Wed 1 Jun 2011
Investing in Art is a Good Way to Diversify your Portfolio
Is it time to add a piece of art to your portfolio?
“The return of art can be measured through an index such as the Mei-Moses All Art Index, which in 2010 saw art increase 16.6%, slightly outperforming the results for the S&P 500 total return index of 15.06%. While stocks have outperformed art over the past 25 years, over the past 50 years, the returns were very close, with art achieving a respectable compound annual rate of 9.23% compared to 9.73% for equities.”
The dowside with art is that it is volatile, less liquid and it cost commision to get your piece sold through an art dealer, it does not pay any divident. You need to have a long time horizon with art.
What art to buy and how
Buying young artists would get you art a bottom prices. Investing in younger talent is akin to buying speculative penny stock.
“As recently as the 1950s, you could have bought a Mark rothko for less than $3,000. One of his works was recently sold for $79 million. Not a bad return on investment! But returns like these are few and far between.”
Also only buy what you can afford. But rather than buying multiple little pieces, buy the single best piece you can afford.