Is Buying Artwork A Good Financial Investment?
Hi Everyone,
Recently, a collector asked me if buying a Michalopoulos painting was a good financial investment. I had no idea. Michalopoulos is a popular local artist, who has paved the way for artists like me to paint New Orleans architecture. But--- does collecting his work make sense financially?
I did a little Google Research and found a paper, Research: Is Art a Good Investment? by finance professors Arthur Korteweg, Roman Kräussl, and Patrick Verwijmeren. According to their paper, “comparing the investment returns and risk of all the styles of art to a portfolio of pure stocks, we found that art investments would not substantially improve the risk/return profile of a portfolio diversified among traditional asset classes, such as stocks and bonds.” Their last statement was sobering- “In short, buy paintings if you like looking at them. Your children may be able to sell one or more of them later for a gain — but paintings are primarily aesthetic investments, not financial ones.”
Determining the value of art is something I struggle with as well. On any given day someone will tell me that my prices are BOTH too high and too low.
I asked Julie, a non-artist friend of mine about the differences between the emotional joy that artwork brings – and the financial gains you might realize when buying it. Julie’s grandmother once bought a print of a plantation for $3,000 (which is a LOT!). Her family was shocked and thought she had paid way too much for it. But the print gave Grandma great pleasure over the years. Eventually she passed away, and the print was given to Julie. Whenever Julie looks at it hanging on her wall she values it for the happiness it gives her . She doesn’t care about the price that Grandma paid.
I know that determining the value of art can be difficult. You want the painting to go up exponentially in value and there are indeed real world examples where a painting’s value grows to dizzying heights. But, even the most savvy collector can’t predict the future and if you want a safe investment I recommend stocks and bonds. You could also buy thousands of lottery tickets and decorate your walls with them. One of those tickets might even win! But they are going to look awful and will not give you much pleasure. I’m going to collect paintings, instead!
To see some paintings in person, I am going to be at the Palmer Park Arts Market in New Orleans this Saturday and Sunday from 10am to 4pm.
Paintings like this one here-
"Antebellum'' 48''x 60'' $2,500
Thanks for Reading!
Adam K Hall
www.adamkhall.com
