A collection of articles for investors and fans of art on the subject of art buying, investing, and collecting. These articles are also published in various ArtAscent Art & Literature Journal issues.

Preserve your capital in art investment and get your proper dividends

The regularly delivered dividend of investing in art is its presence in your home or office. Looking at your investment as it hopefully increases in value should be a continuous pleasure.

To be assured that your investment is safe requires periodic attention. Insurance is essential. Take photographs of all your works of art, record their measurements and media, and collect in a file as much information as you can on your purchases, including invoices and printed material on the art and the artists. Put your photographs on two computer disks. Send one to your insurance agent and keep the other in a safe place. Remember to update your photograph inventory regularly so that it records everything in your collection, including recent acquisitions. Depending on the contents of your collection, you may need to modify your insurance valuations every couple of years so that your insurance coverage is adequate.

Artworks retain their value and are subject to potential increase in value only if they are preserved in excellent condition. Works on paper should be kept from direct sunlight and framed using ultraviolet filtering glass. When they are unframed, works on paper should be stored in acid-free portfolios and, ideally, in archival boxes. Most oil paintings should be properly framed to protect their edges. Works of art should be properly secured to a wall and carefully hung taking into account potential accidental encounters, most commonly with pointing fingers and less commonly with unusual, accidentally flying objects. This might sound ridiculous, but it is not unknown for oil paintings to be damaged by pets and wild interior activities.

If a work of art is damaged, it will require restoration before it is sold. This may involve a considerable expense, which will be added to the base cost of your investment. It will offset some of the gains when the piece is sold. If you do not restore your work, sell it at a discounted price. All serious collectors are intensely concerned with the condition of each work of art. The closer a piece is to what it was when it left the artist’s studio the higher its value.

To get the most of your collection – either for your own pleasure at home or for you and your client’s pleasure in an office – it is worth considering employing a consultant to assist you with installation. Many dealers and gallerists offer this service. Others will direct you to where you can hire help. An installation professional will take into account the safety of a work of art in your environment as well as arranging the display of works so that they are seen to the best advantage. Some art shines in isolation while other pieces attain their greatest impact by being viewed in relation to other works or features of interior design. However you wish to arrange your collection of art, it is imperative that it be secured in a manner appropriate to its setting. A variety of techniques are available that are suitable to deal with risks, such as earthquake and theft.

It is well worth re-hanging or re-installing your collection on a regular basis. A collection of art will appear to be entirely new and you will suddenly be able to re-evaluate the quality of a work and renew your pleasure in viewing it, if it is seen in a different context. At the end of a day either at the office or at home, you might close your eyes and ask yourself whether you really looked at your collection or a single work of art that day. If the answer is no, then perhaps it is time to re-hang the works, have them moved around or, if you have a large collection with works in storage, to replace the tired ones on the walls with fresh faces.

Your collection is an investment where the dividend is pleasure. If you are not getting this on a daily basis, you must consider doing something about it. Some collectors tire of a particular type of work or tire of a single piece. This is the time to sell. This is a no fault situation. You shouldn’t blame yourself. You didn’t make an error in acquiring a work or a whole series of works. Even the finest art can cease to elicit interest or delight. When a work or art does not deliver the dividend of enjoyment even after re-installation or a period in storage, divest yourself of it. Buy another piece that does deliver a daily dividend.

By Dr. Alan McNairn

How to minimize risk by purchasing art wisely

In bygone days it was common for investors to frame, matt and hang, as cautionary mementos, valueless stock certificates from bankrupt companies. Turning these into art-like interior adornments was a way of bravely facing up to one’s folly. For an investor in art an equivalent might be a wall of fakes and forgeries and otherwise valueless artworks. Avoiding such a wall of shame is not easy for the collector. Even the most skilled make mistakes.

Gazing into a crystal ball is not the best way to predict whether a work of contemporary art will increase in value over time. Chance plays a role in the monetary appreciation of art to be sure, but there are ways to increase the probability of capital gain in art investing. The most important of these is to acquire your work from a dealer with a good reputation. How do you evaluate this?

The business of dealing in art depends on commission sales. Like all good entrepreneurs, art dealers or gallery owners want to complete as many sales as possible. The most successful dealers assemble a stable of artists whose works they consider saleable in the specific market they have chosen. This might be local, novice art collectors, interior decorators or experienced high-end consumers.

