Investing in Contemporary Art Direct from the Artist

Investing in Contemporary Art Direct from the Artist

If you’ve spent any time reading AntiqueSage.com, you know that I have a strong preference towards antiques as investments.  Antiques are works of art that have stood the test of time, having been seasoned over decades, if not centuries.

This process tends to weed out specimens constructed of inferior materials as well as fad-based items, leaving a higher percentage of investment-grade examples.  So when I’ve occasionally wondered to myself if successfully investing in contemporary art or new luxury goods by buying them directly from the artist or craftsman is possible, the answer has always been “No”.

But then I had an experience on Etsy that changed my mind. I was perusing the online, peer-to-peer, handmade/vintage centric website for antique jewelry when I stumbled across something rather astonishing: a new piece of jewelry that was investment grade and sensibly priced!

This was something I didn’t expect.  Normally, luxury goods are far too expensive when new to make reasonable, much less good, investments.  The average markup over cost normally runs 100% or even higher.  It is easy to see under these circumstances why buying new luxury goods for investment purposes is a fool’s errand.  It is far better to buy them in the secondary market for discounts of 50% or greater.

And yet here I was, staring at a beautiful investment grade, abstract modernist pendant that was selling for only $365.  In cases like this, calculating an estimate of the item’s intrinsic value can be a useful starting point.  I immediately began to crunch the numbers.

The jewelry had modest intrinsic value from its precious metal content – about $30 or so.  It was also set with two natural sapphires: a small, round-cut, beryllium-diffused orange sapphire and another, much larger natural, purple-pink, marquise-cut sapphire.  The beryllium diffused stone was only worth $8 or $10.

The 1.27 carat purple-pink sapphire was the real treasure here.  Even at a lowball price of $200 a carat, the stone was still worth over $250 by itself.  Altogether, the intrinsic value of the piece was around $300 using fairly conservative assumptions.  As an added bonus, the jewelry had been cast in a cuttlebone mold, an ancient technique that destroys the mold in the casting process.  As a consequence, this pendant was one-of-a-kind, a factor that significantly enhanced its desirability.

The aggregate material value of $300 meant that the piece was only selling for about $65 in excess of its intrinsic value.  This modest $65 premium reflected both the item’s considerable artistic merit as well as its undeniable usefulness as a piece of jewelry.  I was very interested.

But another question quickly popped into my head.  How could the selling artist afford to let the piece go for so little money, especially after Etsy takes its cut?  He must have spent a minimum of several hours designing and crafting this pendant, and a wage of no more than $15 or $20 an hour at best for his considerable skills seemed unrealistically low.

So I read up on his background, discovering that he was more or less an old hippy from Southern California.  He had started out in the mid 1970s cutting gemstones, eventually stumbling into gold working and then full-fledged jewelry making.  I surmised that he probably had low expenses – no million dollar mortgage or $1,000 a month student loan payments here.  It is also possible that he scored a deal on the sapphires used in the pendant, given his extensive background with gemstones.

In any case, I was satisfied that the jewelry was as represented and a bargain at $365.  I wasn’t disappointed either.  After purchasing it, the pendant I received was a wonder of modernist design – at once sleek, organic and, above all, stunningly beautiful.  It was a remarkable find.

This pendant changed my thinking about the viability of investing in contemporary art direct from the artist.  I now think it is possible, although still very difficult.

New art is disadvantaged versus antiques in several ways.  First, it lacks seasoning, which helps reduce undesirable specimens.  Second, it is often overpriced, rendering future investment returns poor, or even negative.  Finally, when scrutinizing contemporary art I believe it is imperative to de-emphasize the artist and focus very intently on the quality and materials of the work itself.

Ultimately artists – especially new, unproven artists – don’t sell art.  Beauty and fine workmanship do.  In spite of these drawbacks, buying contemporary works direct from the artist may be one of the most overlooked ways to invest in art today.

Pop Culture and the Decline of Thrifting

Pop Culture and the Decline of Thrifting

When I still lived in Boston I was an avid thrift shop enthusiast.  Thrift shops exist in a strange space halfway between antique store and garage sale.  And I loved every moment of shopping in them.  While it was rare to find a truly valuable treasure in the vast aisles of secondhand merchandise, mid-century modern kitchenware, furniture and other household goods from the 1950s and 1960s were always available in abundance.

