Investment Art

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CaptainT
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Investment Art

Post by CaptainT »

It is a bit expensive for me however, I saw that one of my favorite paintings by one of my favorite artists(John Singer Sargent) is for sale and I am considering it although expensive for me.

For those of you who own investment level art how does that work? Tell me about the process of insurance valuations ect

If you let a local museum display it is that a tax write off?
z3r0c00l
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Re: Investment Art

Post by z3r0c00l »

Few collectibles are as vulnerable to fraud as art, so you first have to make sure it is real. Then you should check the value of art by Sargent and how it sells, anywhere from $10 to thousands depending on the piece, but frankly he made tons of prints and paintings ("prolific") and they are not all worth that much. Without scarcity, you can't know if it will appreciate in value. Even Picasso items are not always that valuable because he just didn't stop making doodles and sketches.

Here is a list of 800 or so items by Sargent and the prices they got:

https://www.invaluable.com/artist/sarge ... es/?page=1

Are you sure a museum will want to display the piece you are planning to buy? Displaying an item for a few years might help you before you return to auction with it as that generates some press and provenance.

If you get my tone, I think this isn't a good investment. If you love the art by all means collect it, but don't assume you will make money on it. The same is true of wine, coins, stamps, baseball cards, etc.
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Mr. Rumples
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Re: Investment Art

Post by Mr. Rumples »

Regarding loaning art and then getting a tax break, taxes need to be considered. Is the ownership being transferred for a period of time? If so, how will the agreement be structured and what about insurance? How long will it loaned for and how long has it been owned? It can get pretty sticky:

https://www.bnymellonwealth.com/article ... rtwork.jsp

A large museum should have an expert in this area, smaller ones, perhaps not.
"Never keep up with the Joneses. Drag them down to your level." Quentin Crisp 1908-1999
Topic Author
CaptainT
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Re: Investment Art

Post by CaptainT »

z3r0c00l wrote: Wed Mar 02, 2022 5:41 am Few collectibles are as vulnerable to fraud as art, so you first have to make sure it is real. Then you should check the value of art by Sargent and how it sells, anywhere from $10 to thousands depending on the piece, but frankly he made tons of prints and paintings ("prolific") and they are not all worth that much. Without scarcity, you can't know if it will appreciate in value. Even Picasso items are not always that valuable because he just didn't stop making doodles and sketches.

Here is a list of 800 or so items by Sargent and the prices they got:

https://www.invaluable.com/artist/sarge ... es/?page=1

Are you sure a museum will want to display the piece you are planning to buy? Displaying an item for a few years might help you before you return to auction with it as that generates some press and provenance.

If you get my tone, I think this isn't a good investment. If you love the art by all means collect it, but don't assume you will make money on it. The same is true of wine, coins, stamps, baseball cards, etc.
Thanks. This is the first time I have ever seen an art piece I have had a print of hanging on my wall for decades being sold at a price I could buy. Just because I can however doesn't mean I should. It is more then I could justify in home decor. I think you are right ,I should probably move the 30 dollar print to the living room and not the guest bedroom and invest the money elsewhere.

Thanks again for the reality check
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HMSVictory
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Re: Investment Art

Post by HMSVictory »

I would have an expert appraise the painting prior to purchase and have it insured after. I would not consider this a part of m investment portfolio and would consider it a toy that you will enjoy looking at or just owning (like a cool car) and yes it may, key work may go up in value.
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Mr. Rumples
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Re: Investment Art

Post by Mr. Rumples »

"Never keep up with the Joneses. Drag them down to your level." Quentin Crisp 1908-1999
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BrooklynInvest
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Re: Investment Art

Post by BrooklynInvest »

Forgeries, valuation, insurance and upkeep. At minimum I'd get several appraisals.

