling that someone has a natural right to a certain amount of things. If you’re born into a situation, what accrues to you because of that? If you’re born into an unfortunate situation, what do you deserve in replacement for that? Politics lies along those lines. But talent is interesting because people on both sides of the political divide tend to think of it as a natural bounty not to be interfered with. The Nicholas Brothers are so extraordinarily talented that it’s a kind of offence to our most democratic thoughts. Why do these boys dance like that? How is it possible to have those kinds of gifts in the world, and what should you get because of them?

 

NS Did the Nicholas Brothers get the recognition that their talent deserved?

ZS Well, it was complicated, because they would do these extraordinary routines, but the studio always ensured they weren’t integral to the plot, so that when the films went south of the Mason-Dixon line, you could just cut the offending scene. So that was their experience – a very painful one, I think. But they were extraordinary professionals and Astaire spoke so well of them.

When I was a kid, what preoccupied me even more than the movies themselves was the idea of what was going on behind the scenes, between these black actors and the directors, the producers, the other actors. Because even though someone like Fred Astaire was a supporter of these artists, he didn’t actually actively help them on set. There’s a moment in Easter Parade when a maid comes in with a pug in her arms, and that maid is Jeni LeGon. Astaire knew who she was and how talented a dancer she was and yet he allowed her to appear for 35 seconds in a movie, passing him a dog.

 

NS In Swing Time, the narrator goes on to work for a pop star who is busily incorporating African imagery and clothing into her routines. What’s your take on this idea of cultural appropriation?

ZS Aimee, the pop star, says something that I don’t disagree with, which is that art involves an act of love, and of imitation. I would maybe use the word “voyeurism”. I think of myself explicitly as a voyeur, somebody who wants to be inside other people’s lives. To write On Beauty, I wanted to know: what’s it like to be a middle-aged, white male academic? Or in The Autograph Man, what’s it like to be a young, Chinese-Jewish guy who collects autographs? I guess sometimes the reader thinks it’s not appropriation when I’m writing about an older, black American woman – but I’m not an older, black American woman. It’s all voy­eurism on my part. But the way it’s argued a lot of the time, on both sides, is so vulgar.

Also, I feel that the identity facts of your life are so profoundly contingent – where your parents happened to be on the day you were born – that I can only take identity ­seriously as an act of commitment and love. I don’t think it runs through your blood. It is a compulsion. You have chosen to become, for example, British, even if you were born British and your great-grandfather was British. Being British is a kind of engagement; you have to commit to the idea of a culture.

 

NS In terms of identity, the narrator defines herself by the light other people cast on her. She’s almost a negative space.

ZS I felt that I wanted an “I” who was like a void, partly from my own sensibility – I recognise myself as a person of some passivity – but also in response to the performance of a certain kind of persona, particularly among young people. My students have a very firm sense of their “I”, or say they do, and they take that “I” on to the various social platforms and into their lives. It’s a type of presentation. But the kind of person that I was thinking about is asking, “What did I do here, there and then? What does it mean?” She’s working out, “Who am I?” but it comes from action, not from a series of staged performances. I knew it would be a slightly unnerving experience, because we’ve got so used to opening a book or reading a blog or watching Instagram and being presented with this full technicolour person with all these qualities. I felt that maybe in my novel, I could try something else.

 

NS When asked about the target audience for their book, writers usually say that they don’t write for an audience, or they write for themselves. But you have said that Swing Time was written explicitly for black girls.

ZS That’s how I felt when I was writing it. I did have somebody I was trying to speak to, and that might be no different to writing the kind of book – as writers often say – that you might have hoped to read when you were young. I was aware of an explicit imagined reader. I can’t deny that was in my mind. These are not normal times, and I think even writers as domestic or comic as I generally am find themselves in a more political place than they would in peaceful times. Being in America the past few years, I felt I had a lot of things that I had to get on paper, to get off my chest.

 

NS One of the most interesting aspects of the book is the relationship between the two girls. Do you think there’s something particularly fraught and complex about female friendships?

ZS I feel that perhaps in the past – because so much was written by men, because the women were with the children – relations between women have been depicted with very simple concepts like envy, or the idea of the bitch fight. And now that women are writing so much more frequently and the men in their lives are helping with the children, I think you’re getting for the first time in a very long time a different depiction of intimate female relations.

One of the things that strike me is that the much-vaunted envy between women is also a kind of radical imagination, in that women are always in each other’s business; they can imagine each other’s lives with great intensity. When I was writing this book, I was with my daughter at a children’s party, parting from another girl who wanted to know every little thing about where we were going next. I compared that with my son, who, if he’s saying goodbye to a friend, is just like, “See ya!” and doesn’t even remember they exist until the next morning.

That ability of girls to project their imagination into somebody else’s life can have toxic elements, but also seems to me an extraordinary fictional instinct, and might explain the domination of women in the novel historically, when so many other art forms were practically blocked for them. The novel, to me, is a woman’s art. I don’t say men don’t have enormous achievements in it, of course, but it has a strong female element, exactly because of that projection, which can be called empathy, I suppose, but is also a deep curiosity and voyeurism.

 

NS We tend to associate male relationships with power struggles, but aren’t female friendships equally involved in exchanges of power and power games?

ZS Right. I think it can be sometimes invisible to men, because the form of the power game can be so inverted. There is a very funny Amy Schumer sketch of four women meeting in a park in New York and competitively downgrading themselves: “You look nice!” “No, I look like something pulled out of the trash.” On it goes until they explode. All women will recognise that, and it’s a compulsive English habit. I do it all the time. Someone says to me, “You look nice.” I say, “Oh, Topshop, 15 quid.” That habit maybe doesn’t look like power from the outside, but all women know exactly what they’re doing when they’re doing these things.

