Investing in art in the hope of making a profit is never and idea I’d recommend. Most of us haven’t enough capital to buy works by artists with a large following, which means our purchases are unlikely to grow in value. Worse, tastes can change over time. Finding the next Andy Warhol whose soup can will be worth a million dollars in ten years is difficult, like catching a speck of dust in a wind tunnel.
That said, a way exists to make sense of the ups and downs of the world art market. Michelle Celarie writes a strong correlation exists between the strength of the art market and that of the stock market. (“What’s Good For Sotheby’s Is Good For The World,” by Michelle Celarie, Fortune, October 2016, pg. 49.) Think about it. Art soars when the world’s wealthiest people feel bullish about their personal prospects. Says, Celarie, when stock markets experience peaks and valleys, it shouldn’t be surprising that art values follow suit.
What may be less obvious is the correlation between the price of art and oil. Oil, like stocks, can signal when art investors are buying, selling or standing pat. So, before raising your auction paddle for a Picasso, check to see where oil, as well as stocks, are headed. Looking at the share prices of the two great auction houses, Sotheby’s and Christie’s, wouldn’t hurt either.
At the moment, China’s 2,000 billionaires are holding on to their money while their county experiences a slowdown. Concomitantly, and as might be expected, the art market is flat. Pundits predict values will stay this way for the next six months. But, a whiff of change is in the air. One of those Chinese billionaires, Chen Dongsheng , became a 13% shareholder in Southeby’s, recently. (Ibid pg. 49.) His move may be good news for the art world, looking ahead. Perhaps it’s time to scan the living room walls for a place to hang that Picasso or Warhol soup can you’ve always wanted.