Why You Should Diversify

“Your currency is likely to become my problem” Former Chinese Vice Premier Zeng Peiyan in a speech, July, 2009

 

The list of shaky, dollar holding creditor nations continues to grow.  Surplus countries like Russia, China, Kuwait, Brazil, Switzerland, and as of July, India, are openly revealing their intention to diversify their nations’ currency reserves out of the U.S. dollar, in light of the U.S.’ rapid accumulation of debt in just the past six months.  “The major part of Indian reserves are in dollars – that is something that’s a problem for us.” (Suresh Tendulkar, Chair of India’s Economic Advisory Council, July, 2009)

 

Meanwhile, the S&P 500 stock Index is now trading at a record P/E ratio in the 120’s, not only because of a run up in stock prices over the past few months, but because of a dramatic diminution of corporate earnings. Emphasize dramatic. What accounts for the fall? Well, when spending by consumers accounts for 2/3 of a nation’s economy and those people suffer not only declines in the value of their homes, their largest asset, but also rising levels of joblessness, that spending can come to a sudden stop, as it has in the U.S. Given the fundamental source of the spending reduction, it would be foolish to expect a resumption in anywhere near the short-term. 

 

As a result, the majority of businesses are unable to reliably forecast a return to former levels of sales and profitability, meaning that these reduced levels of corporate earnings are neither one-time nor short-term, and in most cases, changes in corporate strategy won’t solve the problem. Instead, corporate leaders will address earnings shortfalls with more layoffs, compounding the spending and production conundrum,  further elevating the price/earnings ratio,  and rendering the datapoint even more irrelevant as a way to gauge value. 

 

As unattractive as current bank rates of return are, the stock market by comparison is today loaded with unacknowledged risks.  Tangible assets like art are far more transparent with a degree of stability that many financial institutions, and even some AAA-rated government debt, can only dream about.

 

 

Damien Hirst’s Sotheby’s Auction Begins the Unwinding of the Hegemonic Gallery/Dealer System – Art, The Safety and Beauty of Real, Tangible Assets

Damien Hirst’s Sotheby’s Auction Begins the Unwinding of the Hegemonic Gallery/Dealer System – Art, The Safety and Beauty of Real, Tangible Assets

“Non-financial assets form the greater part of world wealth and have been more stable in value during periods of financial and social turbulence.” – Roger Ibbotson and Gary Brinson, “Global Investing”  

Between September 15th and 17th, Wall Street and world financial markets were turned on their heads as 158 year-old investment bank Lehman Brothers filed for bankruptcy, followed by the Fed’s rescue of the insurance behemoth AIG. Credit markets seized up, stock markets plummeted and gold dramatically reversed its weeks-long downward movement. 

However, it was obvious that no one had though to inform art lovers as concurrent with the carnage on Wall Street, the artist Damien Hirst was busy staging a record auction of work by a single artist, selling $200.7 million of his most recent work at Sotheby’s. The game-changing auction of 223 original pieces of art has effectively changed the rules of the game, permitting an art lover to simply walk in off the street, without having to demonstrate their ‘seriousness’ to a dealer or gallery-owner, bid for a piece of original art and become its owner. Requirement: money. Not required: proper referrals, lineage, documentation of existing portfolio, etc. 

Not only did the sale highlight the juxtaposition between those assets with value (the visual and tangibly creative) and those woefully lacking it (creative financial instruments), but it signals a sea change in the way that artists view their options, as well as the volume of work from which the public can now choose. And in that sense it marks a seismic shift toward a newly democratic artworld. 

The wildly successful auction at which all but five pieces sold marked the first time that original artwork was auctioned without having passed through either a gallery or dealer’s hands. With the increased number of venues for marketing and selling artwork, the argument against consigning art first to high-cost (50% or higher) brick-and-mortar galleries and dealers has acquired a new solidity. 

Poverty is not the cost of respect in any other industry or endeavor, however, it has seemingly been inculcated as such within the realm of art. 

Hirst himself refers to the 50% cut taken by galleries as “an extortionate amount of money.”

When Claude Monet hosted the first exhibition open to the public of Impressionist artwork in the 1800’s, in effect circumventing the prevailing juried system, it’s unlikely there were very many cheers from the establishment. However, the exhibition held on the Boulevard des Capucines undoubtedly altered the way that artists’ sold their work.

