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.

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Marcelo Krasilcic
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“I don’t want to burst into tears on stage”: The Magnetic Fields’ Stephin Merritt

The cult chamber pop curmudgeon on the process of writing a song for every year of his life – and how he avoided soul-searching.

Stephin Merritt has a stye. Sitting in a hushed greenroom at London’s Barbican, he presses a hot mug of tea against his left eye and winces.

An enormous Steinway grand piano shimmers by the wall, reflecting the room’s sparse glow from an electric candle and mirror framed in fairy lights.

“Have you ever had one?” asks the 52-year-old musician, after bowing in his chair in greeting (to avoid germ contact).

No, I reply.

“Don’t.”

Set against the grandeur of his surroundings, it’s a fitting introduction to The Magnetic Fields frontman and cult chamber pop curmudgeon.

Medical complaints are just one theme in his painfully personal new album, 50 Song Memoir. It’s an epic, genre-bending variety show with a song for each year of his life, performed in two halves. The 1992 track “Weird Diseases” cites an ear condition that confines him to a soundproofed shelter from his band onstage – and means he covers his ears when applauded by the Barbican audience later that evening.

Waiting for his soundcheck in his signature brown flatcap, a beige and turquoise argyle jumper and fawn trousers (he only wears brown – it’s hard to get dirty, and matches his eyes, hair and beloved late chihuahua Irving), he’s about to perform the last show in The Magnetic Fields’ first tour in five years.

“I hate touring,” he tells me in his baritone drawl, his head cupped in one hand. “I can’t wait to get home.”

Before he returns to Hudson, New York, he’s taking a week’s holiday in London, which he first visited at 15. As he wrote in the song for 1980, “London By Jetpack”, its blossoming New Romantic scene passed him by.

“I was here at the right time, but I was not in the right places to experience it,” he sighs. “So I was doing touristy things and going to Madame Tussauds. Eating English pizza. I bought a Sherlock Holmes hat and London trenchcoat for my costume, I guess which was fun.”

Merritt went to high school in Boston, where he founded the revolving gaggle of musicians that make up The Magnetic Fields in 1989. The album 50 Song Memoir is their 11th. It’s an eccentric, dizzying journey from Merritt’s nomadic childhood of cults and communes with his bohemian mother, via a cockroach-infested ménage à trois and the 9/11 aftermath, to writing a silent movie score for 20,000 Leagues Under the Sea.

But it has the regular stuff too. Break-ups, unrequited love, absent fathers and all too present ex-boyfriends. In scope and ambition, it’s similar to The Magnetic Fields’ most famous work, 69 Love Songs (what it says on the tin), but it’s the first time Merritt has written a first-person, autobiographical album.

We hear bitterness and mockery in equal measure about his beatnik upbringing (“My mama ain’t no nudist/Except around the pool/She’s a Tibetan Buddhist/Like Catholic only cool”), dark musings on the AIDS crisis (“We expected nuclear war/What should we take precautions for?”), and the final song, 2015’s “Somebody’s Fetish” – like a filthier version of Cole Porter’s “Let’s Do It, Let’s Fall in Love” – acts as Merritt’s self-deprecating justification for finding love (“Nothing’s too strange for somebody’s palate/Some spank the maid and some wank the valet”).


Stephin Merritt. Photo: Marcelo Krasilcic

Like the Stephen Sondheim of New York’s underground scene, or a rock ‘n’ roll Noël Coward, Merritt’s acerbic observations and camp brand of miserablisim have established him as an extraordinary lyricist over a quarter century of music-making.

Throughout the 25 albums he’s made with different bands and as a solo artist, Merritt’s words are brought to life by theatrical scores and an experimental use of instruments – but nowhere more celebrated than with The Magnetic Fields.

“I keep wondering if this album has been so well-reviewed partly because people think it would be boorish to question bearing my soul,” he says. “Because reviewing it is like reviewing a person.”

Although 50 Song Memoir seems like a highly revealing “audio-biography”, Merritt insists: “I am against soul-searching in general. I don’t believe in souls in the first place – and if I did, I don’t know how one would search them.”

He points out that these songs are more likely to provoke laughter than tears. The “psychoanalysing” by critics annoys him. “I have to perform these things and I do not want to burst into tears on stage,” he says, his eyes widening. “I don’t want to stand on stage humiliating myself and the audience.”

Merritt recalls crying while performing The Magnetic Fields’ classic ballad “The Book of Love” at the funeral of a friend who died suddenly. “That is the last time I will ever do that,” he smiles drily.

The 50 Song Memoir show is more of a revue, with wry narration by Merritt between each song, and band members playing everything from the omnichord to a saw. The singer himself sits in his pastel-hued soundproof booth, surrounded by 16 dolls houses and other trinkets from his own home – Hooty, his stuffed owl, little wooden animals, quirky instruments and “some of my lunchbox collection”. It makes him feel “weirdly” at home.


Before releasing these songs, Merritt contacted every person he names to run the lyrics by them – including his mother, who burst into tears when he played the music for her in his studio.

“What I’m saying about her is not necessarily criticism on her terms,” he says. “So she should not feel insulted, and I said that. She agreed and said in fact [she didn’t] feel insulted.”

You get the impression Merritt enjoyed the mechanics of writing 50 Song Memoir more than the emotional vulnerability. It pieces together lyrics and music he had written back in the Eighties and never released, and even a guitar solo he wrote at the age of 11. It features 100 instruments, many from his own collection. He also notes the challenge of finding rhymes for so many proper nouns. “I usually let the rhymes lead the narrative,” he says, calling them, “the automatic plot generator”.

Merritt mostly wrote this album at a couple of bars in his neighbourhood, filling around five notebooks overall. He buys expensive pads – to try and guard against losing them – which look as different from each other as possible, “in the hope I will be able to find a song or a thread more easily with visual help: ‘this was the piece of music I wrote in the flowery notebook with a robot on the cover’”.

A useful system for when he returns at the age of 100 to fulfil his vague ambition of adding another 50 songs to the piece (“I have quite a while to decide.”)

It’s soundcheck time. After admiring my rucksack (it’s brown), Merritt says goodbye without getting up, apologising again for his stye.

Never mind, perhaps we’ll hear about it in a song in 50 years’ time?

He gives a rare chuckle. “48, actually.”

The Magnetic Fields performed both halves of 50 Song Memoir at the Barbican. Listen to Stephin Merritt discussing the show on the Barbican podcast here.

Anoosh Chakelian is senior writer at the New Statesman.