Does investing in art ever pay off?
What’s beautiful, hangs on your wall and provides long-term capital appreciation? Here’s a hint: it’s not the singing largemouth bass. We’re talking about art, of course! Not just any art, but great works of art that will increase in value over time.
The Mei Moses Art Index tracks the purchases and sales prices of over 20,000 works of art that have been repeatedly sold at public auction. Over the last fifty years, the Mei Moses Index and the S&P 500 have had roughly equal compound annual returns.
So if you’ve ever been tempted to purchase a beautiful original work of art and wondered if it would actually be a good investment, read on for a little artistic inspiration from these record-breaking art sales…
1) The Card Players (1892-93) Paul Cézanne
The highest price ever fetched a work of art is $250 million. Or maybe even $300 million. While the truth lies somewhere in between, the precise amount was never disclosed. The royal family of Qatar purchased this painting in 2011 for the record-beating sum, from the estate of Greek shipping tycoon George Embiricos. Good news for you, The Card Players is actually a series of five paintings, so you have four more chances to score.
2) The Scream (1895) Edvard Munch
It is rumoured that the royal family of Qatar was also the anonymous buyer of the oil and pastel work of art, The Scream, when it was sold for auction in May 2012 for nearly $120 million. The owner was Petter Olsen, a billionaire businessman and heir to a Norwegian shipping company. The work has an illustrious past: while on display at Oslo’s National Gallery in 2004 it was stolen and later recovered with help from British police.
3) No. 5, 1948 (1948) Jackson Pollock
One of Jackson Pollock’s famous drip paintings, No. 5, 1948, was sold privately through a broker at Sotheby’s in 2006 for $140 million. The seller was David Geffen, a self-made billionaire and Hollywood movie mogul who founded DreamWorks SKG with Steven Spielberg and Jeffrey Katzenberg. The buyer is rumoured to have been Mexican financier David Martinez.
4) Woman III (1953) Willem de Kooning
David Geffen must have been cleaning out his garage in 2006, because not only did he sell his Jackson Pollock, he also sold this expressionist painting for $137.5 million. He sold it to hedge fund billionaire Steven Cohen. Mr. Geffen also sold Mr. Cohen another de Kooning painting for a mere $63.5 million; and a Jasper Johns painting to the CEO of Citadel Investment Group for $80 million. Despite these sales, Mr. Geffen continues to hold one of the most impressive collections of post-war American art in the world.
5) Portrait of Adele Bloch-Bauer I (1907) Gustav Klimt
Ronald Lauder, the son of cosmetics queen Estée Lauder, takes a special interest in recovering works of art that were lost or stolen in Nazi Germany. One of these pieces was this painting Gustav Klimt. The owner, Maria Altmann, retrieved five paintings from the Austrian government which had been stolen from her family, then sold this one to Lauder for $135 million. It is the centrepiece of Lauder’s collection at the Neue Galerie in New York.
6) Portrait of Dr. Gachet (1890) Vincent van Gogh
Van Gogh painted this picture of his doctor near the end of his life and it became one of his most famous works. Van Gogh’s sister-in-law sold it in 1897 for 300 francs. It eventually made its way to the Siegfried Kramarsky family, who put it up for auction at Christie’s in 1990. Within three minutes, it was sold to Ryoei Saito, a Japanese businessman, for $82.5 million.
7) Bal du moulin de la Galette (1876) Pierre-Auguste Renoir
Mr. Saito also bought this Renoir painting for $78 million in 1990 from art collector Mrs. John Hay (Betsey) Whitney. He created a minor uproar in the art world when he said he would have these two paintings cremated with him upon his death. Mr. Saito never got the chance however, as he ran into financial trouble and the paintings were returned to auction at Sotheby’s where they were allegedly sold for a fraction of what Mr. Saito had paid.
8) Garçon à la pipe (1905) Pablo Picasso
Picasso was only 24 years old when he painted this and it was considered a minor work art historians. American billionaire John Hay Whitney bought it in 1950 for $30,000 and upon his death it was held within a charity for human rights and justice called the Greentree Foundation. The charity sold the work in 2004 for $104.2 million, reportedly to Guido Barilla, the head of an Italian food company.
9) Nude, Green Leaves and Bust (1932) Pablo Picasso
Another Picasso made history when it was sold at auction for $106.5 million. For the previous 60 years, the painting was owned American art collectors Sidney and Frances Brody and only exhibited to the public once. The couple purchased it from Picasso’s dealer in 1951. The painting was sold Mrs. Brody’s estate in 2010 and it is rumoured to have been bought Monaco billionaire Lily Safra.
10) Orange, Red, Yellow (1961) Mark Rothko
In 1961, after a show at New York’s MOMA and the sale of eight paintings for $15,000 each, Mark Rothko fell into a depression. These were high prices for a contemporary abstract painter in those days and Rothko was upset that his work would become a commodity, appreciated as much the investment community as the art world. Imagine Rothko’s despair had he lived to see this piece sell (from the estate of art collector David Pincus) for nearly $87 million in May 2012.
Real value appreciation
Art investment at these levels is not for the faint of wallet. Master works of art come with all kinds of additional expenses: auction or dealer commissions, storage and handling fees, restoration costs, insurance fees and tax considerations. For the modest investor and art lover, consider investing (or starting) an art fund, such as The Fine Art Fund Group. If you have an eye for talent, you might prefer to start your own collection of reasonably-priced work emerging artists (check out ArtBombDaily.com). Of course, once you fall in love with a work of art, you probably won’t want to sell it – and that’s the best kind of appreciation of all.