 

NS In your fiction, mother-daughter relationships seem equally fraught.

ZS Even though I know a lot of women have difficult relationships with their mothers, what’s amusing, and kind of moving, too, is the amnesia. When they have children, women cannot imagine the idea that maybe this lovely two-year-old will one day do ­anything to avoid calling you between Sunday and Sunday – they can’t conceive of it, even as they’re doing it to their own mothers. I guess I never had that illusion about motherhood. I always thought, “This is going to be terrible,” so anything that’s good is a kind of bonus. I was very surprised when my kids started saying the normal things that kids say, that they love you.

Then there are the sweet delusions of what you want and what the child wants. I can’t tell you how many times people in New York have said to me things like, “I’m going to go and get a massage, because if I’m happy, the child’s happy.” You want to believe that you want the same things at the same time, but exactly the opposite is true. The child wants everything, and it’s the mother’s decision how much she’s going to give. I find that battle kind of comic and sweet and interesting, and certainly having children has reanimated it in my fiction.

 

NS What was your involvement in the recent BBC television adaptation of NW?

ZS When they started, I was pregnant and I just couldn’t engage with it at all. So I just said, “Do whatever you like.” I saw it only two weeks ago on my laptop – very anxious, with my husband, Nick, late at night – and I was just so happy and amazed at that scriptwriter [Rachel Bennette] and all the things she cut so effectively. I’m not in the habit of being moved by my own material, but the power of it struck me, particularly the section with Felix. You see so many people stabbed, all the time, in movies and on TV, and you never really understand the weight of the life being lost – and the actor playing Felix managed to die.

I’m going to try to adapt Swing Time for TV, probably with Nick, because he’s much more of a plot guy. I’m excited. I love telly.
I don’t have original taste – I love all the usual suspects. I think Mad Men is stunning.
I felt like it was a dream life that I was in, and when it was gone I felt really depleted, like I couldn’t have that dream every night, with all those beautiful men and women in it.

 

NS You’ve long been associated with the idea of “multicultural London”, but what comes out strongly in your recent work is a sense of division. Do you feel more pessimistic about London as a mixed community?

ZS Particularly in America, I’ll be asked, “Are you a supporter of this thing multiculturalism, and now can you admit that it’s failed?” What’s being said is that the conditions of your childhood were a kind of experiment, and it turns out it hasn’t gone well, so we’re going to revoke that – it’s over now. I find it kind of unnerving, because millions of people around the world are still living with each other in mixed situations, and I also don’t accept the premise that a homogeneous society is by its nature more peaceful and more likely to succeed. The Romans, the Greeks, the Northern Irish, England for 400 years . . . There’s no reason to believe that. I never felt that a heterogeneous society was perfect. But I think there are promising things in my community, and I don’t accept the idea of an experiment shut down, finished: these are people’s lives.

But what certainly is the case, I feel, is that you cannot, on the left or on the right, assume that a historical situation will remain in perpetuity. If you value things in that ­society, you have to restate them, reimagine them, and the kind of housing crisis we have in London now makes various conditions I grew up in impossible. There will always be rich and poor but, as [Thomas] Piketty makes the case, the gap is so extraordinary now. To have allowed it to get to this almost feudal situation, I don’t see how it can’t create deep cracks within civilised life. The ­division in London is a financial one. It feels extreme and it has extreme consequences.

 

NS In 2008, you wrote an essay full of cautious hope that Obama’s mode of speaking might be the thing required to pull the country together. How do you feel looking back at that moment now?

ZS On the morning of this election, I heard a young black girl on the subway ­speaking very loudly about why she’d voted for Trump. One of her reasons – a kind of “Face­book fact” – was that Obama created fewer jobs than Bush, which I believe had been going round the right-wing sites. In some of the big car towns, Obama saved so many jobs – but it’s hard to sell the counterfactual idea that there would be 800,000 fewer jobs here had this not happened.

But I think another counterfactual will be in his favour soon, and that is all the ways in which Obama is calm. Recently in New York, we had a small terrorist attack in Chelsea. Try to imagine Donald’s response to that. And so I think that over the next four years, all the ways in which Obama has not done many things that would have led us into terrible situations will become very clear, very quickly. It’s a painful way to secure your legacy, but that’s the way I see it.

 

NS As a New Yorker, what has your experience been over the past few weeks?

ZS I left the morning after it happened, because I had to go to Europe. When we turned up at my son’s daycare, the teachers were crying. My friend told me that the pizza delivery guy came that evening and burst into tears at the door. It was traumatic.

My gut feeling is that the job of American journalists and writers is going to be to somehow defy the normalisation of what’s happening. I think there are positive signs. It blows my mind that a man who is meant to be preparing to be leader of the free world watched Saturday Night Live [in which Alec Baldwin played Trump] and tweeted three times about it. So, in one sense, it’s a great opportunity for all of us artists, comedians, writers, because he’s so easily wound up! It gives the press an opportunity to be a real fourth estate and do something significant. Which could perhaps lead to impeachment. It’s promising, from our point of view.

“Swing Time” by Zadie Smith is published by Hamish Hamilton

Tom Gatti is Culture Editor of the New Statesman. He previously edited the Saturday Review section of the Times, and can be found on Twitter as @tom_gatti.

 

This article first appeared in the 01 December 2016 issue of the New Statesman, Age of outrage