What Is Art Really Worth?

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S1: This ad free podcast is part of your Slate Plus membership.

S2: Hell. Welcome to this away special edition of late money.

S3: This is a mid week little treat for all of you who listen to Slate Money. Thank you for listening and what I’ve done for the next few weeks is put together a series of shows about swag which is a financial term which stands to Silver wine art gold. It’s basically anything that you can buy that you might think will retain its value even though it doesn’t have any cash flows associated with it. We are going to talk about crypto currencies we’re going to talk about gold and wine and maybe I know cause that kind of thing. But today to start it off my favorite subject of all is art. And there is no one better to talk to about the idea of art as an asset class and whether anyone can ever make money buying and selling art. Then Julia Halperin of AlterNet Hello Julia. Hi. Welcome to the show. What do you do it on. And do you have a podcast plug.

S4: Yes I am executive editor at art net news and we have just launched our very first podcast.

S3: It’s called The Art angle so check the art angle out which is hosted by Andrew Goldstein not Julia sadly. Stay tuned here. And Julia and yeah we’re going to talk about big names. We’re going to talk about Banksy comes up and Rothko comes up and Picasso Warhol and we’re going to. I think we’re going to conclude that you shouldn’t buy any of them but stay tuned to find out. So let’s start with this question of is art an asset class and what is an asset class.

S5: Because I feel like this is going to be the big question we’re gonna be asking throughout this series. But art is a great place to start because it’s not something that you know financial advisers have historically advised their clients to go into for the sake of diversification or anything like that but yet they all seem to do it or a lot of them seem to do it. So what would you say an asset class.

S6: Well I would say if you think of an asset class as something that you can buy and hold and sell then art is an asset class but it’s not a good sign. So a good asset class would be one that generally goes up in value one that goes up in value one that doesn’t cost you money to keep. One that is pretty liquid one that is probably fairly interchangeable and consistent across the asset class. And art is none of those things.

S3: There’s not a lot of fungibility. No. So like an ounce of gold is worth the same if it’s in New York or if it’s in London no matter what. It’s just made of gold. That’s all it is. But a painting.

S7: Or all painting the unique and the other thing too is that you know gold is you know give or take some major geopolitical drama is going to hold its value over time whereas most art is going to be virtually worthless in the very long term.

S5: So OK so this is a great place to start that we have a general I mean I think you’re absolutely right. I mean obviously right. If you just look at the amount of art that is created every day that’s just enormous amounts of it. And you can go on to Tumblr or Etsy or any number of other places and just see huge amounts of art being created every day. Almost all of it has no value when it’s even created let alone over the long term some of it a tiny tiny proportion of it has value and it’s created in that often. This is the art that is made by artists who are represented by galleries and somehow that nexus of artists and gallery can persuade people to pay good money for the art. And then if you again go back how long is that sort of artist and gallery system been around like maybe since the 19th century. Yeah late late 19th century late 19th century. So we have maybe 120 hundred and twenty and thirty years something like that of of that history. And if you look back over that history there’s been billions and billions of dollars worth of art sold in that nexus and all of that billions and billions of dollars worth of art the amount the percentage of that art which is worth more today than it was on the day it was bought would be a hazard a guess who five person. I think that’s way high to one I would be astonished if it was even one to be five as probably high.

S4: I mean although the further back you go you know the art the smaller. That’s true.

S5: So there were fewer artists who were operating in that system but there were so many just like random academic artists making ground paintings which are basically worthless to them.

S8: And even stuff that like you know Henry Frick collected like a lot of it was just bad stuff that looks really retro and never made it into his museum.

S5: And yes. So that’s one of the sort of lies about the great collectors is they all have these amazing eyes and everything they bought turned to gold like the great collectors have the same kind of pathology that all collectors have which is that they just buy a huge amount of stuff and then according to the Law of Large Numbers we buy enough stuff then some small percentage of that will be stuff that goes up in value. And if that small percentage is a large small percentage I don’t know if it’s like 5 or 6 percent then maybe that’s all you need to go down in history as a great collector.

S8: Yeah I think that’s true. And you know a lot of those guys you know the Morgans and the freaks and the Getty is you know they bought with their ear as much as what their eye. Just like a hedge fund person today.