Before buying a work of art it is advisable to consider the vendor’s business. Try to get as much information as possible about the stable of artists and their sales. Go to an opening at a commercial gallery and look for the red dots indicating that a work has been sold. Look carefully at the price list. Return to the gallery at the end of the show. Look again for the red dots. This will tell you a lot about the gallery and the market for works of individual artists. Although it is far from invariably true, it is more likely that art that finds a market today will have a market in the future.

An art dealer or gallery owner will allocate a percentage of their commissions to advertising and promotion. An indication of the success of an art dealer and what they consider to be the potential for sales of the work of a specific artist is the amount and quality of publicity and promotion allocated to an individual artist.

Buying a work of art from a dealer or gallery rather than directly from an artist has significant advantages for the collector. Such a work of art has the dealer’s stamp of approval. A dealer, if in business for a long time, will have developed an eye for quality and a nose for commercial success. The degree of a dealer’s commitment to an artist’s works is an indication of what might happen in future years with respect to the value of the work of art you buy. It is no guarantee, just an indication.

Another way to reduce the risk of investing in art is to educate yourself by regularly attending public auctions. Note what sells and what is bought in or unsold. Note what works in the catalogue have a provenance that stretches back to specific commercial galleries. Where a work of art was bought by a collector often has a significant effect on the knock down price. Again – although it is not a hard-and-fast rule – what sells today will sell in the future. What works against this rule is change in taste.

The apparent fickleness of taste is one of those pesky unknowns that confounds every investor in art. Some kinds of art or styles of art have cyclical popularity among collectors and the public. Like fashions in clothing, there are periodic revivals of earlier styles. A revival of a style, technique or medium among contemporary artists has the consequence of increasing the value of similar works created by previous generations of artists. Predicting future taste is extremely difficult; however, the rewards for collectors in getting it right can be significant.

In 1839, when photography was in its infancy, the French painter Paul Delaroche said “from today painting is dead.” Of course he was wrong. If a collector at the time stopped buying French academic painting they missed an opportunity. When mid-20th century critics, collectors and art historians – blinded by their infatuation with modernism – turned up their noses at 19th century academic art, prices for it plummeted. For those who could anticipate a change in taste, this was a great opportunity to buy. It is not unheard of for high-quality French academic paintings, which could be had for a song in the 1950s, to sell today for well over a million dollars. The current revival of taste is connected to a re-evaluation of 19th century academic art and a movement contesting the tyranny of modernism by contemporary artists.

Collectors who consult a crystal ball before making acquisitions are doing themselves a disservice. There are much more reliable ways to determine the likelihood of success in investing in art.

By Dr. Alan McNairn

Studio Spotlight | Priscilla Daniels

Catch a glimpse of the space in which creativity is born in this artist studio tour.

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When I am in my studio, it’s like a meditation practice. It’s just me, my canvas, and my paints. Whatever it is I am thinking about eventually comes to light if I search hard enough. I resolve things as I go and allow myself to make mistakes. It’s such a reward when everything surfaces through my work. I use different colours and textures to evoke emotion and realness within my work.

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Creating is something I could always turn to in different times in my life. It has been a healthy rewarding release. I was a very young child when I first started to experiment with creating and using my imagination. I remember using salvaged things around my house as a child. like hangers and cardboard. And no matter what, I could pretty much always find a pencil or pen and writing material.

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Now living in Las Vegas Nevada with my 13-year-old daughter and fiancée, having a studio space of my own means that I have a place of my own to gather my thoughts and create things that inspire me and hopefully will inspire others outside of my studio as well.

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By Priscilla Daniels
Priscilla Daniels is a US citizen, was born in San Diego, California, and is currently based in Las Vegas, Nevada.
Visit www.priscilladanielsart.com.

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Market trends and reality: two examples

Art investors sooner or later come across invariably upbeat reports on trends in the art market. Consider these carefully in light of the source of each report just as you would similar statements by analysts extolling the potential of other investment vehicles.

