BBRG: Getting Rich Investing in Art Is So Easy

Getting Rich Investing in Art Is So Easy
Just figure out what sells for peanuts today and will command a fortune in 30 years or so.
Bloomberg, May 16, 2019.

 

 

 

You, too, can make a fortune in the art market. All you need is an eye for important, beautiful works, some spare cash and a time machine. If you lack the ability to go back a decade or more to buy what we now know will bring huge prices, well, then, making great returns in art is very, very hard.

We were reminded of this courtesy of the sale earlier this week of one of Claude Monet’s haystacks paintings, “Meules” (1890). The painting was auctioned at Sotheby’s in New York for $110.7 million, a record sum for a work by an impressionist. According to the Financial Times, the price, including auctioneer fees, was 44 times more than the $2.5 million the painting fetched when last sold at auction in 1986. This works out to an annual rate of return of 12.2% over 33 years.

Then yesterday, the estate of S.I. Newhouse Jr., the former Condé Nast chairman, auctioned at Christies in New York Jeff Koons’s stainless steel “Rabbit.” At $91 million, it set a record for a living artist. According to Architectural Digest, Newhouse bought the sculpture in 1992 for $1 million. At 91 times more than the sculpture cost 27 years ago, this works out to an annual rate of return of 18.2%…

 

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I originally published this at Bloomberg, May 16, 2019. All of my Bloomberg columns can be found here and here