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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Marvel has moved past the post-credits teaser, and it's all the better for it

Individual stories are suddenly taking precedence over franchise building.

The lasting contribution of 2008’s Iron Man to contemporary cinema comes not from the content of the film itself, but in its Avengers-teasing post-credits scene featuring an eyepatch-sporting Samuel L. Jackson. While post-credits scenes were not invented by Marvel, their widespread adoption in other blockbusters is a testament to Marvel using them to titillate and frustrate.

Fast forward nine years and Marvel’s direction has significantly altered. Having moved to a three-film-a-year structure ahead of next year’s climactic Infinity War, their two releases this summer have featured less explicit connective tissue, using post-credits scenes that are, in typical Marvel fashion, self-reflexive and fun – but this time with no teases for films to come.

Where previous Marvel Cinematic Universe (MCU) films have trailed characters donning superhero mantles, confrontations to come, or more light-hearted team ups, Guardians of the Galaxy Vol. 2 decided to lovingly poke fun at Marvel grandmaster Stan Lee, leaving him stranded on a godforsaken space rock in the outer reaches of the stars. Spider-Man: Meanwhile Homecoming targeted filmgoers who had stayed until the end in expectation of a tease, only to receive a Captain America educational video on the virtues of “patience”.

That isn’t to say that connective tissue isn’t there. Marvel seems to be pursuing world building not through post-credits stingers, but through plot and character. In the past, teasing how awful big bad Thanos is ahead of the Avengers battling him in Infinity War would have been done through a menacing post-credits scene, as in both Avengers films to date. Instead Guardians of the Galaxy Vol. 2 uses character as a tool to explore the world at large.

Nebula’s seething rage is, rather than just a weak excuse for an antagonist’s arc, actually grounded in character, explaining to Sean Gunn’s loveable space pirate Kraglin that Thanos would pit his daughters, her and Gamora, against each other, and replace a part of her body with machine each time she failed – and she failed every time. It’s effective. Thanos’ menace is developed, and you feel sympathy for Nebula, something Marvel has historically failed to do well for its antagnoists. Her parting promise – to kill her father – not only foreshadows the events of Infinity War, but also hints at the conclusion of a fully formed arc for her character.

In the high-school-set Spider-Man: Homecoming, the stakes quite rightly feel smaller. The inexperienced wall-crawler gets his chance to save the day not with the galaxy at risk, but with an equipment shipment owned by Iron Man alter-ego and billionaire inventor Tony Stark hanging in the balance. While such a clear metaphor for widespread change in the MCU might be a little on the nose, the set-up is effective at plaing the film at street level while also hinting at overall changes to the structure of the universe.

Stark gifting Peter a new (and oh so shiny) suit is a key set piece at the end of the film, whereas in 2015's Ant-Man’s Hope Pym inheriting her mother’s own miniaturising suit it is relegated to a teaser. Peter’s decision to turn it down not only completes Peter’s transition past seeking the approval of Stark’s unwitting father figure, but it also leaves the Avengers in an as-yet unknown state, still fragmented and incomplete after the events of 2016’s Civil War. To anticipate Spider-Man joining the Avengers proper is to anticipate the forming of the team as a whole – keeping our collective breath held until we stump up for tickets to Infinity War.

With this happy marriage of the macro and the micro, individual stories are suddenly taking precedence in the MCU, rather than being lost in the rush to signpost the foundations for the next instalment in the franchise. It’s a refreshingly filmic approach, and one which is long overdue. To suggest that Marvel is hesitant to overinflate Infinity War too early is supported by their refusal to share the footage of the film screened to audiences at the D23 and San Diego Comic Con events in recent weeks. Instead, the limelight is staying firmly on this November’s Thor: Ragnarok, and next February’s Black Panther.

Stan Lee, at the end of his Guardians of the Galaxy Vol. 2 post credits scene, cries, “I’ve got so many more stories to tell!”, a hopeful counterpoint to a weary Captain America asking “How many more of these are there?” at the end of Homecoming. With Disney having planned-out new MCU releases all the way into 2020, entries in the highest-grossing franchise of all time won’t slow any time soon. We can, at least, hope that they continue their recent trend of combining writerly craft with blockbuster bombast. While the resulting lack of gratuitousness in Marvel’s storytelling might frustrate in the short term, fans would do well to bear in mind Captain America’s call for patience.