Under the dealer/gallery system, a romantic notion was repeated often enough and allowed to codify as a truth, i.e. that artists must suffer to produce good art and that any state other than perpetual poverty for an artist translated to ‘selling out.’ Not in any other creative or sports-related endeavor does this fiction exist, and it has survived only because of the prevailing inefficient sales and management structure under which the levers of power were tilted in favor of distributors instead of producers.

In the end, no industry is spared the power of the market – all are eventually mean-reverting. Hirst’s auction represents quite a few miles logged on the road to reversion.

 

WHY ART IS THE BEST INVESTMENT YOU’LL EVER MAKE – PART IV

WHY ART IS THE BEST INVESTMENT YOU’LL EVER MAKE 

ART: HOW TO PRESERVE WEALTH AND MAKE MONEY IN VOLATILE FINANCIAL TIMES – PART IV

IT’S TIME TO PUT YOUR ASSETS ON YOUR WALLS

“Non-financial assets form the greater part of world wealth and have been more stable in value during periods of financial and social turbulence.”     Roger Ibbotson and Gary Brinson, “Global Investing”

The devolution of confidence in traditional investment alternatives, in concert with the elevation of the importance of design and aesthetic throughout the world, points to a renaissance in the value of art to a degree never before witnessed.

After all, the art auction market is fair and transparent with a degree of stability that many financial institutions, and even some AAA-rated U.S. government debt, can only dream about. 

“The main contributor to both absolute total returns and to the variance of total returns was the asset allocation policy decision.” ( Global Investing: The Professional’s Guide to the World Capital Markets, Roger G. Ibbotson and Gary Brinson

Even absent the conditions present in the market today, making the deliberate decision to remain in the stock market inherently implies acceptance of a degree of risk. In that case then the decision should be made to diversify with the inclusion into the portfolio of assets which have no or little correlation with that of the market, in order to minimize risk and maximize return potential. 

As a real and tangible versus a monetary asset, art’s low correlation with the stock and bond markets makes it an excellent diversification vehicle, enabling reduction in overall portfolio risk. 

A key study examining the returns of 82 large pension portfolios by Gary Brinson, Brian Singer, and Gilbert Beebower uncovered that over 91% of the variance of returns is attributable to the asset allocation policy decision, rather than specific stock or bond selection decisions. (Gary P. Brinson, Brian D. Singer, and Gilbert L. Beebower, “Determinants of Portfolio Performance II: An Update,” Financial Analysis Journal, May/June 1991.)  

Therefore, the research data argue persuasively that allocating a portion of all investment portfolios to art as an investment class is as imperative as the very decision to employ an investment policy. It shows that for an investor with the twin goals of preserving wealth and growing capital, with today’s market conditions, history points to the capital preservation and return superiority of art.

Hence, it doesn’t matter what genre of art is selected, what matters most is the policy decision for its inclusion.  This study therefore highlights the importance of the investment policy with a clear implication for the Art market.  Why not apply the respected and proven paradigm of the investment world as it relates to financial assets, to the real, tangible asset that is Art?

Art’s status as a store of wealth is undeniable by historical standards. 

Under the old paradigm, one would observe that with a buoyant art market in large part due to exuberant participation of buyers from a single industry, that with the sudden ill fortunes of that industry, would necessarily mean at lease the near-term deceleration of the art market. Not so this time.  The growth of the current art market is traceable not simply to a single industry or even a single continent, but to a hitherto unseen confluence of global wealth and acquisitive desire.

It has been an incredible year for contemporary and modern art. Christie’s and Sotheby’s together posted record sales over $12 billion. Despite all the economic travails discussed in these posts, art has been one of the only asset classes that has continued to outperform and bring an important degree of diversification to owners’ portfolios. If you consider the fact that the 10-year inflation-adjusted return of the benchmark S&P 500 has actually been negative,  that real estate can no longer be considered an asset upon which to retire, and, finally, the inflation which will only continue to ravage real returns, the choice for art becomes clear. 

