| December 22, 2013 | | | | | | | |  | | | | How to Make Money Collecting Art (Part Deux) | | | | | | | | | | The Daily Reckoning's Sunday Investment Review | | | Dear Daily Reckoning Reader,
After a week of 2014 forecasting… we've decided to take a (much-needed) break and muster up our weapons to reckon in the new year ahead.
Through New Years Day, we'll be featuring some of our favorite essays from throughout 2013. Whether it's our call on Obamacare...gold… "the miracle metal"... 3D printing… or our lambasting of the political process… and the logic of pointy headed economists… you'll find it all during this coming week.
We hope you stay safe, find time to relax and enjoy the "best of" essays. Feel free to send us your thoughts: dr@dailyreckoning.com.
In the meantime, please spend a few minutes looking at this week's five investment recommendations from our in-house investment experts. Then, we present you with part deux of Mark Ford's interview, "How to Make Money Collecting Art". Read on below... | | | | | | |
Wishing you a safe and Merry Christmas,
Peter Coyne
for The Daily Reckoning | | | | | | | You should be sitting down for this
Put aside your coffee, close your other emails, and pay very close attention to what I'm about to say...
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| | | | How to Make Money Collecting Art (Part II) | | | | by Mark Morgan Ford |
The Daily Reckoning: Continuing last week's discussion… Are there differences in value for the same artist's work?
Mark: Yes. First of all, there is almost always a range of values according to medium. You know, paintings versus sculpture versus watercolors versus pencil drawings. As a general rule, you will pay more for an oil painting than you will for a pastel, and you'll pay more for a pastel than you will for a drawing.
But there is one notable exception. A medium that an artist is "known for" will always demand the highest price. For instance, the artist Andrew Wyeth is known for his watercolors. Those will get the top pricing. But if you know your artist, you will know this.
The other factor that comes into play is size. As a general rule, the larger the piece, the more expensive it will be.
A third thing is period. Most museum-level artists are best known for certain periods. Their works that were composed during those periods are therefore considered more valuable.
Finally, there is image. Certain artists are best known for certain images. André Derain's "best" images, for example, are somewhat abstract. When he got older, he reverted to a more representational style. These pieces are beautiful...I have one. But they will not fetch the prices that his abstract works do.
One last thing-it is better to buy a top-quality, wholly representative work by a second-tier artist than an uncharacteristic piece by a major "name." So many collectors get wooed by names and prestige. But nobody wants a painting of a barn by Jackson Pollack. They want his "splatter" work.
The Daily Reckoning: Seems like a lot to know.
Mark: Not really. There are about half a dozen good websites that track auction prices of investment-grade artists. All of these will give you the key elements: the image, the medium, the size, and the year. You can study them and learn them very quickly.
The Daily Reckoning: So, when I'm looking at an artist's body of work, how do I know what to buy?
Mark: In collecting in general, you always want to buy the best you can afford. If you are very rich, you should buy large paintings or sculptures with the right image, painted at the right period. The best of the best is going to appreciate the most.
For example, if you were buying a Karel Appel, you'd want to buy a colorful abstraction in oil of a figure that is dated in the 1950s or the early 1960s.
The Daily Reckoning: Okay, so now that I know what to buy, where do I go to actually buy it? Do I have to participate in some kind of auction or do I pay a broker to get it for me, or do I go to a store and just pull out my checkbook?
Mark: There are several places you can go: galleries, auctions, and private owners. | | | | | | |
| Could Obama ban this video? Obama is after even more of your rights. There has been nothing you can do about it. Until now… This video is something Obama likely hopes you NEVER get to see… It could even be the trigger for a wider revolution -- a revolt the establishment fears more than anything. For obvious reasons, I'm not sure how long this video will be available. There are government agencies hellbent on keeping confidential material like this hidden from average Americans. | | | | | | | | Galleries will sell you their products at retail, which means they will charge you 50-100% more than what they paid. As an investor, you can't afford to pay that kind of premium. But sometimes galleries buy cheap and don't insist on such big margins. If you know what you should be paying (by educating yourself) then you can negotiate.
Auctions charge a premium, too. Usually it's 10% to the seller and another 10% to the buyer. That's not a trifling amount, but it can work if the piece is sold at a price that is considerably under its retail value. This happens all the time at auctions. Again, you just need to know the right price to pay and don't bid above that.
The best venue is a private sale. I've just bought a few great pieces from a private collector who ran into financial difficulty and wanted to raise money fast. By buying privately, you can sometimes get paintings at rock-bottom prices and with no commissions. Again, it's critical to know the right price.
On a side note: it is remarkable how many collectors pass by antique shops and estate sales. This is an environment outside the gallery scene or auction house that may house bargains and sleepers. That grimy oil landscape (which can be cleaned) could be a hidden gem. I came across many items in my collection this way.
When buying investment-grade art, be cautious. There are lots of forgeries in the market, especially of popular artists like Salvador Dalí and Wilfredo Lam. You can't protect yourself from this problem by buying only pieces that have good sales records. Buy from reputable dealers and auctioneers. Ask for a complete provenance. And you can always have the work looked at by an expert if you have any doubts.
The Daily Reckoning: Do you have anyone you can recommend?
Mark: For matters like that, I go to my friend Roger Hurlbert. This guy knows everything about art. He has been an art history professor for more than 30 years and wrote a fine arts column for The Sun Sentinel for 20 years.
He has also been an art collector and a buyer for clients for decades. He has literally attended hundreds of exhibitions, met and interviewed tons of artists, and personally dealt with more dealers and gallery owners than anyone I can think of. In fact, we should publish his contact information in this piece.
The Daily Reckoning: Ok, we will. Well, thanks Mark. We'll see you next week.
Mark: My pleasure.
Regards,
Mark Ford
for The Daily Reckoning
[Ed. Note: If you're interested in learning more about the simple tools Mark has used to amass his fortune, you may be interested in The Palm Beach Letter. This unique publication provides research on the safest investments to help ensure long-term financial security and gives you the wealth-building advice of a self-made multimillionaire. To learn more about The Palm Beach Letter, click here.] | | | | | | |  Mark Morgan Ford is a serial entrepreneur, author, and editor of the Palm Beach Letter. After more than 30 years in the financial publishing industry his writing on finance, business and economics have become the industry gold-standard. If you're serious about growing your wealth, we highly recommend reading and re-reading all of his published work. | | | | | | | BE SURE TO ADD dr@dailyreckoning.com to your address book.
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