Modern art as a proxy for wealth sequestration

lmog · Post by **lmog** » Tue May 14, 2013 6:03 pm

More support (although we would have to throw in classical paintings in as well):

Nytimes article

lmog · Post by **lmog** » Sun Jun 02, 2013 9:09 am

Wow, this really hit it on the head:

http://blog.ninapaley.com/2013/06/01/bargain-ten-thousand-dollars/

lmog · Post by **lmog** » Tue May 12, 2015 6:03 am

Roubini thinks there is something shady about art:

http://money.cnn.com/2015/05/11/investing/art-market-shady-nouriel-roubini/index.html?iid=HP_River

wait, but there is something shady about...

radikal · Post by **radikal** » Sat Jan 09, 2016 5:34 pm

I'm not terribly knowledgeable here but doesn't expensive art carry pretty badly?

If a painting is in the single digit M, you're looking at paying:

- Insurance on protection/theft

- Insurance on transit to your site

- Insurance on transit to next sale point

- Cost of shipping is generally rolled into above

- Generally poor terms on art lending (few hundred bp premium?)

So either you're purchasing for a lot of edge (which seems maybe possible since markets are reasonably inefficient / opaque) , you're able to somehow lever tax inefficiencies so that the above issues are moot, you simply LOVE the piece and don't care, or you're up to some shenanigans?

If you spend 70.5M on a Cy Twombly and hold it for 3-4 Y, where's your breakeven?

lmog · Post by **lmog** » Mon Jan 11, 2016 6:54 am

The best guesses I can find on art returns are pretty dismal:

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1352363

"In general, art's risk-return profile is much less attractive than that of financial assets [stocks, bonds etc.], even before transaction costs. "

The puzzle is, then, why is it such a prominent asset class? People buy all sorts of silly things for lots of money I suppose...but it's easier to understand why someone wants a fancy car (that they can be seen in and impress people with) than it is to understand why someone would want an (expensive) painting painted by someone with little skill.

goldorak · Post by **goldorak** » Mon Jan 11, 2016 9:13 am

If you had 100mio$ hidden on a Swiss bank account and were abandoned by the very robot bankers who robbed you fees throughout the years, your only way to get that money out with decreased risk is to buy art and park it in a free port zone.

The recent crack down on these free port zones will probably bring down the average art market.

tbretagn · Post by **tbretagn** » Mon Jan 11, 2016 11:13 am

When you buy a $1bn of old cars can you tell me where you put it?

Also when you buy $1bn of art you can bequest it to a museum and your name will appear on a wall for a long time.

A lot of those guys buying art is so their name stays in stone.

Tradenator · Post by **Tradenator** » Mon Jan 11, 2016 1:52 pm

You can bequest your cars to a museum.

lmog · Post by **lmog** » Mon Jan 11, 2016 6:30 pm

Never heard of parking art at FTZs. ... why not just park gold there? I guess the legacy premium you pay with art collections might be cheaper than buying a university building or public park..

lmog · Post by **lmog** » Wed Jan 20, 2016 8:30 pm

Nothing fishy at all about art and money, nothing fishy at all.