I'm an avid photographer. The dynamics are a bit different - you can always make more editions from the same negative - but how on earth is a fair valuation determined? Auction houses, appraisers etc. all have a vested interest in high prices. My inner skeptic would avoid from an investment perspective - unless I was really rich then I'd collect pieces I loved and call it an expensive hobby!

Art, classic cars, high end watches all likely to make money over the long term but the transaction costs and risks can be very high. The wealthy are doing very well and in America that's not going to change.
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Re: Investment Art

Post by psteinx »

BrooklynInvest wrote: Tue Feb 07, 2023 8:26 am Art, classic cars, high end watches all likely to make money over the long term but the transaction costs and risks can be very high. The wealthy are doing very well and in America that's not going to change.
All these things have insurance costs (or risk of loss if uninsured), and many have maintenance costs, too.

And the tastes of the wealthy change over time.

A 1923 version of Boglehead likely would be talking about antique furniture, stamps, and collectible coins, all relatively less favored now. Maybe vintage rugs, decorative silverware, and/or some porcelain, too. Even the art that was valuable back then would have a different flavor than what's popular among the wealthy, now.
secondopinion
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Re: Investment Art

Post by secondopinion »

I do not understand art as an investment. Art should bring happiness, inspiration, other emotions like that. Investment is business; happiness could come concurrently, but I think that has been arbitraged out most of the time.
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calmaniac
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Re: Investment Art

Post by calmaniac »

Art is not an investment, it is a speculation.

An example of an investment is an equity ETF, which is ownership in companies, which make a profit by selling a product.

With a speculation, such as artwork, increase in value is based on the possibility that it will increase in value over time.

I would not confuse the two. I can't predict what the art market for John Singer Sargent will be in 30 years, but I am pretty such the global economic engine will continue to be profitable.

If you like art and have sufficient assets to provide for yourself, go ahead and buy art for its own sake. But don't buy it as an investment.

We own in the low 5 figures of art, most of which is by artists I've seen exhibited at elite museums, such as the Smithsonian & Met. I'm pretty sure we have not made a dime vs. inflation over the past 30 years of ownership.
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nisiprius
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Re: Investment Art

Post by nisiprius »

secondopinion wrote: Tue Feb 07, 2023 3:38 pm I do not understand art as an investment. Art should bring happiness, inspiration, other emotions like that. Investment is business; happiness could come concurrently, but I think that has been arbitraged out most of the time.
I forget which podcast it was, that had a really disturbing episode about fine art, bought as an investment. It is crated, shipped to a "free port," and stored indefinitely. Something about taxes and imports creates an incentive to do this. The result is that the art is locked away where nobody can look at it--not even the owner.

Ah, here it is: Planet Monet (a pun on the podcast's title, "Planet Money.")
MALONE: Amber says as an art closer, fixer - whatever her job is - she has ended up placing about $300 million worth of client art in these free ports.

SIMON: And there's one other big reason Amber sends all that art into free ports.

MALONE: Taxes.

NOLAND: So free ports are used in the art world to hold work to delay taxation. So the work can live there and be immune to any type of taxation.

SIMON: Amber gave me an example of how this works. Say her client bought a work of art for a million dollars. If that client buys art in New York at Sotheby's, he has to pay the New York sales tax, 8.875 percent.

MALONE: That's $88,750. But maybe he sends that work of art straight to a free port - maybe in Geneva or Singapore. He doesn't have to pay that tax.

SIMON: And that's a lot of money.

NOLAND: That's a lot of money.

MALONE: A lot of money that you don't have to pay until you take that artwork out, which could be a long, long time. It could be forever. You might even be able to use that art stowed away as a kind of cash by taking a loan out against it.
SIMON: Fritz takes me through a loading dock pass lots of boxes. And then he takes me to the back of the warehouse where the building manager opens up a huge metal gate.

(SOUNDBITE OF GATE OPENING)

SIMON: It's cavernous, 20-foot ceilings. And as far back and as far up as I can see - boxes.