Capucine Price

http://www.CapucinesBoulevard.com

September, 2008

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WHY ART IS THE BEST INVESTMENT YOU’LL EVER MAKE – PART III

WHY ART IS THE BEST INVESTMENT YOU’LL EVER MAKE 

ART: HOW TO PRESERVE WEALTH AND MAKE MONEY IN VOLATILE FINANCIAL TIMES – PART III

IT’S TIME TO PUT YOUR ASSETS ON YOUR WALLS

“Non-financial assets form the greater part of world wealth and have been more stable in value during periods of financial and social turbulence.”     Roger Ibbotson and Gary Brinson, “Global Investing”

The Inflation Problem

Economies around the world are experiencing slower growth. However, the imported inflation in those countries where the currency is tied to the U.S. dollar has eliminated central banks’ option of reducing interest rates in order to generate growth. Growth has been further stymied by those countries’ losses from their dollar-denominated assets. Of all the maladies around the globe however, it is dollar-driven food price inflation which poses the gravest danger to the sustainability of the dollar peg. To reduce inflation, Thailand and the Philippine central bank increased intereste rates this week. South Korea has been selling dollars in an effort to revalue the Won. To address inflation, the Indian central government recently decided took steps allowing the rupee to rise in value against the dollar, sparking a rally in the stock market. For example, Pakistan experienced riots at its stock exchanges as a result of continued movements downward, on top of rapidly rising commodity price inflation. A recent survey there highlighted the fact that 71% of respondents see inflation as a problem. This situation has been pointing many decision-makers toward the necessity of de-coupling from the dollar, revaluing their currencies higher, accelerating the movement away from U.S. investment vehicles, including the AAA variety, and hence, the vulnerable position that the dollar now finds itself in. 

Bank Failures:

It doesn’t end at IndyMac, the U.S.’ third largest bank failure ever. Bank regulators,  due to their increased expectations for greater numbers of bank failures, has for months been bringing bank examiners out of retirement in order to handle the anticipated workout workload. Many more banks are expected to fail.Interestingly, IndyMac wasn’t even on the regulators’ watch list when it failed, indicating that other banks are almost certainly as vulnerable. In its call upon depositor insurance to consumers, IndyMac alone will exhaust 10% of the FDIC’s total warchest. 

Not all things with high prices are in a bubble/Art Market will not implode

The most well-known of the art indexes was developed by economists from NYU’s Stern School of Business Jianping Mei, and Michael Moses.  The Mei/Moses Fine Art index exist for seven different categories of art including Old Masters, 19th century, Impressionist, Modern, postwar and contemporary, and American before 1950.  It is based on repeat sales of paintings, sculpture, ect. and captures almost 95% of all auction data. The index indicates that art had a compound annual growth rate of 12.05% between 1953 and 2003 versus 11.65% for the S&P500 index, with reinvested dividends. 

 

WHY ART IS THE BEST INVESTMENT YOU’LL EVER MAKE – PART II

IT’S TIME TO PUT YOUR ASSETS ON YOUR WALLS

“Non-financial assets form the greater part of world wealth and have been more stable in value during periods of financial and social turbulence.”     Roger Ibbotson and Gary Brinson, “Global Investing”

The devolution of confidence in traditional investment alternatives, in concert with the elevation of the importance of design and aesthetic throughout the world, points to a renaissance in the value of art to a degree never before witnessed.

After all, the art auction market is fair and transparent with a degree of stability that many financial institutions, and even some AAA-rated U.S. government debt, can only dream about. 

Foreign Investors Reducing Their Exposure to the Dollar

Because sovereign wealth funds have begun to more aggressively reduce their exposure to the dollar.  With over $3 trillion in investable assets, Foreign governments already own a whopping $1 trillion of Fannie and Freddie debt. Having watched as their investments in faltering U.S. banks such as Citibank (down 71% past 12-months) have cost them huge losses, Gulf state funds as well as China’s primary investment fund (SAFE) are increasingly diversifying out of dollar assets. China’s State Administration of Foreign Exchange (SAFE), which holds most of China’s $1.8 trillion in foreign currency reserves in dollar-denominated investments, is evaluating investments outside of the U.S. Their move follows moves by Kuwait which cut its ties to the dollar in 2007 and their statements this week that they will not buy any additional Fannie or Freddie debt, and Singapore which has also reduced its exposure after watching its $5 billion stake in Merrill Lynch fall by almost 40% so far. The $200 billion in funds managed by the China Investment Corporation have taken huge negative hits as a result of their $3 billion investment in Blackstone Group in 2007 followed by their $5 billion in Morgan Stanley earlier this year. 

The largest sovereign wealth fund, the Abu Dhabi Investment Authority, is growing increasingly sensitive as its population shoulders the pain of inflation imported as a result of the countries’ tie to the dollar. And while the desire to diversify currency exposure is gaining strength, most sovereign funds, due to their own significant dollar holdings,  are concerned with doing so in a measured way that is unlikely to cause an accelerated dollar plunge. 

