Here’s an article from Worth Magazine that discusses the Art Market.
“Annual sales of art amount to $10 billion in the United States alone, according to various industry estimates. In the past several years, consultants and economists have turned their sights to the problem of tracking this sector’s investment performance. Research by Jianping Mei and Michael Moses, professors at NYU’s Stern School of Business, and firms such as Art Market Research in New York, Kusin & Co. in Dallas and Gabrius in Milan, shows that art can complement equities, bonds and other more traditional investments because its price movements are not correlated with those of financial assets.
One thing is clear: fine art appreciates over time, and may outperform equities in some instances. The Mei/Moses All Art Annual Index tracks the auction prices of 6,000 pieces of art, including pre-1950 American paintings, Old Masters, 19th-century masters and Impressionists. Last year, the Mei/Moses index rose 21.7 percent. Equities fared better: the S&P 500 rose 28.7 percent. Longer term, the art index shines. The Mei/Moses benchmark had an annualized compound return of 12.6 percent over the past 50 years, beating the S&P 500’s 11.7 percent.
The gains are not only in aggregate measures, of course. Moses—himself a collector of what he terms “representational American painting” from the second half of the 20th century—notes that Boy with a Pipe outperformed the market, posting an average annual return of around 16.5 percent since Betsey and John Hay Whitney bought it in 1950 for $30,000. Alternatively, the two Edgar Degas racing scenes from the same lot returned 8 percent per year for their owners.”
The art market has benefited from the latest surge in foreign investors mainly from Russia and India. They are paying outrageous prices and throwing caution to the wind. Low interest rates help to fuel the art market as well.