In general, reports on trends in the art market have limited value for the investor. It is easy to be seduced by the statement that the number of works of contemporary art sold at auction in the last decade has quadrupled. There is even better news. The prices for contemporary art have risen by 34 percent. (All statistics taken from the white paper Contemporary Art Market: The Artprice Annual Report for 2013, available at artprice.com.) However, it is important to be aware that this figure includes major pieces by blue-chip artists, such a Jeff Koons, Takashi Murakami and Anish Kapoor. The hammer price for a very select group of art stars has soared into the stratosphere, but this group is very small indeed.

The average annual price increase for the works of non-star and emerging artists is much less. Investors in works by emerging artists must look deeper into the art market and be skeptical of reported trends. The statistics get skewed by the stellar winning bids for works by the likes of American painter John Currin (b. 1962). In 2013, 13 of his pictures were auctioned for a total of more than nine million USD. This was a rare and quite unpredictable event in the art market, making it newsworthy.

A look at a single work by American art-star Jeff Koons (b. 1955) can be instructive for those bowled over by the market for his works. In 2013, 48 works by Koons sold for a total of more than 50 million. Of these, a few sold for several million dollars, while the others had much more modest knockdown prices.

At a sale on March 7, 2014, Koons’ ceramic Balloon Dog (Red), number 131 of an edition of 2,300, sold for $22,500. This appears to be a good return on an investment held by the collector for 18 years. If one considers the transaction in a little more detail, the return on investment is not all that it might seem at first glance. The process of calculating a return on investment is a little complicated, but it is well worth understanding how it is done.

First the sale price must be discounted by the 25 percent buyer’s premium retained by the auction house. In this case of Koons’ Balloon Dog (Red), it was 25 percent of $22,500. So from the transaction, the seller’s account was credited with $18,000. From this was deducted the auction house seller’s premium or commission of 20 percent. Thus, the seller pocketed $14,400 from the sale. In calculating the return on investment we need to know the cost base or book value of the work. This is particularly difficult as commercial galleries are notoriously tight-lipped on sale prices. It is possible that the owner of the single piece from the large edition of Koons’ Balloon Dog (Red) acquired it for something in the range of $2,000. The return on the 18-year investment ($14,400 – $2,000) may have been around 34 percent per annum. But, there is another way of looking at this. If we put $14,400 actual return from the sale into a calculator at usinflationcalculator.com, we find that this sum equals $9,499 in 1996 dollars. Over 18 years, the real/uninflated annual rate of return for this investment, was about 26 percent. Koons’ Balloon Dog (Red) was a very good investment no matter how it is calculated, but not as stunning as it may first appear.

Only a few lucky investors had the foresight – or available cash – a couple of decades ago to invest in a work by Jeff Koons or one of his colleagues who now happen to top the art index. It is a question of predicting future demand for the works or a particular artist.

Currently, 68 percent of contemporary works sell at auction for under $7,000. They are not the works of so-called “market leaders.” Consider a single work, chosen more or less at random, as an example – a 10-inch X 96-inch oil on canvas, Lamay Bridge, (1987) by the American artist Woody Gwyn (b. 1944). In February 2010, it sold at auction in San Francisco from the collection of a law firm, fetching $4,575. Subtracting the 25 percent buyer’s premium, the return to the seller was $3,432. Because this work was part of a large consignment by the law firm, the auction house seller’s commission was probably discounted to around 10 percent. The law firm likely received in the vicinity of $3,089 from the sale of this work that was originally acquired in 1987 from a Santa Fe gallery. The price at the time might have been about $500. The difference between the book value of the artwork and the return from its sale ($3,089 – $500) shows a $2,589 capital gain. The annual rate of return on investment was in the range of 23 percent. But, when we put the $3,089 return from the sale of the work into an inflation calculator, this sum is equivalent to $1,609 in 1987 dollars. Subtract the cost of acquiring the work originally and the uninflated gains from the purchase are $1,109, or ($1,109/22 years) $50 per annum or 10 percent.

These two examples show the differences in return on investment. If a collector with a small budget is lucky – or clever enough – to acquire a work by an emerging artist who eventually rises to the top of the market, the rewards can be substantial. This applies equally to investment in works by skilled artists who do not achieve a mega-star status. In both cases, the risk must be considered in relation to a best guess at future demand and the potential rate of return.