S5: Yeah. No one actually buys with the eyes. Right. Oh very few. I think there’s one there’s I know I think I’ve met one collector in my life who I genuinely believe buys with her eyes and how could you tell. Just walking around her house and looking at her collection I am perfectly happy to say who it is. It’s this woman called Marilyn Osman down in Texas who has some extraordinarily valuable works but the vast majority of what she has in her house is not valuable and she just buys from artists who she loves and she likes to support them and she and they’re wonderful in their own way. And she has absolutely not a care in the world about whether she could so ever sell any of it. And it’s kind of awesome but it’s so rare to find that. And when you do when you’re in the world that we’re in and we get invited on tours of great collectors homes all the time. And it’s kind of once you’ve seen one you’ve seen the mold realize it to a certain degree oh look there’s the Warhol there’s the reef the there’s the Picasso and you. And these things become sort of instantly recognizable brand names. And if you want to buy art that is not going to be worth zero is easy to do that you have by Picasso right. Picasso is never going to be worth zero. But is that a way to diversify your net worth somehow that you have some stocks you have some bonds. Yes some Picasso stuff that make us some kind of financial sense.

S8: I can’t imagine that that’s the primary motivator for people doing it. I mean I think that that narrative exists because it it can justify a splurge. But I think it’s it’s all of this. I mean you can’t discount the sort of social value of participating in this world and feeling like you’re a part of this sort of rarefied economy that requires kind of story shape whether you’re actually acting that out or not.

S9: I mean even in the most sort of like brash macho segment of the auction world they’re still like is it an A.

S7: Or is it an A plus you know or is it today or is it a B picture. You know they’re still talking about whether this thing is good or not.

S3: So tell me about that because this is something which you hear I think in probably 90 percent of auctions that there will be an auction and then at the end of the auction someone will get asked a question about how did the auction do and they will. And they will answer with this response basically saying Well I think what this auction proved is that there’s bids in the market for the very best.

S10: There’s appetite for good material.

S3: However the hype the good in that area. So that is that completely meaningless. Is there any objective criterion of what good material is beyond just randomly what ever happened to sell well yesterday.

S8: So I actually do think that there is some objective criteria that you can look at for quote unquote scare quotes good material and that has to do with you know nobody wants something that’s been shopped around a lot. Nobody wants something that you know people want something that hasn’t been seen for a while.

S3: But the interior don’t seem to have any obvious correlation with quality inherent.

S11: Yeah I guess I’m thinking more about like the sort of price that you make in terms of quality I do think people talk about you know when you look at like a Rothko like he’s a guy who had good days and bad days a good Rothko you know those squares that with like feathered edges they like flow in the picture and you feel like you’re being sort of like absorbed by it and then he has you know pictures that are a similar composition similar shapes on the canvas that just kind of like cut plunk on it.

S9: And I do think that you can tell the difference and I actually don’t think it takes like an art historian to know that you just have to stand up from it and look at it for a while.

S3: Okay so let’s assume all of that. Let’s say that Rothko had good days and bad days that a relatively untutored I can relatively quickly discern the difference between a good Rothko and a bad.

S10: You’ve seen more than one. Yeah.

S3: And let’s say that bad Rothko will sell for two million dollars and a good Rothko will sell for twenty million dollars. Yeah just point pulling numbers out of thin air here. Then the next obvious question is like if we’re thinking about autism then as an asset class if we’re thinking about something which will hold its value over time in real terms or possibly even in like S&P 500 times if you’re being very ambitious then. Is there any reason to believe that the 20 million dollar Rothko is a better investment than the 2 million dollar Rothko.

S12: Yeah I think you’re right.

S11: I think that is yeah I think so. I think in part because you’re a good one is always gonna be better. So if the desire or the demand or Rothko standing shifts over time which happens all the time in our history and in our market that might mean that the one that’s worse it’s going to be pushed to the side.

S9: But his best stuff is always going to be his best stuff. And so it’s going to hold its value more than I think the handful of ones that he did when he was tired.

S3: I think this is something which you hear a lot in the well and I think it is based on some fact that if you care about art as an investment or if you want the art you buy to go up you really are better off buying an extremely good piece by you know. Well you’re absolutely convinced of the timeless quality of it rather than you know buying something you can afford I guess.