What is left then for those banks and investment banks in need of capital infusions, who don’t have the benefit of being Government Sponsored Entities, and can no longer rely on sovereign wealth funds to lend a hand? They, like Merrill Lynch announced this week, are reduced to selling assets. Having raised $15 billion in capital year-to-date from hedge and sovereign funds from Singapore, Thailand, Kuwait, and South Korea, the investment bank announced that it will sell its stake in Bloomberg.

Foreign investors currently hold around $2.6 trillion of U.S. Treasury Securities. Unfortunately, foreign investors’ questions about the strength of our assets don’t end with Fannie and Freddie. A clear indication of this latest statement comes in the form of credit insurance costs for AAA-rated U.S. Treasuries which in July rose to 16-20 basis points, higher than other nations for the first time ever. 

If the country is called upon to write the check to Fannie and Freddie, our increased debt burden will only serve to call into further question the health and reliability of the dollar, which exacerbates oil and food price inflation, and further threatens the dollar in an endless, macabre loop. 

 

Capucine Price

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Email: Support@CapucinesBoulevard.com

August, 2008

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WHY ART IS THE BEST INVESTMENT YOU’LL EVER MAKE – PART 1

 

IT’S TIME TO PUT YOUR ASSETS ON YOUR WALLS

 

“Non-financial assets form the greater part of world wealth and have been more stable in value during periods of financial and social turbulence.”     Roger Ibbotson and Gary Brinson, “Global Investing”

 

The devolution of confidence in traditional investment alternatives, in concert with the elevation of the importance of design and aesthetic throughout the world, points to a renaissance in the value of art to a degree never before witnessed.

 

After all, the art auction market is fair and transparent with a degree of stability that many financial institutions, and even some AAA-rated U.S. government debt, can only dream about. 

 

The Current State of Things 

The U.S. has experienced many decades of economic growth facilitated by technological innovation and ongoing reductions in the cost of labor. As a result, it has enjoyed one of the highest rates of consumption in the world, bolstered by low interest rates and record rates of liquidity, all courtesy of the rest of the world’s willingness to buy U.S. debt. 

 

The DJIA is down 13.1% year to date and the S&P has fallen 12.4% in that time. The U.S. dollar has lost over 10% against a basket of six currencies over the past year, 40% over the past six years, a time when the price of oil is up seven-fold. The Chinese Yuan is up 7% year-to-date versus the dollar after having gained 7% in all of 2007.

 

The U.S. money supply is growing at the rate of 16% per year, the highest rate of growth since 1971 and, correspondingly, Gold is up 283% against the dollar since June 2001. The real source of many consumers’ wealth, their homes, have already lost 16% of their value since the peak in 2006. 

 

Writeoffs related to the credit crisis have already passed the $550 billion mark. Keep in mind that this still only reflects sub-prime losses, as no commercial or Alt-A losses have been taken as of yet. After assuring in June that economic risks had diminished, Fed Chair Ben Bernanke testified in mid-July that “there’s no doubt there’s further deterioration in the cards for bank earnings and we’ll continue to see financial sector woes play themselves out.”  Despite inflation in the form of rising consumer prices, currently at an annual 5.6% rate, the highest since 1991, the stresses in the financial system negate almost any efforts by the Fed to tackle inflation. That does not bode well for the dollar.

 

Fannie Mae and Freddie Mac:

The liquidity and capital crisis at these two mortgage behemoths is set against their guarantee of a whopping $5.3 trillion in mortgage credit, or half the total of all U.S. mortgages. The main issue however, revolves around their relative under-capitalization; the two have only a combined $81 billion in capital and that inadequacy means that raising capital has become a priority in this era of mortgage crisis.  That roughly 2% of liabilities in the form of capital means that the danger exists that if the value of the mortgages that they guarantee declines by a small percentage……From where that capital will come is the big question, and it is increasingly likely that it will be the U.S. taxpayer who will have to shoulder the burden once again. Why? Absent their ability to raise additional capital in the public market they will almost certainly be rescued by the federal government because they are at least implicitly, if not so stated in their prospecti, guaranteed by the federal government, meaning that their failure would send a pronounced negative signal to the nations’ creditors were they allowed to fail. Hence, their bailout could cost as much as 10% of GDP, the rating agency S&P has said  and “could create a material fiscal burden to the government that would lead to downward pressure on its rating.”