The good news must be tempered with an important warning. All the statistics on which art market trends are calculated are based on actual public sales. No one reports on the huge number of works that are put up for auction and fail to find a buyer. Depending on the prevailing economic conditions it is not unknown, for as many as half the works in a sale to be bought in or remain unsold.

In the art market, statistical trends are an imperfect guide at best. They are not of much use in helping an art investor determine risk. In the case of the acquisition of art for investment purposes, the eye is invariably mightier than the math. Even if capital gains are not forthcoming, a well-chosen work will delight the owner. There is no way to put a monetary value on this, so it’s not subject to the vagaries of statistical analysis.

By Dr. Alan McNairn

Buying what you like

It may be a cliché, but in the acquisition of art for purposes of investment, “buy what you like” is a good piece of advice. This statement of conventional wisdom holds true; however, only if you are confident in your taste.

The most successful collectors are constantly refining their taste. Enthusiasts of visual art do this by regularly visiting commercial and public galleries, attending gallery talks and lectures, reading art books and constantly discussing art with dealers and curators. As knowledge of art is acquired, taste is refined. As a consequence, the risk in investing in art decreases. With increasing knowledge, your confidence in your eye or your taste will develop so that you can be assured that buying what you like will be rewarded.

The daily dividends of investing in art are non-monetary. Nevertheless, they are inherently valuable. They consist of the pleasure of looking at your treasure or treasures and, from time to time, sharing this delight with others. If you haven’t bought what you like, you will not reap these dividends and, thus, you will not be getting full value from your investment.

The only monetary reward in investing in art is through capital appreciation. This, of course, is dependent on the price of acquisition and the proceeds at disposition. Capital gains in art investment are as difficult to predict as those accruing from any other investment vehicle. The goal of buying low and selling high involves risk. Your knowledge and your taste will be essential in selecting a work for acquisition. If you are buying a piece you like by an emerging artist with a low retail price, you will carefully consider the possibilities that the artist will continue working, develop in skill and that his or her work will gain in popularity in the market. In acquiring a work by an established artist who has already gained a reputation regionally, nationally or internationally, you will likely not be buying the work at a record low price. In this case, your risk will be less because the work will, in most instances, at least retain its value. Being a knowledgeable collector with a good eye will ensure that when you buy what you like, you will be confident in its investment potential and, most importantly, you will enjoy the dividends.

The taste of a disciplined and astute collector of art will naturally correspond to the taste of other collectors. The demand for the works of a particular artist or school of artists or genre of art impacts monetary value. After years of enjoying your treasured possession that was acquired because you liked it, it can be disposed of, perhaps delivering substantial capital gains, because there is a market for it among others who also like it.

There are pitfalls in buying what you like. Taste in art changes over time. The cutting-edge quality of art that once made it exciting and in demand often diminishes over time. Some genres of art fall out of fashion, and the market will reflect this. You may find it hard to part ways with a piece that you truly enjoy. Some collectors avoid this permanent parting with their art works by donating them to public museums and galleries where they, like old friends, can be visited on occasion.

The only guarantee in investing in art is the non-monetary dividend of pleasure. If you bought what you like, it should wear well over time and your dividends should increase.

Dr. Alan McNairn

Artist interview of Liz Ruest

Artist Interview | Liz Ruest

Become acquainted with perhaps a few unknown dimensions – thoughts, ambitions, wisdoms, life changing moments – of this inspiring artist.


When it comes to your art/writing, explain what you do in 100 words.
I use technology as a glue to combine layers of texture and iconic imagery, building a sense of place and the complexity of life decisions in my compositions. My tools and techniques range from hands-on collage, printmaking, and encaustic wax, to digital cameras, scanners, and microscopes – all to help capture a sense of history. I create colours by building up digital layers, add details, obscuring and revealing, just like in a hands-on collage. Then, I have the luxury of deciding how to share my digital file: online, as a limited-edition print, or as open-edition accessories on print-to-order sites.

What project are you working on now?
I’ve just wrapped up a “body of work” for the year that I titled, “Factors,” large digital images with multiple layers of photography and collage. Now, I’m in prime-the-pump mode for next year’s work. Each fall and winter, I start building the basis for another year of images and layers. I’m shooting with my digital camera, using my collages as plates in my printing press, and experimenting with acrylic and watercolour for more colours and textures that I can scan.