S9: And I also think that’s why that dynamic is why the market gets sort of twisted up into knots because when people are making decisions based on you know seeing a j peg knowing the name and the date maybe and not paying attention to the actual thickness of it then the sense of what’s valuable gets completely blown out of proportion and you sort of lose that thing about merit and inherent value and then you just get into you know betting on names and yet the whole idea of people buying names and like you know I don’t know who’s who I know.

S3: George Kondo someone like that like you know some random piece from 20 years ago which you might have been able to pick up for a couple thousand bucks. Not that long ago is now worth half a million or something and you’ll like. And that’s just because of the name on the bottom and like we definitely see this with you know we saw this with Picasso famously and even even with Warhol like there are certain artists where anything by them becomes worth a lot of money just by dint of the fact that it’s by that artist and even. That hypothetical not so good Rothko is still worth a couple million dollars that’s still a lot of money.

S12: Yeah. So how does that work.

S4: I mean I think that there is a whole system that’s built to keep those guys you know their material moving and really when you look at it especially when you think about somebody like Picasso or someone like Warhol I mean the art market is really small compared to other markets.

S6: And those artist markets are run by generally a pretty small number of people who have a lot of everybody else’s markets run by an even smaller number than that.

S9: But in terms of the volume like I would say I don’t I I’m guesstimating but I think you could say that in the last year maybe a thousand Picasso sold at auction and there were maybe 30 percent of the total price the total value of those were properties probably run by like 10 people. And so I think that that kind of you know people being really active in these markets is generally and especially in the areas that are really closely watched like the evening sales at auction where people see those things as symbols for where the market is headed. You know there are people whose job it is to kind of keep those things ticking along and keep those things moving so that you don’t have a radical fluctuation in those assets.

S3: So one of the things I occasionally say when people ask me whether it’s possible to make money by buying and selling up is to say well yes it’s actually it happens all the time and the people who do it called art dealers and if if you are a professional art dealer and you are buying and selling art and especially if you are relatively deep pocketed and can hold a bunch of art in inventory for decades and wait for it to go up in price and not sell it if it’s gone down in price then it is possible to make a really quite enormous amount of money. You know William Steines today the nomads have done it like that quite a few collectors have done it but they do it in a super professionalised way. And then what happens is you get a bunch of no hedge fund managers or whoever coming into the market and being told oh you should buy this because it’s going up in value and then they buy it and then they see some auction data points which kind of imply to them that probably they were quote unquote smart because their quote unquote investment has gone up in value. And then they congratulate themselves on being really smart and they buy more and more of it and they never realize that it’s actually really difficult to sell these things if you ever want to sell it. And they do quite a good job of ignoring the fact that a large number of paintings that they bought may have gone down in value and it’s a very disciplined and capital intensive a full time job to be an art dealer and if you’re not an art dealer then I don’t think anyone like really makes money on this.

S8: I don’t think so either. And I also think that the people who make money the dealers who make money you also have to kind of not care about it and you kind of have to not care about artists because dealers who really like bleeding heart dealers put their money in you know living artists or they support a scholarship to kind of promote artists who haven’t been paid attention to. And that stuff is like you do it because you love it you don’t do it because you want to make money.

S5: Right. And indeed if you if you look at the dealers who’ve made the mega bucks this there’s a couple who have a business representing living artists in the primary market but in a way it’s much easier to not do that and you just be a secondary dealer.

S7: Yeah it’s way easier way way easier. And there are you know these are sort of small outfits.

S8: They’re like guys who worked at the Goshen and they went off and started their own shop and there are two guys and you know they don’t really do shows. They just sell art and they like they do deals and that’s that’s what it is.

S5: Yeah. And then there’s nothing romantic about that.

S8: No no it’s not. And it’s those are the conversations where it becomes I think sort of more crudely about the asset. This is when you see like the same you know Basquiat popping up over and over at an art fair and the guys just try and move the product.

S5: So let’s put dealers to one side because you know I think if you’re trading in anything then that’s that’s clearly a profession where you can make money being a trader and start talking a bit more about collectors who can in many respects have like a significant Lee enormous percentage of their net worth tied up in art you know because they’ve caught the bug they love. They love the the social entree it gives them. They probably love the art you know and they really love the artists and they love the ability to support these things. But there is a I have this idea that there’s a level a price level above which no one really buys are without considering the question of whether it’s going to retain its value.

