In the time of the sacred sites and the crashing of ecosystems and worlds, it may be worth not making a commodity out of all that is revered. —Winona LaDuke
When the high-end art scene starts crashing, do we worry, or do we look for opportunity?
The art world is crashing. Don’t worry, your favorite museum is safe, at least for now. In fact, for all but maybe .001% of the population, life will go on as it always does. No big deal. In fact, even as I’m typing I’m still trying to decide whether or not I should be concerned. I mean, after all, there are much more important things to be worried about. Just look at this list:
- Global investors are cashing out, which typically means they’re anticipating a crash and want to be as liquid as possible.
- China’s army is making itself combat ready. Why? When the world’s largest army starts prepping for war, how do you not worry?
- US workers in chicken plants have to wear diapers. This is seriously the most WTF moment of the week. We may all have to start raising our own chickens.
- People are still arguing about bathrooms. Doesn’t anyone understand that no one wants to use a public bathroom at all? We only go because we don’t carry a change of pants.
- McDonalds is testing using fresh hamburger material rather than frozen patties. Perhaps next they’ll test using real meat.
Oh, and on top of everything else, it’s Friday the 13th with a full moon while Mercury is in retrograde. I may know people who won’t leave their house today. I may be one of them; I’m not sure mowing the lawn is worth the risk.
With all these really critical issues out there, why am I most bothered by this article about art sales crashing? I’ve been sitting here staring at it since Tuesday, trying to decide if I’m really concerned that Sotheby’s reported a loss of $32 million. Am I really all that upset by the fact that auction at Christie’s this past Sunday only brought in $78.1 million compared to the $658.5 million of a year ago? Is this really all that important?
On the surface, what happens in the high-end art world is irrelevant to the overwhelming majority of people because we are not and never will be invited to that party. The people who invest $20.4 million for Auguste Rodin’s sculpture “L’Eternel Printemps” are not your next door neighbors. These are people who have stupidly insane amounts of cash on hand, more money than sense some may say, and are investing it in the hope that art produced by dead people will go up in value.
Note, the artists’ families don’t see a dime of this investment revenue. The artists only get the amount for which the work was originally sold and I can, in most cases, promise you that it was not $20.4 million. The art investment scene is a game among the super rich to see who can obtain the bragging rights for the largest and most valuable collections.
What makes the high-end art market even worse is that all too often the people who buy the art don’t have any intention of displaying it. Some of the world’s most valuable art has been sitting in climate-controlled warehouses for decades. Occasionally someone will loan a piece to a major museum, but even among the most elite very few have sufficient security systems in place to risk displaying irreplaceable works of art. The only value in buying these art pieces is the hope that the next sucker will pay even more for them.
Given all that, is there really any reason to be concerned that the handful of extremely evil art brokers who control high-end art have seen their over-priced commissions slashed by 37%?
Actually, there is. See the article in the very first bullet point up there, the one about global investors cashing out? The crashing art market is part of that same worry among major investors that something bad is about to happen to the global economy. People who have money, lots of money, are resilient in the face of normal market fluctuations; the daily ups and downs don’t bother them a whole lot. So, they lose a few million on one day, they gain it back and more a couple of days later. No worries.
When the economy shows signs of depression, or worse, however, people who have money start cashing out so that they don’t risk losing everything. Should the markets suddenly decide to go crashing, they don’t want to lose all their money. This week’s hit was about $7.3 billion taken out of the markets and that’s the fifth consecutive week for such a gap over the amount of investment.
Where the art market fits into this is that it doesn’t involve as wide a group as does the stock market. There are no hedge funds in art. The number of people making this kind of investment is extremely small, fewer than 500 by some counts, and involve only the richest individuals and estates in the world. Not much makes these people nervous. They barely flinched in 2009 after the markets collapsed in 2008, and have been consistently making heavy investments in art since then, despite various challenges to the economy. When these people are nervous enough to stop investing in art, the rest of us should probably be shaking in our dime-store boots.
That’s not to say that there might not be an opportunity here. Previously, when the high-end art market starts crashing as it is now, investors look to more modestly priced art and unknown artists. Such investments are cautious, to be sure, because investors never know whether an artist whose work is currently under appreciated might “catch on” within the art investment community and suddenly increase in value. If it doesn’t, they’re just stuck with a $4,000 painting of flowers that they’ll probably just end up loaning to a small museum and forgetting about.
Still, for all those unknown and under appreciated artists out there, which is pretty much every artist out there, a downturn on the high-end may well be their opportunity to gather high-level attention. Doing so is not easy. These investors rarely go shopping among second- or third-tier galleries, and even then one has to figure out how to deal with the nasty-assed art brokers to even get a showing at any place remotely impressive. Being an artist is wonderful. Actually trying to sell art absolutely sucks but can be worth all the trouble.
We all know how important timing is and this crash at the high-end may mean the timing is right for a number of artists.
Or, it could mean that the entire global economy is doomed.
It is Friday the 13th, after all.