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Ten Tips for Investing in Art

Filed under: Art

If you put any faith in conventional wisdom, the best time to invest is when the market is at the bottom. So, there's no time like the present to put some cash into the fine art asset class. Hey, what passes for a solid performance these days is more than 70 percent off last year's levels. Before you invest anywhere, it pays (sometimes literally) to do your homework, and this is especially true with the art market. A fourth grade math education equips you to watch a stock prices ups and downs – and it is supplemented by what we pick up on the nightly news and (I hope) on the likes of BloggingStocks and DailyFinance.

Art, however, is different.

To understand this market, you're staring down the task of learning thousands of years of product history, in addition to a relatively illiquid marketplace in which prevailing tastes play a major role. You can carve this mammoth amount of information into smaller pieces, but you still need to identify a starting place. It's easy to get intimidated ... and also unnecessary. Take a look at the 10 tips below to make the art market a bit more accessible.

1. Take a recreational interest in art
If you're going to commit several thousand dollars to an art investment, you really ought to be interested in it. Start by going to museums, just to get a sense of the breadth available to you ... and to decide what you like. Some of the most attractive pieces may be way out of your price range. I love Francis Bacon's work, but there's no way it will grace my walls anytime soon, not even with the help of the current art market slump. But, you can use the masters to get a sense of the styles that turn you on, which you can use to choose pieces that are closer to your price range.

2. Know where to find insights
Okay, my bias toward Luxist's art market reporting is pretty obvious, but the articles here can help you get started. Also, check out art market publications like ArtInfo, ArtPrice and Art Market Blog. Bloomberg also provides solid art market coverage. Once you have the basics nailed down, spend some time on the auction house websites, like Sotheby's and Christie's. Get a feel for how the marketplace operates.

Gallery: The artwork of Julio Aguilera

Tags: art, art collecting, art collection, art fair, art investing, art market, ArtCollecting, ArtCollection, ArtFair, ArtInvesting, artist, ArtMarket, artwork, asset class, AssetClass, auction, auction-house, auctionhouse, auctions, fine art, fine arts and collectibles, fine arts festivals, FineArt, FineArtsAndCollectibles, FineArtsFestivals, investing, luxury guide, luxury guides, LuxuryGuide, LuxuryGuides

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People Buying Gold In Bars, Not Bracelets

by Deidre Woollard (RSS feed) —

Filed under: Jewelry

People may be selling gold jewelry left and right but they aren't buying too much of it. The 'Gold Yearbook 2009' from CPM Group shows that while gold prices remain high, gold fabrication rates are expected to fall in 2009. Gold is used in jewelry but also for dental, medical, electronics and other uses. The fabrication demand fell 6.6 percent in 2008 and is expected to fall 7.9 percent in 2009. Jewelry demand is expected to drop by 7.1 percent in 2009.

Investment interest in gold remains high with investors. As reported in National Jeweler, investor buying is expected to hit a record high in 2009, 52.3 million ounces versus 43.3 million ounces purchased in 2008.

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Tags: gold, gold jewelry, GoldJewelry, investing, jewelry

Company Lets Investors Trade Shares For Land

by Deidre Woollard (RSS feed) —

Filed under: Real Estate Developments, Wealth

Dolphin Capital Investors Ltd., a company which invests in vacation resorts, has a new offer for their shareholders. The company is offering a buyback program that will let those who own shares trade them for real estate assets the company already owns. Bloomberg reports that shareholders can exchange their stock for property with a value double that of their holdings.

The company is stopping new investment activities and delayed construction projects until the markets improve. It says that it has idle properties that it would take years to sell (especially in today's market). The program will run for four months as a test but could be renewed if successful. Dolphin Capital Investors projects include the Playa Grande Resort in the Dominican Republic, Pearl Island in Panama and the Kilada Hills Golf Resort in Greece.

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Tags: dolphin capital investors, DolphinCapitalInvestors, investing, real estate, RealEstate

Worth Magazine Cuts Staff As Financial Advertising Falls

by Deidre Woollard (RSS feed) —

Filed under: Wealth

Worth magazine, a magazine that focuses on issues of wealth management, investing, estate planning and "passion investments" like antiques and fine jewelry, is retooling its strategy. The parent company Sandow Media has cut its New York staff by 45 percent and plans to relaunch based out of Boca Raton, Florida. The company will also be producing six issues a year instead of 10. Reuters reports that the general manager of Worth magazine, Alison Parks, had told them in January that there were no plans for layoffs but clearly the ongoing attrition of the financial services sector called for a change in strategy.

Worth has an estimated total readership of 250,000. Worth's bread and butter is financial advertising which has declined with the stock market. Sandow Media also publishes New Beauty and the regional LUXE magazines. Those titles are said to be stronger than Worth which focuses primarily on the financial/investing sector.

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Tags: finances, investing, magazine, pulbishing, worth magazine, WorthMagazine

Hermes Stock Prices Ripe For A Tumble?

by Deidre Woollard (RSS feed) —

Filed under: Wealth

Even as the luxury market started to fall apart in the second half of this year, French luxury brand Hermes remained strong, almost freakishly so. While other luxury groups such as LVMH and PPR began to lag, the share price for Hermes is up 16.7% over the past year. But Forbes predicts that the company's currently level of profitability is not sustainable and that shares will start to fall next year. Most of the stock is held by the controlling family with approximately 30% freely traded. Rumors that Hermes will be sold have also boosted stock prices at various points although denials have always been speedily issued. The stock is still up so this is a good time to collect gains and perhaps move on. In the Forbes article John Guy, an analyst with MF Global picks Burberry as a smart bet for the future.