So I'm looking down, and I see wooden boxes or wrapped-up crates.

DIETL: Everything that you see in here is artwork, yeah. Everything - we only store artwork.

SIMON: I thought about something the former director of the Luxembourg free port once said - that he didn't want free ports to become cemeteries for art. But what was I looking at? I was looking at a bunch of art in wooden boxes that kind of looked like coffins.
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secondopinion
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Re: Investment Art

Post by secondopinion »

nisiprius wrote: Tue Feb 07, 2023 4:15 pm
secondopinion wrote: Tue Feb 07, 2023 3:38 pm I do not understand art as an investment. Art should bring happiness, inspiration, other emotions like that. Investment is business; happiness could come concurrently, but I think that has been arbitraged out most of the time.
I forget which podcast it was, that had a really disturbing episode about fine art, bought as an investment. It is crated, shipped to a "free port," and stored indefinitely. Something about taxes and imports creates an incentive to do this. The result is that the art is locked away where nobody can look at it--not even the owner.

Ah, here it is: Planet Monet (a pun on the podcast's title, "Planet Money.")
MALONE: Amber says as an art closer, fixer - whatever her job is - she has ended up placing about $300 million worth of client art in these free ports.

SIMON: And there's one other big reason Amber sends all that art into free ports.

MALONE: Taxes.

NOLAND: So free ports are used in the art world to hold work to delay taxation. So the work can live there and be immune to any type of taxation.

SIMON: Amber gave me an example of how this works. Say her client bought a work of art for a million dollars. If that client buys art in New York at Sotheby's, he has to pay the New York sales tax, 8.875 percent.

MALONE: That's $88,750. But maybe he sends that work of art straight to a free port - maybe in Geneva or Singapore. He doesn't have to pay that tax.

SIMON: And that's a lot of money.

NOLAND: That's a lot of money.

MALONE: A lot of money that you don't have to pay until you take that artwork out, which could be a long, long time. It could be forever. You might even be able to use that art stowed away as a kind of cash by taking a loan out against it.
SIMON: Fritz takes me through a loading dock pass lots of boxes. And then he takes me to the back of the warehouse where the building manager opens up a huge metal gate.

(SOUNDBITE OF GATE OPENING)

SIMON: It's cavernous, 20-foot ceilings. And as far back and as far up as I can see - boxes.

So I'm looking down, and I see wooden boxes or wrapped-up crates.

DIETL: Everything that you see in here is artwork, yeah. Everything - we only store artwork.

SIMON: I thought about something the former director of the Luxembourg free port once said - that he didn't want free ports to become cemeteries for art. But what was I looking at? I was looking at a bunch of art in wooden boxes that kind of looked like coffins.
The artist life's work, stored in a box, forever... More "investment"-minded and less drama, I am worried that the next person to look at these paintings is some government official or a thief.
Passive investing: not about making big bucks but making profits. Active investing: not about beating the market but meeting goals. Speculation: not about timing the market but taking profitable risks.
malabargold
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Re: Investment Art

Post by malabargold »

Is there a company that buys art to be shared among investors/clients like some second house or private jets services?
ScubaHogg
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Re: Investment Art

Post by ScubaHogg »

nisiprius wrote: Tue Feb 07, 2023 4:15 pm
secondopinion wrote: Tue Feb 07, 2023 3:38 pm I do not understand art as an investment. Art should bring happiness, inspiration, other emotions like that. Investment is business; happiness could come concurrently, but I think that has been arbitraged out most of the time.
I forget which podcast it was, that had a really disturbing episode about fine art, bought as an investment. It is crated, shipped to a "free port," and stored indefinitely. Something about taxes and imports creates an incentive to do this. The result is that the art is locked away where nobody can look at it--not even the owner.
This little tax avoidance scheme is part of the storyline in the movie Tenet
“Runs are a pathology of specific contracts, such as deposits and over-night debt, issued by specific kinds of intermediaries.” - John Cochrane
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mrmass
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Re: Investment Art