Why do you do what you do?
I process so much visually – it’s what I go to sleep mulling over, and what I wake up thinking about – that I can’t imagine not doing it. When I don’t get art time for too long a stretch, I get antsy. As I combine layers and images, and hit that just-right combination, I can’t wait to share it, to find out if you see what I see, and connect.

How has your practice changed over time?
I’ve made much more of a switch to digital compositing since 2010. Before that, I was trying other ways to get images to layer: Chine-collé printmaking, acrylic matte medium, and encaustic wax. Digital layering allows me to experiment more quickly and freely, and doesn’t preclude me from using hands-on methods with the final print, either.

What is your strongest childhood memory?
I grew up in an old house near Lake Ontario, in Canada, with frequent visits to the beach after dinner. That endless horizon and sense of calm have stayed with me, and they are something I still seek in my travels.

What is your scariest experience?
One evening at the beach, I was a little apart from the rest of the family, and started walking into the water. Nobody saw that I had walked right off a drop-off, and I became completely submerged. Thankfully, I was able to calmly turn and swim back, but that sense of being utterly alone underwater has stayed with me since childhood. I am grateful for the sense of self-reliance that seemed to come out of nowhere that evening, and I lean on that to this day as well.

Describe a real-life experience that inspired you.
When I moved from Ontario to the American West coast, I became an invisible immigrant, not obviously a stranger, but feeling very strange and out of place nonetheless. I’ve since done a lot of thinking about what it means to leave a location, choose a new one, or decide to stay put, and that exploration of a sense of place comes up in my work every day.

What superpower would you like to have and why?
I always think that I’d like to be a mind reader, to simplify the complex process of communication, but I realize we all think thoughts that aren’t always fit for consumption. The editor in me appreciates that we can choose our best words and images to put forward.

What is your pet peeve about the art world?
I notice a need, a human need, really, not just an art world need, to label things. But I have more fun when I mash two colliding ideas together, such as handmade and digital, or printmaking and collage. “Mixed media” doesn’t always cover the complexity that goes into the work.

What is your dream creative project?
I wish everyone had large digital screens in their homes, so I could just zap them my work! Since that’s far-fetched, I’d love to work out how to physically render some of the many layers in my work, rather than flattening them all prior to printing.

Which place in the world do you find to be the most inspiring?
With my French-Canadian background, you’d think it would be France, and I’ve certainly tried a visit or two. But I keep returning to Scotland, for its landscapes, coastlines, language, and history, despite not having more than a drop of Highland blood in me. I’ve tried to figure it out, find the origin of my fascination, to no avail. The rugged views, the self-reliant underdogs, and the wonderful people just keep me coming back, and I’m okay with that.

What’s the most indispensable item in your studio/practice?
Oh, this is so tough! I am torn between my camera and my computer… But maybe it’s as simple as a sketchbook that I can slap collages into, to get creative thoughts moving.

What is the best piece of advice you’ve ever been given?
To encourage more attempts at art and less focus on perfection, my art teacher in high school said, “If you made it once, you can make it again.” That thought frees up a lot of worry about getting it just right, and has led me to creating great quantities of work, but I am pleased with only a small portion of it.

What are your hobbies?
I still love to try new art techniques in my spare time, but when I’m really trying to take a break from art, I dive into a good book, or explore a bit more of my family tree. My French-Canadian ancestors are so well documented that my genealogy database has upwards of 10,000 names. I track my reading in a database too, on goodreads.com, and have logged over 1,000 books!

Creatively, where do you see yourself in the next five years?
I see myself moving into more and more abstraction, finding a studio to share with friends, and growing my small business enough to fund those trips to Scotland!

Liz Ruest was born in Cornwall, Ontario, Canada, and is currently based in Bellevue, WA, USA.
Visit http://www.lizruest.com.

Increasing the value of investment in an art collection

Every collector wants his or her carefully chosen art works to increase in value. Some seek the reward of having their pictures, sculptures, prints or photographs provide, over time, increase in the aesthetic pleasure they give. Others want to have their “good eye” confirmed by a rise in the monetary value of their investment. While it is quite possible for a collector to achieve both goals, this article deals with how to get maximum capital appreciation from an investment in art.