There was one specific Salvation Army thrift store located on the outskirts of Boston that I often visited. Due to unique circumstances, it carried the best secondhand items of any thrift store in the area.  It was close enough to the wealthy neighborhoods to receive their cast-offs – stately brass candlesticks, vintage Pyrex glassware, retro porcelain dishware and lots of secondhand designer clothing.

The prices are ultimately what made the experience, though.  Who can resist funky fresh vintage mid-century modern items at $0.50 to $3 each?  It was a thrifting paradise.

Then the Great Financial Crisis of 2008-2009 hit and the thrifting world was turned upside down.  In the wake of the recession my preferred thrift shop – a previously reliable source of great vintage pieces – gradually became a barren wasteland.  All of the older items disappeared in less than 12 months.  Suddenly the store was overrun with low quality pieces from the 1980s and 1990s.  This meant there was a lot more plastic and particleboard and a lot less brass, glass and porcelain.

After a few years of going back to the shop every few months vainly hoping for a reversion to normalcy, I finally gave up.  The good vintage stuff was gone and it was never coming back.  This unfortunate trend was a universal phenomenon too, repeated in every other thrift shop I visited after the Great Financial Crisis.

It took me a long time, but I finally came up with a theory to explain the decline of thrifting.  The primary factor was the financial crisis.  People who used to donate massive amounts of “old” household “junk” now didn’t have the disposable funds to renovate or redecorate their houses any longer.

In addition, those who continued to make donations to thrift shops now examined everything with an eagle eye to ensure they didn’t accidentally part with anything valuable.  They weren’t going to give away anything of even modest value.

I also think demographics played a secondary role in the decline of thrifting.  The elderly move to nursing homes and die at statistically predictable ages.  Because their estates are also partially or fully liquidated during these events, any vintage or antique items they owned are auctioned, sold or donated at the same time.

These estate items are of a predictable age as well, generally no more than 60 years old.  Around 2010, this demographic truth finally started to catch up with thrift shops as the supply of 1950s and early 1960s vintage items from estate sources began thinning out dramatically.  For those who are interested, my article entitled “The Demographics of Antiques” delves into this topic in greater depth.

The Great Financial Crisis prompted an entirely new clientele to explore thrift shops, too.  Shoppers who before had never before strayed from the staid halls of Banana Republic, J. Crew or the Gap now boldly ventured out in search of a bargain.  It’s tough to beat prices of $2 or $3 for a pair of trendy jeans or a nice blouse.  This phenomenon goes hand in hand with the rise of Hipsters, who wouldn’t be caught dead shopping anywhere but thrift stores.

It is no coincidence that the song “Thrift Shop” by Macklemore and Ryan Lewis (featuring Wanz) was released in 2012.  This chart topping, hip-hop anthem features caustic social commentary on the cookie cutter look of ridiculously expensive designer clothing while glorifying the thrifting experience as a great way to acquire clothing that is inexpensive, stylish and unique.  The song’s video is a pop cultural phenomenon, as demonstrated by the fact that it is currently approaching one billion views on YouTube.

I think it’s safe to say that thrifting is no longer the little-known, underground activity it used to be.  No wonder it’s impossible to find good vintage items in thrift stores today!

Medieval French Illuminated Manuscript Leaf, Circa 1300 AD

Medieval French Illuminated Manuscript Leaf, Circa 1300 AD
Photo Credit: Antik-Bendt

Medieval French Illuminated Manuscript Leaf, Circa 1300 AD

Buy It Now Price: $399 (price as of 2016; item no longer available)

Pros:

-This is a charming medieval illuminated manuscript leaf created in Northern France around 1300 AD.  It was originally part of a Breviary – a prayer book used by monks to direct their daily worship.

-It measures 5.43 inches (13.8 cm) tall by 3.98 inches (10.1 cm) wide and is made from parchment, or dried animal skin.

-The dark brown text, interspersed with red text, is written in Latin, the lingua franca of medieval Europe.  Medieval Latin was the spoken and written language of Europe’s elites during the period.  Nobles, clergy, lawyers, architects and other intellectuals all communicated via Latin in medieval times.