S3: And I think that place that was relatively low I think I think basically once you reach don’t 15 20 thousand dollars I do think it’s different depending on how rich you are.

S5: I mean it is yeah maybe I mean so. So OK let me ask you a couple of questions. The first question is what is the cheapest work of art that you think has a decent claim to being able to retain its value.

S10: Mm hmm. Well I think I don’t want to recommend this it’s like don’t do it like you know don’t do this don’t do this but there are people who will you know go to the Columbia MFA shows I go to the Yale MFA shows there are certain art schools that have a reputation for turning out people who become start with that. That’s a super gamble. Oh yeah yeah.

S3: But that’s all said sir.

S13: We have a board I’m saying it’s like if I don’t want late if I if I spend you know a million dollars on a Warhol on a minor Warhol then there’s a big liquid market in Warhols and I’ll know that know I could probably sell it tomorrow and not lose more than about 20 percent of what I paid.

S3: Maybe if I’m lucky where is it. Yeah and you can do that and possibly there is some sort of work some paper that is cheaper. But like in general if I if I say to myself hey you know I’m decorating my house I have empty walls.

S5: I want to put something on those walls. I have two choices I can either put on those walls which I buy and I know I could never sell and it’s basically worth zero and that’s. And that’s just the consumption expense. And I will lose that money forever or I can try and pick out works of art that conceivably will retain their value or maybe even go up in value. And if I do that then maybe I can even afford a bit more because I haven’t really lost that money. So the first question is how much was kind of the minimum amount of money that I do I need to spend to even get in that ballpark.

S11: So I would say maybe like four or five hundred K okay.

S14: Because there are artists that are subject to kind of wild speculation where it’s feels like a bubble that’s gonna burst. They don’t generally I think it hits around like three or four hundred K and that’s where somebody who started you know three or four years ago it at 10 or 20 K can get up there to that level pretty quickly but I think that’s a ceiling that’s hard to break if you don’t have you know a longer career. Museums support other things like that. So I feel like there is a threshold there right below the 500 k mark where I think you have to have a little bit more of a foundation to hit it.

S3: So if you don’t have sort of half a million dollars per piece kind of budget then don’t kid yourself. You’re making an investment. Yeah no but if you do have that kind of multimillion dollar budget then on some level even if it’s a bad investment and even if it goes down in value it does on some level have the ability to retain its value or have a an actual value over the long term.

S11: I think you have a shot you have look good you have a solid shot right.

S3: So that that. Okay so that’s that’s an awesome answer. I really like that.

S12: There’s somewhere else like half a million dollars per piece which seems so it’s just so much money so much money is so much money. It’s like you I have to just think with two brains when you think about the art market.

S10: Look I have to think about the brain of my money and like what I spend at the grocery store and how much money I make in a year and then you have to like go sit in a room and hear people beat in increments that are like three times what you make in a year and just be like those two things are separate things. Those are not they’re not the same dollar. You just can’t put them together. Real crime.

S3: So what does that mean for the people who are spending fifty thousand dollars. Because I feel like on some level if you’re spending 50 or 100 thousand dollars on an artwork like you don’t do that if you genuinely believe that the minute you put it on your wall it’s worth zero.

S11: I think well first of all I think that you must convince yourself that this is a good idea. And I think oh I just think I don’t know. Would anyone buy something worth fifty thousand dollars just because they love it.

S3: That’s what I’m asking. It’s just I had this. I remember I I interviewed an art collector you know him called Adam Lindemann. Oh sure. And I asked him this very question. So it’s like how much would you spend. What’s the most you would spend for the artwork which you knew was worth nothing just because you loved the art and because you loved how beautiful it was and you wanted to live for something that gorgeous. And he looked at me like I had three heads. It’s like I would never buy that.

S9: I think you have to delude yourself into thinking that you’re doing both at the same time. Right. I mean you must think if I love it this much somebody else will love it that’s much because I’m smart and my taste is good taste. And so it can’t be a bad idea. Because I like it like it’s the reverse of. There was this famous line that was said by a former contemporary auction had at Sotheby’s Tobias Meyer who said the best art is the most expensive because it’s the one that people wanted to buy them.