Collectors of art for investment purposes, whether they are corporations or individuals, have to pay the same kind attention to their acquisitions as they would to any other investment. This is can be pure pleasure. However there are certain measures, not all of them as much fun as buying what you like, that will work to increase value.

As a first principle it should be understood that a collection is more than the sum of its parts. An artwork from a good collection has added value. The best collections, those with potential for the highest return on investment, are formed by collectors who specialize in the works of a single artist, works in a specific media or style, or works created at a particular time or in a particular place or region. Excellent collections are comprised of works carefully chosen so that they complement each other and contribute to the chosen overall theme. The best way to understand the idea of a focus for a collection is to regularly attend exhibitions at galleries and museums and consider how the organizers have selected the works on display to advance a significant theory or idea.

Because a collection is not a group of unrelated works, those collections with the most potential as an investment vehicle will have a clearly defined premise and include works of the highest quality. The risk associated with capital appreciation in such a coherent collection will be spread over a number of works. This is equivalent to portfolio diversification. However, unlike stocks and bonds, the individual artworks in a collection, while they appreciate at different rates, all benefit in value by having been owned by a corporation or individual noted for excellence in art acquisition. Value is added to art through its association with respected collectors and well-known collections.

Intelligent buying is only the first step toward ensuring that your investment will grow. It is essential that accurate and complete records be kept for each purchase, including notes on why a particular work was acquired. These should indicate how the new piece fits into and enhances the strength of the collection. Documentation is important for insurance purposes, but it also immediately increases the value of the artwork. Proof of this is evident in the secondary market where, at auction houses, more detailed information in a sale catalog translates into a higher knockdown price.

It is well understood that conserving artwork is critical to preserving investment value. When a work is sold or donated, its fair market value will be partly determined by its condition. Ideally a work will be kept in exactly the same state as when it was purchased. Every collector should seek expert advice on the preservation of his or her collection.

The monetary value of art depends on how it is regarded by its audience. The more people who see a collection or pieces from it, the more likely it will increase in value. Corporate collectors understand this. Not only do they use their art to enhance their brand but they also increase the collection’s value by exhibiting it in offices and reproducing it in print and other media.

Most corporate and private collectors work to augment the value of their investment by talking regularly with dealers, other collectors and curators in exhibiting institutions. This networking has the dual goal of obtaining invaluable advice on the art market and promoting one’s own collection. The best possible result will be a request to exhibit the collection publicly or to borrow a work or several works for a show. The fact that a serious collector is organized and has comprehensive documentation of the collection will encourage exhibiting institutions to make requests for loans. Simply put, promoting a collection by whatever means necessary will increase its value.

Art collecting as an investment is the same as investing in bonds or stocks. Nothing can be guaranteed, but it is a lot more rewarding in terms of enjoying your asset. Over time, art collecting will be profitable if works of the highest quality are chosen according to well-thought-out criteria. On disposal of an entire or partial collection by sale or donation, the price realized by individual pieces will depend on their condition, how thoroughly they are documented and how often they have been exhibited publicly.

Remember, whether you make huge profits or not, art collecting is an enjoyable activity. It’s a never-ending learning process through which you will encounter a variety of interesting people and, best of all, you will be surrounded by fascinating art.

By Dr. Alan McNairn

How to determine if your art collection is appreciating in value

Everyone wants to keep an eye on their investments, ensure that their portfolio is growing and make adjustments as needed. This is as true of investment in art as it is of investment in stocks, bonds, precious metals and real estate. Keeping track of where you stand as an investor in art involves periodic reference to sales in the art market.

Because the quantity of transactions in the buying and selling of art are considerably less than those in financial instruments, pricing is less volatile. Art is a long-term investment. Nevertheless, it is advisable for the serious investor in art to keep an eye on the market. This will not only allow you to manage the insurance on your assets, but will also indicate when it is time to dispose of works that are underperforming or have reached a fair market value where they can be liquidated to your advantage.

