Why Fine Art as an Investment
Holds Up Well In Bad Times
Contrary to popular belief, art does not tank in value during times of stock market weakness or war. Fine art’s 256% rise in the last great bear market (1966-1975), during the Vietnam War, is a testament to that. According to an exhaustive study by NYU professors Jianping Mei and Michael Moses – using figures from the 27 recessions dating all the way back to 1875 – fine art investments hold up very well in bad times. It is a good store of value.
Mei and Moses created the Mei/Moses Fine Art Index (www.MeiMosesFineArtIndex.org) using data on repeat sales of fine art auctions from Sotheby’s and Christie’s. The index includes nearly 6,000 sales. While their index shows that art investing has nearly kept up with stocks, importantly, their index does not include transaction costs or storage costs (which can be quite high for art).
But don’t take Mei/Moses figures to mean that ALL fine art will hold up as an investment, or that art is immune from stock market bubbles. For example, in 1990, a Japanese businessman paid $82.5 million for Van Gogh’s “Dr. Gachet.” It has since sold for nearly 90% less than that. 1990 was the height of Tokyo’s stock market boom, and the Japanese were buying “trophy” artworks, and paying exorbitant prices.On the flip side, Mei and Moses found that American paintings have been a good investment. American art showed high returns and was least affected by world markets.
