Art Market vs. Stock Market Revisited
With the Dow finally breaking the 12,000 mark, I felt it might be a nice time to revisit the idea of investing in Art vs. Stocks. I, like many of you, have a fair percentage of my ‘net worth’ invested in the stock market and during the boom days of the 90s we all enjoyed miraculous returns on the funds we invested. Those in the know, sadly I was not one of them, cashed out before someone pulled the plug and saw almost all of those paper profits disappear down the drain. I often daydream about those days … thoughts of buying an island in the South Pacific and spending the rest of my life in the warm weather, with a view of the Pacific Ocean surrounded by exotic birds, palm trees and great art … which I would be selling via the Internet; but then reality kicks in and I realize that I am on the Belt Parkway headed, at breakneck speeds of 10 – 15 miles per hour, towards a concrete and steel island filled with ‘exotic’ yellow cars, scattered deciduous trees, thousands of pigeons and views of the murky East & Hudson Rivers. But let’s face it ... that is New York City and as you all know, there is no other place like it. Not to mention that I love buying and selling works of art and our gallery is, to me, a tranquil oasis in this urban jungle.
As for my stock portfolios, they are still far from the levels of the good old days that harbored my early retirement fantasies. For many years I have been lucky to see a 1 or 2 percent gain … though this year I am up 10 percent so far, and with 2 months to go my only thought is “will it hold?” Only time will tell!
During this same period, the art market has seen a dramatic increase not only in values and numbers of individuals entering the arena, but the number of independent publications discussing both the monetary and esthetical benefits one can receive from their art investments. In the October 12 issue of The New York Times the lead article in The Arts section was titled Works by Johns and de Kooning sell for $143.5 Million. When I first saw the headline I was surprised, since I knew that there were no major Contemporary auctions at that time. However, as I soon found out, both of these works were sold by dealers to two different hedge fund managers and are representative of the many ‘major private’ sales that are taking place in the art world.
The Jasper Johns painting, titled False Start, has had an interesting market history. The painting was originally sold in the late 1950s to Robert Scull for about $1550, who then sold it in a private transaction to Francois de Menil. Menil, in 1988, offered the painting at auction where it was bought for a then staggering price of $17 million by S.I. Newhouse. A few years later, Newhouse sold it in a private transaction to David Geffen for an undisclosed amount and he, through one of his art dealers, just resold the painting for a reported $80 million to Kenneth C. Griffin.
The Willem de Kooning, Police Gazette, also has an interesting history. This painting was originally owned by Sidney Janis (who bought it from the artist), then by Eugene Thaw and subsequently moved on to Robert Scull. Scull offered it for sale at an auction in 1973 where it was bought by the European dealer Ernst Beyeler for $180,000 (then a record for a de Kooning painting). At some point the work entered the collection of Steve Wynn who, in turn, sold it to David Geffen in the mid 1990s. Geffen, in another private transaction, just sold the painting to Steven A. Cohen for a reported $63.5 million.
Of course, this is not to say that all works of art have seen similar types of appreciation over the same span of time, but I do think you will find that most good works of art bought in the 50s, 60s or 70s are now selling for many times what they were back then. It is also true that more people, not only ‘those in the know’ have been placing a sizable amount of their assets into works of art. Since the number of works by any given artist is limited (especially when discussing artists who are no longer with us), and more collectors are donating large portions of their collections to museums, there are fewer and fewer good quality, good condition, works coming to the market. As the supply becomes more limited, the only place for prices to go is up.
Just so you don’t feel that the only way to achieve spectacular returns is to buy works by the hot Contemporary artists, here are the general range of prices for a number of 19th century artist from the early 1970s (the earliest records we have available to us in the gallery are from 1972). During that year, the typical Cortes painting would have cost between $1,500 - $2,500; a nice Boudin, port scene approximately 12 x 16 inch, would have brought $25,000; typical Bouguereaus were selling in the $2,700 - $7,500 range and a major work brought just under $11,000; Julien Duprés were bringing $800 - $1,500; Daniel Ridgway Knights could have been had for about $3,500 - $4,500 while Aston Knights were selling in the $800 - $1200 range; most of the Monets were selling in the $50,000 - $250,000 range; and the most expensive Picasso reported that year sold for $680,000. We have all seen what each of these artists’s work sell for today … many multiples of the prices they made back in the early 70s.