S3: It’s the efficient markets hypothesis applied to the art world which everybody knows is the polar opposite of an efficient market and is full of you know the most egregious forms of money laundering and insider trading and and information opacity and you know that lying about if you don’t know who the fish is at the table it’s probably you applies to probably 99 percent of people who buy.

S9: Yeah I think on some level in the same way that like I have to look at the money being spent with of two minds like I think when you’re buying art you have to do that to you have to sort of like just delude yourself into thinking that because I think this is worth this somebody else eventually will too. And that’s the dealer’s job. That’s kind of the system’s job is to convince you that that’s the case and the system does it so well.

S3: So it’s as this guy incredible like industrial complex devoted to persuading people that art is an investment that you can make and that like oh we have I think almost as a cheap right now relative to contemporary or like these lines on charts that you see which which you know like you should plot something or other against the S&P 500 where the thing that’s being plotted is never something that’s actually investable and it’s full of like confirmation bias. I mean oh my God. Don’t get me started on the problem with the May Moses index of late. How how much art is worth but this there’s so much of it coming at collectors the whole time. And and on some level it’s so easy. Like one of the one of my favorite stories is that great American artist known as Thomas Kincaid. Yes. Painter of Light. Painter of Light. He would he would put dots on his paintings. But yeah I mean like no one in know no one in the sort of high end world ever ever took him seriously but he managed to persuade hundreds of thousands of Americans that his art which wasn’t even original paintings is just like reproductions that his art was always and everywhere going to go up in value. And he did it through this unbelievably simple mechanism of owning a bunch of shops which would sell his paintings and then rising raising the prices every three months and then the shop could with. In all honesty say well look at this painting. You can buy it today for three thousand dollars but if you bought it last year it was two thousand dollars it’s gone up in value by a thousand dollars. And people were like Oh wow. And they bought it. I mean they didn’t just buy the art they bought the story and of course it all ended in ideas and all those paintings are worthless. But like it’s so easy to persuade people because there were so many narratives in the market of like you know all of these expensive paintings that get sold at auction and every single one of those expensive paintings was owned by someone and that someone made lots of money and if they can do it why can’t I do it.

S4: And also I mean all of the data that’s available is auction data. And if you really want to track apples to apples you have to track things that meet that have come to market before. So you’re already dealing with a really really narrow slice of the market that you know has been deemed re saleable.

S9: Right.

S5: Because again to our original point if you look at all of the art even the art that has been purchased from relatively reputable galleries over the past 130 years if you took a representative slice of that to Sotheby’s or Christie’s they would immediately throw out 95 percent of and say we have no interest we’re not even going to try and sell this that we’re interested in maybe four or five of these species which we think we can put into a sale maybe one of them would make an evening sale. You know I wrote a lot back in the day about the Burke ship museum when it was doing its deals accession thing and they had a huge collection of thousands and thousands of works and so the bids came in and said give me this one that one that one and that one because that’s where all the value is. They just went down the list of the most expensive pieces until the point where Sotheby’s wouldn’t accept them anymore and they said OK.

S6: So it was it wasn’t that long of a list now and so on the one hand you know they’re telling buyers you know this is so special. You will be so special if you own this. And then on the other hand are telling sellers like I can only sell to the rest of them are enough you know. I can’t work with that. And that that is really representative of how the market works.

S3: So OK. So we can agree that the smart and really probably only way to buy art is to assume that it’s worth zero. The minute it goes up on your wall and then if you don’t love it enough to spend that much money on it then don’t spend that much money on it. But given that people are not going to do that. And they’re going to get themselves like if they spend X on it and it must be worth X and so on some level. Do you have an opinion on the question of whether people should find the artists they love just buy directly from those artists whether they should find the artists they love and buy from galleries because gallery is a useful way of ensuring someone’s value or whether they should buy in the secondary market and in an auction or somewhere like that where the artist actually gets no money at all but at least you know there’s an under bidder who can kind of ratify the amount that you’re paying.

S9: I would say that if I were advising like a friend who just you know came into money and wanted to buy art. That’s the thing to do would be to go to a bunch galleries see not only which artists you like but also which like the snooty art term is like which program you like because the idea is that any dealer is going to see a lot more art than you’re going to see. Like you have another job. And so if you like what this person has put together as you know a sort of selection of artists and you like that point of view that’s already kind of one call. And then within that you know you can support an artist in that you like. I still don’t think it’s a good idea.