 

Art for the Masses

We felt art before we intellectualized it. Just as the internet has facilitated heretofore unseen levels of political participation and contribution, the increasing amounts of artwork online is raising the public’s comfort with and confidence and trust in their own artistic gut reactions and taste.  Trust in one’s own evaluative ability is rising alongside a very quiet decline in the experts’ ability to dictate worth and value.  Formerly geographically isolated artistic fiefdoms are falling and being replaced as the internet facilitates new levels of artistic exchange and collaboration.

Those with an interest in art do not need Charles Saatchi or any other art dealer telegraphing taste. It’s no coincidence that just as an increasing number of people are turning toward a spirituality which is personally meaningful and away from traditional organized religious structures, blind faith in the opinions handed down by the arbiters of taste in the art world are gradually being replaced by an overarching supreme, personal aesthetic.

 

The Rise of the Relevance of the Artist

Before co-founding CapucinesBoulevard.com, I spent my career investing in small and micro cap value stocks which basically means the smallest and least expensive 5% of all public companies – and despite the fact that these were all well-run enterprises, most investors didn’t pay much attention to them — so, when I went to visit companies to learn more about their operations, many were pleased that someone was actually interested.

Most importantly, by spending the time to get information that other investors were ignoring, I was able to find opportunities that others missed. I believe that like small and micro cap value stocks, Emerging Artists are the greatest investment opportunities that no one has ever heard of.

 

Many people make the mistake of looking at art as something that’s nice to have, but that simply doesn’t meet the qualifications of a necessity. How wrong they are. 

Art happens to be the biggest unregulated, legal economy in the world to the tune of $64B worldwide, in fact, it grew 95% between 2002 and 2006 and, the truth is, as Robert Redford has said, “culture is a solid investment”

 

Make no mistake, art isn’ fluff. We live in an abundant country, and have pretty much taken care of all of our basic needs, and our culture places increasing value on creativity and innovation: the ideas that catch on today are those that represent conceptual leaps – they give us things that we didn’t know we were missing, not things we necessarily needed, but ideas that appeal to our creative natures.

 

Artists begin with an innate advantage in this new economy by their very ability to see and to think differently. And Art is becoming more and more intertwined with our daily lives: we can see it in the examples of corporations buying Contemporary art in order to attract and inspire their employees, and to highlight their brands to the world while giving something back to society — and these companies aren’t cutting back on their art buying despite what’s going on in the economy, because they’ve come to recognize how much the visual really drives our culture, and keeps them top of mind.

 

The other side of this new economy other than the art itself centers around the value of it — art should always be purchased for the joy it brings, but art is also an asset and if it’s bought for pleasure and gives the investment returns for free, what more could anyone ask?

However, when it comes to art, it’s contemporary art that’s in demand because even though people admire the Old Masters, what they want to own are representations of their own culture and time. Contemporary art is more topical and often more interesting and now, it’s becoming more valuable.

 

Art isn’t usually an asset that springs to mind when thinking of investment alternatives, but its long-term performance record argues that it should be.

For the last 50 years, contemporary art has outperformed the S&P 500, which means that someone who bought a portfolio of art would have done better than someone who invested in the stock market over the same time period. The same holds true during every major war of the twentieth century and through the twenty seven recessionary periods since 1875.

 

From an investment standpoint, and most important for Emerging Artists, is the fact that there is no greater advantage to buying more expensive works of art, buyers get the same returns buying artwork that’s never been exhibited or received any citations, as they would buying the work of artists with more notoriety. 

 

There’s truly never been a better time to be an emerging artist. With their power to inspire, and yes, to prosper, the record is quite clear: the VALUE is in work of the emerging artist.

 

TITLE: WHY THE TAX RATE FOR ART SALES SHOULD BE LOWERED

“Man will begin to recover the moment he takes art as seriously as physics, chemistry or money”   Ernst Levy

 

What’s the best capital gains tax rate for the sale of artwork? There are currently  several arguments being made against reducing the capital gains tax rate on the sale of artwork from the current level of 28% to the 15% rate enjoyed by sellers of real estate, securities and other assets.  Arguments against the reduction center around the view that art is not an asset which plays any real role in economic activity, particularly job creation, and revenue generation.  Nothing could be further from the truth.   

 

When the forces against tax reduction argue that to do so might shift money into art at the expense of more productive activities they fail to appreciate the significant and documented economic impact that art has made and continues to make on everything from job creation, to neighborhood redevelopment to tourism. 