At least the right Hermes bag is still a good investment...

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Tags: hermes, investing, money, stocks

Jack Grubman's Mansion, Estate of the Day

by Deidre Woollard (RSS feed) —

Filed under: Estates

There are only six pictures of this New York City townhouse but they are a very evocative six pictures. This is the home of Jack and LuAnn Grubman. He's the former lead telecom research analyst for Citigroup's Salomon Smith Barney and as the New York Observer's Manhattan Transfers column puts it, "a star in its telecom investment banking." Grubman ended up banned from the industry amid a scandal involving shady dealings and had to pay a $15 million fine. He may be counting himself lucky now that he got out in 2001-2002 and isn't a Wall Street player today.

It seems that the he managed to squirrel away plenty of money (he did after all have a $30 million severance package). Grubman's home is a neo-Federal mansion built in 1883. The home is a five-story mansion located steps from Fifth Avenue and the Metropolitan Museum. It has been completely renovated and includes a marble entrance hall, iron and bronze adorned staircase, 13' high ceilings in the living and dining rooms with full-height oak paneling and period plaster moldings, an elevator, and an eat-in chef's kitchen that has a dumb-waiter to the butler's pantry off the dining room. There are two planted terraces as well as an ivy-covered south-facing garden. It is listed at $32 million.

Gallery: Grubman's Mansion

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Tags: estate of the day, EstateOfTheDay, investing, jack grubman, manhattan

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The Ex-Governor's Next Move, Professional Vulture

by Deidre Woollard (RSS feed) —

Former New York governor Eliot Spitzer has announced his next move since leaving the governorship under the dark cloud of a prostitution scandal. Spitzer's looking to make some dough and instead of writing a tell-all, which might seem the most obvious move, he's going to try and cash in on the country's depressed real estate market. Spitzer is looking to create a "vulture fund" that would buy up cheap real estate and then sell the properties for a profit. It's a more elaborate and grandiose version of the same house flipping dream that got so many people and companies into real estate trouble in the first place.

The NY Sun reports that late last month Spitzer met with high-level Washington, D.C.-based labor union officials at the headquarters of his father's real estate business in Manhattan. Sptizer's father owns several New York properties but his holdings haven't changed much since the mid-1990s and Spitzer is looking to enliven his father's company. He told the officials that he was creating a business plan and wanted the labor officials to consider investing pension fund money under their control. Spitzer is planning to look at projects valued between $100 million and $500 million. There are certainly plenty of struggling real estate developments out there to choose from.

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Tags: eliot spitzer, EliotSpitzer, investing, real estate

Should Tax Laws Be Changed To Benefit Art Collectors?

by Deidre Woollard (RSS feed) —

Filed under: Art

Is collecting art a luxury or an investment? This simple question has some complex repercussions. The Wall Street Journal reports on the legislation sponsored by two senators, Pete Domenici (R., N.M.) and Charles Schumer (D., N.Y.) to change the tax treatment of sales of art and other collectibles. The capital-gains tax rate of 28% for the sale of art is quite steep compared with only 15% for the sale of real estate and securities (the rate for real estate and securities was also 28% until two measures reduced the rate). The senators argue that the tax rate is unfair to the art industry and punish those who invest and deal in art. Their legislation is endorsed by both Christie's and Sotheby's auction houses and the Art Dealers Association of America.

Another long-standing issue in the art community is the fact that when artists donate their work to museums, libraries and other nonprofit institutions they are only able to deduct the cost of materials rather than the full fair-market-value deduction on their taxes for their gifts. Talk about a disincentive to donate.

Is the problem that the government does not see art as serious business? The WSJ article quotes Joseph Cordes, professor of economics, public policy and public administration at George Washington University who says that the government is interested in encouraging people to invest in business that stimulate job growth and tax revenue and art doesn't really do that. He also says that reducing the capital gains on art sales might discourage certain collectors from donating to museums.

Those opposing changes to the law say that lowering the capital-gains tax rate would just benefit the wealthy without adding anything to the overall economy. The question may come down to the perception of the art world. Is it simply a luxury for the wealthy or is it an industry that impacts people at a variety of income levels? Part of the resistance to these tax bills may be that in supporting them those in Washington could be seen to be creating another way to help the rich get richer.

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Tags: art, art market, investing, luxury, taxes

Are Luxury Funds The Hot New Investment Trend?

by Deidre Woollard (RSS feed) —

When I began writing for Luxist back in 2004 one of the first things I did was pick up a copy of the Robb Report, the magazine for the ultra-rich is one of the standard sources for information on the luxury market. Now the magazine has its own stock index, the Claymore /Robb Report Global Luxury Index ROB. CNN Money reports that Claymore Securities launched an exchange-traded fund on Monday based on an index created by CurtCo Robb Media, publisher of the Robb Report.

The financial reasoning behind this is that companies catering to the luxury market may be a safer bet because spending by the rich is less affected by gas prices or mortgage rates, things that may throw off other consumers. And with luxury spending on the rise in countries like Russia, China and India many of these companies are looking at continue growth. The 42-stock portfolio includes many brands you might expect such as Porsche, BMW, and LVMH.

This follows the news that came out last month that Dominion Group had launched the Chic investment fund which cover 61 designer names and 2,300 brands such as Stella McCartney and Ralph Lauren. After all, if you are going to buy the luxury brands, why not also invest in the companies that make them?

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Tags: curtco, dominion, investing, investment, luxury goods, money, robb report, RobbReport

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