Speaker(s): Nelson Saiers
Art Investing and the Economics of Collecting
When you invest in stocks or bonds, there are a lot of similarities to investing in artwork. But there are significant differences as well.
Welcome to the world of art investing! Art has been a staple of human civilization for millennia, and in recent years, it has become an increasingly popular investment. Just like any other asset, however, there is always risk involved in art investing. In this session, we'll explore some of the risks and rewards associated with art investing in the 21st century.
When it comes to art investing, there are two main schools of thought. The first school focuses on the intrinsic value of art, which is the value that art holds independent of its price. This school argues that art is a good investment because it will always have value, no matter what the market looks like. The second school takes a more pragmatic approach and focuses on the financial value of art, which is determined by things like market trends, supply and demand, and inflation. While there is no right or wrong answer when it comes to which school of thought you subscribe to, it's important to be aware of both perspectives so that you can make informed decisions about your investments.
What Makes Art a Good Investment?
There are a number of factors that make art a good investment. Firstly, art is a physical asset that can be stored and does not depreciate in value over time like stocks and bonds do. Secondly, there is a limited supply of art in the world because artists can only create a certain number of works in their lifetimes. This means that as demand for art increases (as it has been over the past few decades), prices will continue to go up. Lastly, art is a relatively safe investment because it is not subject to things like economic recessions or political unrest. When the stock market crashes or inflation rates rise, people often turn to investments like gold or real estate as safe havens—but these assets can also lose value in times of turmoil. Art, on the other hand, tends to hold its value or even increase in value during these periods.
What Are the Risks Associated with Art Investing?
Of course, no investment is without risk—and art is no different. One of the biggest risks associated with art investing is buying fake or counterfeit works. With the proliferation of online auction sites and private sales through social media platforms such as Instagram, it has become easier than ever for unscrupulous sellers to pass off fake artwork as the real thing. Another risk to be aware of is storage costs; if you're planning on holding onto your artwork for a long time, you'll need to factor in the cost of storing it safely and securely. Finally, remember that art is a luxury item; if incomes decrease or tastes change, people may be less likely to buy expensive works of art (just as they would be less likely to buy luxury cars or vacations).
Art investing can be a great way to diversify your portfolio and hedge against inflation—but it's not without risk. Before making any decisions about investing in art, it's important to do your research and consult with experts so that you can make informed choices about which pieces (and artists) to invest in. With a little bit of knowledge and effort, you can make sure that your art investments provide you with both financial and intrinsic enjoyment for years to come!
Nelson Saiers Shares His Expertise
Artist and former CIO of New York based hedge fund Saiers Capital Nelson Saiers offers lessons about investing that are relevant to collecting art in today’s market.
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Nelson Saiers’ art draws inspiration from a range of subjects portraying them through a mathematical lens that translates ideas into symbols and metaphor. Having received his Ph.D. in mathematics by the age of 23, Saiers possesses a rare ability to perform extreme mental math, envision color in other dimensions, and notice patterns in unexpected places. He therefore largely sees and...