S12: I really don’t. For that you know for if you if you’re trying to do you know like I don’t know buy bonds.

S10: But but I think that there are so many other reasons to buy art. I mean there’s and there are reasons that you know these same reasons are reasons that rich people buy art. I mean it’s to kind of participate in an exciting world where you’re constantly being present with things that you don’t understand and that you know are pushing you to look differently.

S3: And I would pay a reasonable amount to be able to live with something like that but I wouldn’t expect to make money later on that I feel like the reason to participate in the primary market is on some level has to be because you think that making is a good and important thing that happens in society. Yeah. And you want to support that and you can’t support art making without artists getting paid somehow and if you participate in the primary market then those artists are getting paid and paying artists is on its face. Generally a good thing.

S8: And if you buy stuff at auction you’re like cheating and if you buy stuff directly from the artist then you’re not supporting the kind of system that can keep artists from working and making money because a gallery you know a gallery has artists that do well and make money on it. And artists who don’t. And so you know they’re sort of floating some people at at any given time and you know making money from others and so I do think I mean there’s been a lot of talk about the gallery system especially in kind of the middle tier struggling because there is such a polarization in the market. And I think there is no inherent value to that system.

S3: Yes it’s daunting. Galleries is like it’s less obviously good than supporting artists but it’s still important still have a role especially like the smaller galleries who really do struggle and these are people who you know they give artists you know legal advice they give them they help them with materials they help them figure out what decisions to make.

S6: You know like art school does not have a class called like you know jobs being being an artist and that’s kind of what it’s part of why galleries do.

S3: So tell me about like when. When I was you know I’m an old person you probably don’t remember this but back back when I was small I remember this world existed in New York it existed in London and I’m sure and it definitely existed in Chicago and in Paris and a bunch of other places as well where galleries would you know have the locations often in relatively posh parts of town they would often be like at street level and they would put paintings on their walls and people would walk in and decide whether they liked those paintings and if they like those paintings. When

S15: I say people I mean real normal people like you that dentists and lawyers and yeah just normal upper middle class professionals would look at the art and say I like that.

S3: I would buy the painting and then you would get wrapped up in brown paper and they would take it back to their home and put it on the wall and enjoy the painting. And as the art world has globalized and become part of this big like Art Fair monstrosity and and become financial lies and an asset class and that kind of thing I feel like that seems to have gone away to some level. I can’t kind of imagine in my head right now as a 45 year old dentist wandering into an art gallery and saying that looks pretty I’d like to buy. Put that on my wall. Is that like a thing of the past.

S6: No I think it’s definitely shifted a lot away from that. That is a class of collector that is definitely a vanishing breed. But I don’t know if it’s just the art world’s fault. I mean I think that that’s the result of income inequality and you know in the same way that like being a journalist used to be a good job or you would have disposable income you could buy an apartment.

S3: I mean family dentists still have disposable income that you have but they might not have half a million but they could probably afford a thousand or two.

S6: Yeah but do you think in when you were small. Were they spending a thousand or two do you think. Yeah yeah listen yeah.

S3: Twenty nineteen dollars. Yeah yeah.

S6: Cause you can’t like you couldn’t a gallery isn’t going to sell much that’s a thousand or two dollars and you’re like eight is probably the basement. And so I do think that some of it is just how much the cost of living has changed and disposable income that people have and the fact that they’re using it differently. Plus the fact that they’re sort of starting price for an artwork has definitely gone up over that time. And then obviously you have the like hole. Our world is snobby component where galleries don’t want to sell to just anyone.

S5: Realistically if it’s not a huge gallery they will.

S7: And I was gonna say I also think that’s changing because galleries need money now just as much as vending business and they’re there I think they’re getting a little bit less choosy as time goes on.

