Howard Rehs
Ever been to Disney’s It’s A Small World? by Howard Rehs – my thoughts on the recent auction sales that have taken place, and I try to answer the big question on people’s minds: where has all the good art gone? I have been saying this for a very long time — there are just too many sales and not enough really good works to fill them. If this continues, we could be in for one wild ride!!
After May’s $1.5 Billion worth of art that traded hands in a matter of 2 weeks in New York, one might have felt that the art world needed a rest, and you are probably right. However, the salerooms were not going to let that happen and moved the auction action over the pond to Merry Old England. Hey, why not milk the market for as much as you can get, as fast as you can? It’s not a great strategy, in my humble opinion, but if you are just in it for some fast money, I guess it works.
By the middle of the month, both main salerooms presented another round of Impressionist / Modern and Contemporary art sales – at least they are waiting until July for their Old Master sales – oh wait, that is only next week. And once again the press was abuzz with the thought that another Billion dollars worth of art might sell. In addition, I found it very interesting to read that other dealers and some press people are now concerned that there may be too many sales since there appears to be a ‘shortage’ of quality material coming to the auction block. The big question on everyone’s mind is – where have all the good works of art gone? The simple answer is that they are hanging on people’s walls.
Now, for what I feel is a more all-encompassing answer. Over the past decade, the major market players have been really pushing the idea that art is a great investment, and while I agree that over a long period of time, most works of art, by well-established artists, will do well, I am still a firm believer that one needs to buy art because they love it and want to own it … not just to make money — remember, nobody can guarantee that each work you buy will go up in value. In addition, there are now a number of art funds that will be happy to take your money and invest it in works they feel will bring you great rewards. So, with all the talk about investing in art and many of the major money people buying into it, you have to assume that at some point, most of the really good works will be in private collections (and do not forget that some will be in those art funds). On top of that, the banks are paying almost nothing in interest (at times, I feel like I am paying them to hold on to it), and the stock market, while it has made great strides over the past few years, is still one big roll of the dice – come on 7 – and let’s not forget the wild swings it takes which can really take its toll on your mental health. So, if your money is doing nothing in the bank, and you are not ready for a game of craps or the volatility of the market’s daily swings, the art market seems to be a nice calm place to park some of your greenbacks. There are no daily ups and downs (at least that you can see or read about); you can dream about the big score when you decide to sell, and you get the added bonus of enjoying the works that you own (unless they are part of an art fund). So why should people sell? If they do not need the money they are not and that is part of the reason why less stellar works are coming to the market.
Of course, bigger issues will surface if all of the great private collections are donated to public or private museums with the caveat that they cannot be sold; but the odds of that happening are pretty slim. Many of the large players in today’s market are young and it will be a long time until they (or their estates) want or need to sell. That is not to say these buyers will not tweak their collections as time goes on, but it also does not mean that those works will appear on the auction block — yes, we dealers do sell a lot of work that never goes through the auction houses … there are many 5, 6, 7, 8 or even 9 figure transactions that take place in the private sector of the market. On top of that, the auction rooms now offer ‘private’ sales … so they are adding to the public’s perception that the great works are drying up … it is hard to have your cake and eat it too.
The real interesting part is that as the supply has dwindled, the number of people coming to the market has increased. Some of these new buyers are beginning to pay high prices for average works of art … in the grand scheme; I guess that is a double-edged sword. The sellers of these ‘average’ works are very happy, but at some point, the market for the ‘average’ will get so high that people who own the better pieces will want to sell just to cash in … and that is when the crap may hit the fan. I say ‘may’ because it all depends on how much good art comes on the market at any one time. If the works flow into the market in an orderly fashion, they should be easily absorbed, at very strong prices, and only help support the middle-level works; but if too much comes out at one time, hold on to your hats … it will make that initial drop on Six Flags’ Kingda Ka feel like a ride through Disney’s It’s A Small World!!
Best wishes,
Howard