Post by mrmass »

ScubaHogg wrote: Wed Feb 08, 2023 6:23 am
nisiprius wrote: Tue Feb 07, 2023 4:15 pm
secondopinion wrote: Tue Feb 07, 2023 3:38 pm I do not understand art as an investment. Art should bring happiness, inspiration, other emotions like that. Investment is business; happiness could come concurrently, but I think that has been arbitraged out most of the time.
I forget which podcast it was, that had a really disturbing episode about fine art, bought as an investment. It is crated, shipped to a "free port," and stored indefinitely. Something about taxes and imports creates an incentive to do this. The result is that the art is locked away where nobody can look at it--not even the owner.
This little tax avoidance scheme is part of the storyline in the movie Tenet
Is that what Tenet was about?? :mrgreen:
ScubaHogg
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Re: Investment Art

Post by ScubaHogg »

mrmass wrote: Wed Feb 08, 2023 6:27 am
ScubaHogg wrote: Wed Feb 08, 2023 6:23 am
nisiprius wrote: Tue Feb 07, 2023 4:15 pm
secondopinion wrote: Tue Feb 07, 2023 3:38 pm I do not understand art as an investment. Art should bring happiness, inspiration, other emotions like that. Investment is business; happiness could come concurrently, but I think that has been arbitraged out most of the time.
I forget which podcast it was, that had a really disturbing episode about fine art, bought as an investment. It is crated, shipped to a "free port," and stored indefinitely. Something about taxes and imports creates an incentive to do this. The result is that the art is locked away where nobody can look at it--not even the owner.
This little tax avoidance scheme is part of the storyline in the movie Tenet
Is that what Tenet was about?? :mrgreen:
It’s a confusing movie. By the third watching, once I could keep track of what was happening, I loved it. A completely original take on “time travel” and I say the most underrated big budget movie of the last decade plus.
“Runs are a pathology of specific contracts, such as deposits and over-night debt, issued by specific kinds of intermediaries.” - John Cochrane
Mr. Rumples
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Re: Investment Art

Post by Mr. Rumples »

Yes, art is speculation, unless one has a Turner* or a Picasso and then there is the danger of a forgery. But art can be enjoyed, sold and perhaps a profit will be made, but perhaps not. The antique chair market is way down...I love antique Windsors. I have 13 (alas, can only sit in one at a time), but I buy and sell them when I see one which has a different form or workmanship quality. Does anyone in my family appreciate them? Nope...I guess they will go to the dump when I go under, though I have tagged them with a sticker to note they are of value, maybe that is. My POA still has her mother in laws antique chairs, she can't get what is a good price for them.

*Angela Hamblin was exposed as painting a fraudulent Turner, long thought to be a real work by him. On the flip side, a Turner long thought to be a fraud, was authenticated and sold for $1M+ in 2021.
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ScubaHogg
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Re: Investment Art

Post by ScubaHogg »

Serious question, how does this discussion not fall under the prohibited “Greater Fools” investing?

rules#rule-4c
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BrooklynInvest
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Re: Investment Art

Post by BrooklynInvest »

psteinx wrote: Tue Feb 07, 2023 3:01 pm
BrooklynInvest wrote: Tue Feb 07, 2023 8:26 am Art, classic cars, high end watches all likely to make money over the long term but the transaction costs and risks can be very high. The wealthy are doing very well and in America that's not going to change.
All these things have insurance costs (or risk of loss if uninsured), and many have maintenance costs, too.

I did an interview with an art appraiser one time. She said a big problem isn't just the maintenance of things like vintage Ferraris, it's making sure paintings are stored correctly - too much humidity and mold can form over time, too little and the paint will eventually crack. Too much sunlight and you've got more problems.

Me, I'll go to the MOMA when I want to see the good stuff. Prints go on my walls.
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