 

Uneven tax policy has also played a role in reducing museum offerings, and hence the public’s access to art as a result of the tax treatment of artists.  Since they are only allowed to write off the cost of materials for donated works instead of the fair market value of the artwork, artists are less inclined to make donations. The negative impact on museums is compounded by the strength of the art market of late, particularly for Contemporary art, all of which reduces museums’ ability to acquire work.

 

Nevertheless, the value of innovation to our society is becoming more and more clear. Businesses that own and display art are perceived as being more innovative, interesting and desirable places to work.  Real estate developers are incorporating art galleries into new condominium towers to entice buyers seeking differentiable living experiences.  In connection with its recent renovation, the Aventura Mall in South Florida now includes a twelve-piece, museum-quality art collection designed to be a destination in a clear indication that creativity is valued and valuable.

 

In the third study conducted by the group Americans for the Arts titled Arts and Economic Prosperity III, data was collected from 116 cities and counties, 35 multi-county regions, and five states. The areas stretched from Walnut Creek, California to Anchorage, Alaska. They found that nationally, the arts generate $166.2 billion in annual economic activity, up 24% over the past five years. That’s greater than the 2006 GDP of either Malaysia, Chile, the Czech Republic, Columbia, Singapore, and the list goes on!  Furthermore, the arts provide 5.7 million jobs and contribute $104.2 billion to household income,and, they produce $30 billion in annual local, state, and federal revenue. 

 

Two specific examples:  In Baltimore City, Maryland, the arts are responsible for $270 million annually, provide 6,500 jobs, and generate $12.6 million in local government revenue.  In a study released in June, 2007, Rochester, New York (Monroe County) calculated that the attendance and sales revenues generated by its arts and cultural organizations were responsible for a total $199 million annual infusion into its economy. 

 

Far from playing a neutral role in this country’s economy, art continues to demonstrate its uniquely productive role as a strong generator of jobs and tax revenue, just as any other important industry. Therefore there really isn’t any defensible rationale for penalizing art investors with an incremental 40% tax bill.

 

 

Capucine Price

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Email: Support@CapucinesBoulevard.com

January 15, 2008

 

How to Invest Like a Contrarian with Art

In case you hadn’t noticed, there is currently quite a frenzy in the U.S. credit markets. Coincidentally, a frenzy of a different sort has overtaken worldwide art markets. The hubbub In the credit market resulted from staggeringly bad decisions to underwrite loans of questionable quality. Demand from investors for these loans was equally detrimental as it was based upon shoddy analysis and a devil-may-care attitude toward risk. Therefore no one should be genuinely surprised by the continuing unfolding of this market’s demise.  And, unfortunately, the damage isn’t confined to that single market; the economics underlying the credit market flows inevitably into the equity market as the narrowing of the loan spigot trickles inexorably down to infect the broader economy. 

 

There is very little reason to expect the stock market to prosper when consumers, who have for many years provided the fuel to our economy, can no longer rely upon refinancings to fund their spending, and are in fact declaring bankruptcy at almost unprecedented rates.  In addition to the pinched consumer, U.S. corporations are also feeling the effects of reduced credit availability, hence the Fed’s recent decision to provide liquidity via the discount window. The fallout is becoming clear in the already apparent slowdown in job growth, and the cycle feeds upon itself. 

 

Only rarely in history has art received the degree of attention that it is currently enjoying. In the contemporary art market, demand has been on a tear with values quadrupling over the past eleven years. Sotheby’s sales of Contemporary art increased from 98 million pounds in 2002 to 343 million just in the first six months of 2007. Annualizing the 2007 figure yields a compound annual growth rate of 47.5% over the five year period. Christie’s has enjoyed similar results with sales in the first half of 2007 up 45% over 2006. Driven by demand from newly created wealth from around the world, buyers continue to turn their eyes toward art as not only an aesthetic pleasure, but a defensible investment as well.  Interest in reliable alternative investments is always heightened when the foundations of the bellwethers become rocky. And if history is a reliable guide, art values will continue to be favorably impacted as credit and equity markets lose some of their luster. 

 

In contrast to those advising adherence to more conventional, widely accepted assets in the face of art’s  seemingly inexorable run and the aforementioned economic tsunami, I would argue that now is the time to go for the non-traditional investments and to look to instruments that over time will, and have, served as true stores of value, i.e. art.

 

 

Capucine Price

http://www.CapucinesBoulevard.com

Email: Support@CapucinesBoulevard.com

January 7, 2008

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