Bullish Investor: Contemporary Art
An asset class often overlooked and one that certainly is a non-traditional investment vehicle.
If you know me personally, you know I am incredibly bullish on the art sector. I allocate a fair amount of capital to fast rising contemporary artists each year and enjoy the landscape for a multitude of reasons. Focusing specifically on the investment factor for this article, there are certainly “unicorn” type artists with rapidly appreciating artwork.
First let’s discuss the different types of art you can buy and I’ll dive a bit deeper on where I focus.
- Paintings on canvas or other mediums
- Digital Art
Almost all high value art falls within the first category of paintings on canvas. Likewise you can begin to work down the ladder towards the medium of sculptures, artists such as Richard Serra, Alexander Calder & Jasper Johns populate this space. Furthering on you’ll find photography, a popular medium where you’ll find artists such as Annie Leibovitz, Ansel Adams & Nan Goldin. Finally, digital art is becoming a rising trend. Now you can actually purchase proprietary digital works to store forever within your digital space.
As mentioned, traditional paintings take the crown for where value sits. That’s where we will focus, and let’s jump right into some of the superstars of today’s era.
Amoako Boafo took the art industry by storm. From 2019–2020 he broke barriers of all kind. December 2nd 2020, Baba Diop (pictured above) sold for $1,150,000 USD at auction, nearly 10 times the estimated price. Just one year prior a collector likely purchased that work for <$50,000 USD. Amoako is just one example of incredible returns that can be achieved through the world of art. Another prime example is the massive Banksy spike that has occurred recently. The acclaimed anonymous England-based street artist has spiked hundreds of percent through the past six months. Unsigned, mass produced prints are commanding $200,000+ USD at auction.
So how do we find these artists? This is the million dollar question right? If you could’ve purchased Tesla stock in 2016 with guaranteed knowledge shares will appreciate to ~$700 USD, would you have thought twice? No. You wouldn’t have, and unfortunately that isn’t a possibility with public equities. With art, an unregulated asset class that is highly manipulated, appreciation is at your finger tips.
Who controls the price of an artists work? The market of course. The art market is constructed and manipulated at auction. High profile collectors begin accumulating an artists work at their earliest stage and begin placing their work at high profile shows across the globe. From there their work generates incredible hype and demand from the public market. When a work finally reaches auction, it can be bid up to exceptionally high dollar amounts which essentially sets the market price for that artist.
Keep your ears to the street. Just like with any investment, the more active you are in the space and the more time you spend speaking with experts and tracking artist careers, you’ll begin to get tips and hear whispers about who’s next.
Macro level returns: The graph at the beginning of the article paints a fairly clear picture and art as an investment should be involved in any high net worth individuals portfolio. While rising artists are more along the lines of venture investments, established artists are consistently safe bets that have little volatility in their price.