S3: So everybody’s favorite art critic is this guy called Dave Hickey who has been around the art world in the sort of curmudgeonly way fit since the 60s 70s and he was not dealing back in the day back in late 70s and he wrote this in 1997 but he was referring back to I think like the 80s ish he said when I was not a dealer any biggish work of art was worth 500 dollars. Any little ish work of art was worth 200 today a biggish work is worth a thousand dollars and the littlest work is worth 300 like that. I feel like that was the day when you could you know if you were upper middle class and had a bit of disposable income like it was a fun place where you could play and on some level maybe there was a lottery ticket aspect to it and you know if lightning struck it was conceivable that maybe that you know work keyboard four thousand dollars would you would wake up a couple of decades later and it would be worth half a million but you wouldn’t expect that. But it was conceivable now like the cost of a lottery ticket as you say like the bargain basement is like penthouse.

S6: Yeah. And I think to that part of it is you know when I think about people I know who are in finance who say you know I want to buy art there is this big fear now of just like looking stupid of choosing something quote unquote bad. And I think it’s sort of the it’s the reverse of the coin of people you know buying art because they want to feel smart.

S7: It’s like these are two different personality profiles but I think that there is something about the sort of like consciousness and psychology of the art world as it’s evolved since the 70s or 80s. You know maybe because you know people now have access to all this information online and so they feel like there’s information overload and they should know more that it doesn’t feel as as fun anymore. You know it feels like you’re being judged which is so sad.

S12: Yeah because it is fun. It should be fun to look at art and it’s fun to live with.

S3: Yeah and it’s really great to live with. And I can highly recommend it. Just don’t expect to make any money doing it. Yeah I mean essentially if you if something which is that much fun shouldn’t be profitable really like get something which you should be paying for.

S10: And you know I’m gonna make a very weird analogy which is that I kind of I just got a dog and I kind of feel like living with our is like getting a dog. It’s like you put a lot of money into it and then every day you sort of take this joy in it that has no purpose at all. It’s like I’m just wasting time looking at this thing I’m walking this dog and like throwing a toy across the room or sitting on my couch and like looking at this print on my wall and it’s like it’s like wasted energy that somehow still extremely elevates our quality of life.

S3: I couldn’t agree more. And just like the amount of joy that you get from A. It’s exactly the same as the amount of joy you get from some incredibly offensive pure breed like getting it’s getting joy out of it has no correlation whatsoever with the price that you paid for it.

S8: Yeah. Oh completely completely.

S3: I mean especially if you’re like Steve Wynn and like you know shoving your elbow through your Picasso. Yeah creating gashes and it just creates like pain and they feel worried about insurance and all of that kind of stuff that maybe you’re doing it wrong. Maybe we should all just try and find something we love and don’t care about the value of it in the same way.

S10: Like when it becomes part of your life like when it becomes I’m so really stuck on the dog analogy. But when you bring this dog home it because you don’t like you forget what you like. But you know I got a rescue but if it’s a rescue or you are purebred like you don’t eventually it’s like it’s your day to day and you don’t you don’t really think about what you paid for it. And I do think that’s true living with art too I mean probably not if you paid a lot a lot but it becomes part of your world it becomes part of the fabric of your life. And I do think that if if you look at it and you only see the price tag then you’re doing it wrong.

S3: I feel like this is one of the problems with the way that the art world has evolved in the past couple decades is that most of the professionals that you deal with when you buying art or forfend selling art that’s how they look at it. They look at art and they see price tags.

S11: Yeah. I don’t know. I think that that a lot of people get into it for the love of the game for the love of the game and the love of the thing.

S4: You know I think it’s like you know as a journalist you’re thinking about that great story that’s going to take forever. That is the labor of love and that people might not read but you love it.

S3: You are. But I remember when I first started working in magazines and then about six months to a year after working in magazines I found myself unable to pick up a magazine without light mentally counting the number of ad pages I was on like the editorial side by the side who would literally have to make up for the outside back cover. You know you kind of like once you understand the industry you can’t not look at it that way even if you want.

S10: No I think that’s true. I think it’s still the kind of thing now where I think there are a lot of people in the market who are in the same way that like I think when I’m assigning stories like one for me and one for like there’s a Banksy story and therefore I can do something on an artist no one’s heard of. I really believe that there are dealers who are like OK like we have the Christopher Wall and he’ll buy us like this artist this like female artist from Lebanon that I’m really passionate about that’s gonna be a real like it’s gonna be work.

S5: Yeah exactly. You’ve got to if you don’t have a passion you won’t last that long maybe you will. I don’t know I have no idea who loves in this business.