Now we can fast forward to October 2006 when a number of 19th century sales took place in New York; and while a majority of the works really left something to be desired (many having condition, period, or quality issues), a number beautifully illustrated the strength we are still seeing in this market. In 2000 Alberto Pasini’s Cavalieri Circassi che Aspettani il Loro Capo sold for $325,000, this month it made $430,400; Eugene von Blaas Daydreaming by the Shore made $142,400 in 2003, this month it brought $419,200; William Bouguereau’s La Tricoteuse made $540,000 in 1997, this month is sold for $1.47 million; while his much smaller Le Livre d’Heures made $151,000 in 1996 and 10 year later made $452,800; Arthur John Elsley’s Spring Song sold for $420,000 in 2000 and six years later made $1.136 million; and among the biggest surprises to me was B.C. Koekkoek’s Landscape with Castle, a work that had many areas of pigment separation, that made a whopping $1.4 million (it appears that this work had been in a private collection for decades and no previous sale information is available).
As always, there were many losers … those over priced or poor conditioned paintings: Among them were J.W. Godward’s The Jewel Box … a pretty picture from afar, but far from pretty upon closer inspection (the entire painting showed signs of over-cleaning), estimate $700 - $900,000 – no takers; James-J-J Tissot’s overestimated ($1.8 - $2.2 million) rather dull Mavoureen, Portrait of Kathleen Newton found no takers as well; and Sir L. Alma-Tadema’s Ask Me no More … For at a Touch I Yield, which was a very large (31.5 x 45.5 inches), over-estimated ($3 - $5 million), lackluster example, also failed to sell.
I know that we can look at many stocks that have given similar positive and negative returns to investors, but the main difference is that the stocks are simply a piece of paper that often sits in a vault. A work of art is an individual man-made creation that will not only stimulate your mind, but has the added bonus of decorating your home … giving you many years of enjoyment … not to mention it is something you can pass on to future generations for their visual enjoyment. And let’s not forget about the enjoyment one receives from the ‘hunt’. Buying a stock is fairly easy … you call your broker, place an order, send the money and a few weeks later you receive your stock certificate which you promptly place in your vault and probably never look at again until you decide to sell (those of us who have brokerage accounts probably never even see the certificate). Buying a painting requires a bit more time and effort; searching various points of the globe to find just the right work, by the right artist, that is from the right period, in the right condition and size you need. Then you have the anticipation of receiving and installing the work, and then the pleasure of enjoying and studying it for as long as you own it.
New Exhibit at the Brooklyn Museum
I just read about a small exhibition that is currently on display at the Brooklyn Museum entitled First in Line. The exhibit explores the creative process an artist goes through when composing a painting. Among the works on display is Daniel Ridgway Knight’s At the Well which is part of the Museum’s collection. Alongside the work is a preparatory study for one of the central figures. The exhibit is on display from October 18 – January 28.
Diaz de la Peña Catalogue Raisonné
We are putting together a bulk order for the Diaz de la Peña catalogue raisonné. We will be able to offer these volumes, for a limited time, to our US customers for a delivered price of $360. This is an important set of books on the life and work of this major Barbizon artist … I have already seen people on the web advertising the set for over $700. If you would like a copy, please let us know ASAP. After our initial order, prices for the set will be higher.
Howard L. Rehs
© Rehs Galleries, Inc., New York –November 2006
Gallery Updates: We are very pleased to inform you that since our last sales update, the following works have found new homes: Federico Andreotti’s The Young Suitor; Antoine Blanchard’s Rue Tronchet, La Madeleine, Arc de Triomphe: Champs Elysees, Place de Luxembourg: Le Pantheon, and Rue Royale, Madeleine; Sally Swatland’s Mid-December and Early Snow in the Valley; and John Kuhn’s Watermelon Slice.
Web Site Updates: New works by the following artists have, or will be added to the web site this month: Jean B.C. Corot, Eugene Boudin, Emile Munier, Charles H. van Den Eycken, Antoine Blanchard, Edouard Cortes, Walter Spitzer, Holly Banks, Allan Banks, Sally Swatland, Gregory Harris, and John Kuhn.
Next Month: A continuation of my art market update.