-Four initials on each side of the page are richly illuminated in blue, red and gold.  They also employ an illumination technique called “fleuronne” which is French for “floral”.  This decoration consists of stylized plants, flowers or vines emanating from the illuminated initials.  The subtle use of vine-themed fleuronne is particularly exquisite on this French illuminated manuscript.

-This piece is in good condition, with only a little light foxing (brown age spots) and a few pinholes.  Medieval illuminated documents are often found in much worse shape.

-This medieval French illuminated manuscript leaf is over 700 years old!  Most illuminated leaves on the market are much later, from the 15th or early 16th centuries.  It is unusual to find a fine, early specimen, especially at the low price of only $399.

 

Cons:

-Although the text initials are superbly decorated, the illuminated leaf lacks any illustrations.  Illustrations are the most desirable kind of decoration possible in a medieval illuminated manuscript.  However, if the leaf did contain illustrations, the price would probably be an order of magnitude higher.

-This leaf, at less than 6 inches by 4 inches, is small by modern standards.  However, this was a rather standard book size during the medieval period.  Nevertheless, a larger illuminated manuscript leaf is more desirable than a smaller one, and there are larger examples out there.

Japan – Land of the Rising Investment Grade Art

Japan - Land of the Rising Investment Grade Art

I’m constantly challenging myself to discover new types of investment grade art and antiques.  But this search isn’t an easy one.  The ideal investable antique should possess five different attributes: durability, portability, scarcity, and quality of materials and construction.  In addition, an item should reflect the era or culture in which it was created – an attribute I term zeitgeist.  These five elements together form the delightfully zany acronym DPSQZ.  They are also the basis of universal desirability which is ultimately the foundation of investability.

However, following these five principles naturally tends to lead in certain directions.  For example, high quality materials and durability are joined at the hip.  Precious metals and precious gemstones are some of the most lasting, stable materials known to man.  Therefore it is only natural that antiques that incorporate them frequently appear on the list of investment grade art and antiques.  And yet I strongly believe that art does not have to possess significant intrinsic value in order to be desirable and investable.

This has prompted me to exhaustively search at the periphery of the art world for possible investment grade art.  Why the periphery?  Well, the major arts – painting and sculpture – are well trodden asset classes by this time.  The luminaries and great artists of these fields are well known.  Even an expert in the field is rather unlikely to suddenly “discover” a previously unrecognized or unappreciated artist.  There is a great deal of reference material about paintings and sculpture in existence, and, as a corollary, decidedly few bargains available to the collector.  This doesn’t necessarily make them bad investments, but it does make them less interesting from an investment standpoint.

What I have noticed time and time again in my endless search for unconventional, investment-worthy art is the amazing artistic talents of the Japanese people.  Historically eschewing personal adornment and conspicuous displays of wealth, the Japanese instead turned everyday functional objects into glorious works of art.  The list of their artistic accomplishments is truly impressive.  Expertly crafted samurai swords, delicately carved netsuke, intricately decorated tsuba, beautifully embellished lacquerware and alluringly modern shin-hanga woodblock prints are all examples of conventional antiques elevated into art forms by the Japanese.  These traditional Japanese crafts may have little to no intrinsic value, but are all solidly investment worthy.

Perhaps it isn’t surprising, but the Japanese still produce luxury goods of unparalleled beauty today.  Obsessive attention to detail and dedication to their chosen craft are truly admirable traits that shine through in many Japanese luxury products.  And while I don’t normally advocate buying new luxury goods for investment purposes, some Japanese items are so superlative in terms of quality that I may be willing to bend my own rules.

I don’t intentionally target Japanese art when looking for unrecognized, investment grade art.  In fact, I go out of my way to try to find unknown art and antiques from a variety of regions and cultures.  And yet I continually find myself drawn toward Japanese works again and again.  The Japanese people’s artistic skill – particularly with highly-detailed, miniature work – is the stuff of legends.  Their aesthetic reputation for both graceful simplicity and delicate naturalism is unrivaled.  When searching for aesthetically pleasing work that is universally desirable, I believe you must go where the fundamentals lead.  All too often, the final destination is Japan – the land of the rising investment grade art.  And that isn’t necessarily a bad thing.