S7: I think no one can predict longevity you know and I think that there are people who’s like in any business there are those people whose passion is money and like that is their true love and they’ve been able to make good money in this business. But I still think probably in terms of sheer number like you don’t get into art because you think they’re going to make a fortune.

S5: It’s hard to sell out at the highest levels without on some level being able to have an infectious sense of enthusiasm for whatever it is that you’re trying to sell.

S6: Yeah I think you have to make people feel like they’re you know participating in something that matters. Even if it’s just something that matters because it’s worthwhile.

S3: The one other thing we should touch on is the question of selling like obviously nothing can ever be an investment or even worth anything if you can’t sell it. And this is part of the art market that almost no one talks about.

S15: If individuals own it and they for whatever reason need or want to sell it and it has some non-zero value what are their options. And how like disillusioned and disappointed that they likely to be.

S4: I actually think that this is. I agree it’s like the least talked about component of the art market and it’s also I think kind of the most problematic.

S9: Like it’s the part that works the least well and that’s because you’ve got OK. You have a few options you have consigning something to auction you have consigning something to a gallery you have you know finding somewhere online to sell it and that’s kind of what it is. And even within those those are really narrow pathways. So an auction house may not want it. They might not set it at a price that you want. You know when you talk about it being illiquid you know if they’ve got two pieces already by that artist in their sale they’re going to say wait six months wait a year. And that’s how they do business galleries might keep something for you know two years and not be able to move it.

S6: I mean even at a high levels like I have seen the same Basquiat at I think in Hong Kong London New York and then someone else saw it in Maastricht in a year and it’s still like as far as I know still in the mix still in the market has not found a buyer. And you know there are some options online like I mean where I work art net you know you can consign to an online sale but there it’s just I mean it’s it’s a pretty underdeveloped part of the marketplace at this point and the people buying that artwork by definition aren’t going to be supporting the artist because they’re buying it from you and from the artist they’re not even really supporting the gallery that much.

S3: You know if if you do to consign it to a gallery maybe the gallery will take a cut but you don’t really know how much it’s in one of the again one of the things which you used to hear back in the day was well if you buy a work of art from from a gallery then they’ll always buy it back for whatever you paid for it. And of course that that just is not true.

S4: Oh no that’s extremely untrue. I mean you know it is considered like especially at a certain level it’s good manners to offer it to the gallery first because they can kind of control who sees it. They can protect the artist market and make sure that it doesn’t get shopped around too much. They can keep the prices at the level that they’ve been working at. You know there are reasons why it’s sort of good behavior to offer it to the gallery but it’s true that sort of an artists like Jeff Koons who can kind of set his own terms. Artists don’t see any money from even the sale. The resale through their gallery.

S3: My one advice if anyone listening to this is thinking about offloading a work of art. If it’s a living artist then just give it back to the artist. It seems to be like you know the artist really do appreciate that even if they can’t sell it very easily. They like having it and owning and having it back in their control.

S4: Yeah the other tip I would say to you is that I mean I think this is probably less true today but still somewhat true is that you can also ask for a trade. Yeah like that I have done that. Yeah me too.

S10: You know if you have something and you would want to sell it and you bring it back to the gallery you can get you know something of similar value by a different artist. Sometimes you can also go back to the artist and say you know can trade it for something else. And that is you know a rare case in which having like a liquid assets like art is kind of that you know trade trading art.

S3: It’s fun. Go ahead and trade it. Don’t expect to make a huge amount of money on it and you will be fine. I feel like we’ve started off this season with an asset class that both of us are very down on in terms of an asset class or you know all of the existence of like fine art investment funds notwithstanding. Presumably we would both agree that investing in a fine art investment fund is a spectacularly bad idea.

S12: Very very bad very bad idea.

S3: So with any luck maybe later on in this area go find something which is a less spectacularly. It’s hard to think that we will find something which is the worst idea.

S10: Honestly I’m like I’m going to listen just fine. Yeah Bitcoin I think is maybe worse.

S3: But I’m gonna list and I’m waiting to hear what would be a better idea what yeah will find a better idea which would be just like lighting your money on fire you know at least you get warm. Maybe we’ll find a wise idea.

S16: But Julia Hoffman thank you very much for coming in and starting off this little mini season for us. Thanks for having me.