To check the current value of your assets in art, you can refer to public sales of equivalent works at auction houses. There is no guarantee that your well-chosen sculpture by Ai Weiwei, Jeff Koons or Rodin will fetch top price at auction, but you can, through study of sales, get an approximate retail price. Remember that you have to subtract the cost of disposition – an auction house seller’s fee – from this to determine the actual value of your art asset. By analyzing auction prices, you will be able to determine which of the pieces in your collection have declined in value or are not rising in value at a rate that you expect. You can take appropriate action to dispose of these works and acquire others with more potential. You can access several sources of auction sales records on the Internet. Some are free and some charge a subscription fee. For living artists, the most useful and accurate source of information on the retail price of their work is through their dealers. Try to attend all the dealer shows of artists in your collection and see how their work is stylistically evolving and consider the current prices being asked for their work.

Depending on the size of your collection, it may be worth considering having it professionally evaluated periodically. This will give you an approximate value of your assets and can be used to satisfy the needs of your insurer. The accuracy of an evaluation depends on the skill of the evaluator. Because evaluators in many jurisdictions are unlicensed, you will have to exercise care in choosing one. Ask for advice from commercial and not-for-profit galleries and weigh what you are told carefully before proceeding.

The only certain way to determine the value of a work of art in your collection is to offer to sell it to another collector or dealer or place it in an art auction. Before contracting to sell an artwork at auction, you should be given an estimate of the sale price. Be aware of the fact that this is an estimate only, and that the auction house has a vested interest in including your work in a sale. Based on this you, can choose to proceed with the sale and, if you want, protect your investment by setting a minimum bid. You can check the estimates provided by auction houses by having a look at their sales records. Compare the estimated prices with the winning bids. This often yields sobering results. In using any of these means of determining the value of an artwork by actually disposing of it, always keep in mind the complimentary adage to “buyer beware,” that is: “seller beware.”

The value of your investment in art will, in the best of all possible worlds, slowly increase. This is particularly true for the work of contemporary emerging artists where patience is necessary. Remember that only a few artists achieve such acclaim that the prices for their work rise astronomically. It is your job as a collector for investment purposes to find the new Damien Hirst, Michael Snow or Andy Warhol and acquire their works in the early stages of their careers. Even if you don’t manage this, a small increase in value over a number of pieces in your collection will be rewarding. Through infrequent evaluations, either informal ones you make yourself or ones provided by professionals, you will be able to keep an eye on the approximate value of your collection and weed it accordingly.

By Dr. Alan McNairn

Authenticity and provenance are critical

Acquiring art works for investment purposes can be much more complicated than purchasing real estate or publicly traded financial instruments. What you do before you complete a transaction with a seller, whether it be an auction house or dealer, is critical.

As a collector the first step in your due diligence is to ensure that the artist’s agent or dealer is reputable. This applies also in the case of art sold at auction. Claims of authenticity by auctioneers can vary in accuracy. High-end reputable auction houses generally have the means and expertise to ensure what they sell is described honestly. The occasional errors in attribution or identifying the creator and/or the period of a work of art, made by even the most highly respected auctioneers indicate how difficult it is to guarantee authenticity.

The news stories of errors in attribution made by very experienced experts delight those who are skeptical of expertise but they should also serve as a warning to all. It is a rare occurrence when, for example, a work sold at auction as a 17th century follower Rembrandt turns out to be by the master himself. Much more common is the sale of a work optimistically attributed to a well-known artist that is in fact by the hand of an imitator, copyist or forger. The reputation of an auction house or art dealer depends on the accuracy of their attributions and their description of a work of art. Any serious collector is advised to exercise caution. It is wise to remember that the art market has justifiably been described as “the last unregulated frontier of commerce.”

If absence of regulation were not enough to scare off investors in art, there is something even more troubling affecting the art market. Worldwide commerce in the sale of illicitly acquired works of art generates enormous profits. Even the works of emerging or young artists, such as those in this magazine, appear from time to time on the Interpol list of stolen art works. Add to this the highly lucrative business of art forgery, that is not entirely restricted to old masters, and you have a marketplace where it is impossible to exaggerate the importance of the warning “buyer beware.”

When acquiring art, be sure to investigate who you are doing business with. You don’t want to acquire a work that you are assured is an authentic creation of a particular artist only to have it proved otherwise when you are disposing of it. A certificate of authenticity provided by a dealer may or may not be of value. After all, it is just a piece of paper that is only of value if the signing expert is widely regarded as reputable. With the work of emerging artists, you can generally be assured of authenticity and provenance by a dealer who has a direct and ongoing relationship as representative of the artist.

