What Is Contemporary Art?
There is no uniformity in defining the Contemporary sector. Even Christie’s and Sotheby’s are in disagreement about how to label the category. Unlike art historical scholarship, financial analysis of each category or school requires a sufficient critical mass of auction trading to be treated as a trackable sub-sector. Some categorizations are obvious: Post-War (Pollock), Pop (Warhol), Minimalism (Judd), Established Contemporary (Koons, Hirst, Murakami). Defining which art and artists are “Emerging” is arguably the most contentious — while it is easy to define a young artist at the beginning of his career as emerging, it is much more difficult to determine when he no longer is.
This time is not different. The art market is cyclical, and the Contemporary sector is the most volatile. In the 2008 market crash, the prices for Contemporary Art tumbled by as much as 50%, while art in many other sectors saw price declines of 35% or less. There will be future corrections, and Contemporary Art is likely to continue to suffer them more severely.
The more recent the work, the more volatile the price. Prices for Old Masters are less volatile than those for Modern Art, and Abstract Expressionist works are less volatile than Pop works. Works created after 2000 are higher risk and most volatile of all in terms of investment.
New art is the most illiquid. Until an artist is firmly established in the secondary market (i.e. public auction sales), he is not considered tradable for the purposes of art collateral. There are some notable exceptions, but once an artist is selling well at auction, he is then perceived to have reached a new level of market staying power.
Buying Emerging Contemporary is akin to venture capital investing. A common rule-of-thumb practiced by experienced Emerging Contemporary collectors is similar to that practiced by venture capitalists — one in ten. Of every ten works of art purchased, one is likely to increase exponentially in value, while the others are likely to become worthless. The one gain should more than offset the losses on the other nine. Thus it is not uncommon for an avid and successful collector to be left with numerous, if not hundreds, of effectively valueless works of art by the end of his collecting career.
Auction records can be misleading. For works by artists just beginning to trade at auction and who are setting outsized records, it is important to be circumspect. For instance, if a dealer buying a work at auction also handles the artist through his gallery, proceed with caution before using that auction price as a relevant benchmark.
Be skeptical of galleries promoting their artists as good investments. No one has a crystal ball, and it is rare that anyone with a stake in an artist will give objective investment advice. On the other hand, do take notice of a gallerist who is passionate and deeply knowledgeable about a particular artist’s corpus of work because that may be one sign that he is an artist worth following.
Even works by well-known artists may decrease in value. A May 30th article in the New York Times by Robin Pogrebin and Kevin Flynn thoroughly explores this risk, explaining how hot artists from the 1990s (Larry Rivers, Eric Fischl and Fancesco Clemente) have seen their prices at auction remain flat or decrease in value over time.
Different genres of an artist’s body of work perform differently. All artists, even the Masters, have wide price variations for different periods, depending upon whether a work is part of a seminal time or from a less inspired one. For Picasso, paintings from his Marie- Thérèse years are valued more highly than those from the 1950s and later. For Warhol, work from his disaster series in the 1960s is valued much more highly than his camouflage pictures from the 1980s.
The power of many is greater than the power of one. Artists who are part of schools or peer groups are more likely to increase in value. A group of artists like the YBAs (Young British Art- ists) inspire, promote and even collect each other’s work. They are also likely to be represented by a larger network of dealers and reach a broader range of collectors and museum curators.
Buy with your eyes, not your ears. Works of art are not fungible commodities. Connoisseurship counts: condition, quality, message, visual impact, physical viability (stability of media) and how the work contributes to the narrative of art history all matter in sustaining value over time, even if the artist is the hottest buy of the moment.
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