As a rule of thumb, if you collect contemporary art, you might look at the financial aspects in the same way you approach a trip to Las Vegas: I’ll wager a certain amount of money that I can afford to lose, and, win-or-lose, I’m going to enjoy the action. Most contemporary art will not go up in value by the time you turn over your collection to your children—or a museum! But if you have enjoyed the artwork and refined your connoisseurship, supported worthy artists and their ecosystem of galleries, you have played a worthy role in the cultural life of our times. To increase the odds that your collection will retain and possibly gain in value, you should buy the best artists from the finest galleries that you can afford. History and the market’s judgment on an artist’s work are fickle, unfair, and full of black swan events that often work against even the greatest artists. Quality (your ultimate gold standard)—backed by reputable and market-savvy galleries (savvy artists, too), a large well-heeled collector base, and the support of institutional curators—is the best predictor of long-term value.
But tastes change, hype falters, and economic cycles play havoc.
If you let investment criteria become your predominant validation—or worse, motivation to collect, you’re in for a disappointing ride. Collecting and living with art is a life style—for some of us, a way of life. The happiest collectors are those who derive their profoundest joys from sharing their enthusiasm with family and friends. Looking for social or financial validation in the brand-name artists on your walls—much less looking to make a killing, diminishes and distorts the art experience.
But few can afford to dispense entirely with concerns about value: insuring your collection is only one practical reality.
If you desire less uncertainty in your collecting, you may be more suited to the secondary market of classic modernist works with long retail and auction track records. You will pay more for these blue-chip artists but will have better assurance of the quality of the artworks (best period and preferred subjects by the artist), and more predictable expectations for long-term appreciation. If you buy well, at auction or from a dealer of integrity, you will have a measure of confidence that you can recover your costs in the short term, and long-term confidence in some degree of gain.
Collecting historical art—think thoroughly dead artists—and Old Masters gives you the best assurances in terms of both inherent value and long term—but not spectacular—return on investment. Condition, rarity, and well-established collecting circles and the imprimatur of major museums make for relatively predictable valuations in the historical market.
When we started out as collectors, we couldn’t afford not to have some liquidity, to be able to sell works if we faced an unexpected financial crunch or wanted to switch collecting areas. So we did what is now termed cross-collecting, collecting both contemporary artists and historical works, etchings of Venice by Whistler and his followers, and Tonalist landscape paintings from 1880 to 1920. This allowed us to indulge in the joys of buying living artists while exploring the fascinating field of historical art, especially the life and times of extraordinary artists from the past.
And in a pinch, the Whistler etchings always sold well.
(Fifth in a 21-part series of posts on the Art of Collecting. Originally published on Artsy.net. David Cleveland, an advisor to Artsy, is available to Collector Program members to discuss both the critical market details and strategic vision necessary to building a fine art collection.)
Leave a Reply