Authenticity is more of concern with the work of deceased artists than of living ones. However, it is not unknown for the work of living artists to be copied, reproduced and forged. The wise and careful collector will always assure himself or herself that what they are buying is exactly what it is purported to be. If it is an old work of art, then the provenance is of critical importance. One must be supplied with evidence of who owned the work in the past, when they bought it and when they sold it. Examine the artwork carefully to determine that it is exactly as described by a dealer or an auction house. This includes checking the medium, dimensions, condition and, in the case of multiples such as prints, photographs and cast sculpture, the date when they were made and the authenticity of the artist’s signature. Of course, you should also practice this due diligence when buying art, even if it is by an up-and-coming artist.

Whether you are making a small or large investment in art, you must, without fail, ensure by every possible means that what you are acquiring is genuine. If you have any doubts whatsoever, either forgo the purchase or consult a highly reputable advisor before deciding to proceed.

By Dr. Alan McNairn

Collecting art multiples as an investment

Prints, photographs and sculpture that are part of a limited-edition pose particular problems for the investor in art that set them apart from unique works.

The fact that an object of art is unique is of critical importance in determining its monetary value. When purchasing an art work, the collector will consider the price of similar pieces by the same artist or works from the same period and determine whether the asking price is fair and reasonable. Inevitably, there will be some uncertainty.

With the acquisition of prints, photographs or sculptures that are part of an edition of multiples, this uncertainty is reduced. In some cases, not all of the impressions of a contemporary print will be absolutely identical. The price for each print in an edition will, however, be within a fairly narrow range. Differences in the price of individual sequentially numbered impressions of a print arise from visible variations in quality of reproduction of the printing plate or major and minor differences in ink colour or density. Because of changes in printing technology and paper and ink manufacturing, the value of different impressions in contemporary lithographic or giclée editions is not as variable as it is with etchings, woodcuts and engravings. Determining the value of contemporary prints is less complex than for singular works of art. One simply checks the auction records or visits a dealer to see what the current price is for other impressions of the same print. The same applies to editions of contemporary photographs and sculpture.

Because prints and photographs can be consistently reproduced with ease these days, the numbering of impressions in a limited series is of less consequence than it once was. For instance, print numbered “one” in an edition of 50 is unlikely to be worth much more than impression number 50. The value of a print or photograph is, however, dependent on the number of impressions printed in any edition. Generally, the smaller the edition, the more likely a print will appreciate in value. This fact is reflected in the popular advertising slogan of “limited edition” used in the marketing of everything from cars to porcelain. Of course one must be cautious that an edition is not limited to as many as can be sold. Ethical artists can be trusted to adhere to the implicit promise of destroying the plate or digital file when the stated limit of the edition has been printed.

Sculptures also are often produced in an edition. There might be variables in the finishing of the surface from one impression to another. This will affect the value or desirability of a particular piece over another. In the work of deceased sculptors, a premium is added to the price for pieces that were cast or fabricated during the artist’s lifetime. For example, casts made of Rodin sculptures after his death have a much lower value than those that were produced under his watch. The same applies to photographs that are styled vintage, meaning they were printed during the artist’s lifetime, as opposed to those posthumously printed from his or her photographic negatives. It is not certain what the market will make of digital art printed after an artist’s death, but generally, a work of art is more valuable – in other words in more demand – when its authenticity is confirmed by the handwritten signature of the artist.

For those collectors who are concerned with the investment value of art, collecting prints, photographs or sculptures produced in multiples has certain advantages. The price of acquisition of each piece will usually be much less than that of a unique work of art. This allows the less well-off collector to enter the market, but one should be aware of the fact that the capital appreciation of a work created in multiple impressions will not necessarily increase at the same rate as a unique work of art.

Another advantage of collecting prints and photographs is that they are easily stored and simple to transport. This reduces the cost of managing and disposing of an investment in art in these media. Finally, collecting prints, drawings and sculptures that exist as multiples allows the investor to spread risk of capital appreciation over the work of several artists with minimal cost.

Collecting prints and photographs or sculpture created in a limited edition can be rewarding in terms of investment, but as with all acquisitions of art, risk can be reduced if one has broad understanding of the market.

By Alan McNairn