Art is a good investment?

March 30 No Comments latest by

Apparently so in some cases. Usually I hate art (that’s because it all looks like garbage to me), but this article was pretty stunning:

“In 1998, NYU business school professors Michael Moses and Jianping Mei began an unusual experiment. They would track every transaction involving objects that had sold more than once at auction at the major New York houses since 1875…”

The index revealed that fine art was a far more reliable investment than is commonly thought. In the five decades after 1953, fine art appreciated at 10.4 percent, a compound annual rate remarkably close to the Standard & Poor’s 500 index, which posted a return of 10.9 percent. Moses and Mei also disproved the hoary maxim that masterpieces make the best investments. They showed that lesser-known (and thus cheaper) works appreciate at a higher rate.

Finally, the index suggested that the art market floats independently from the stock market, giving it resilience against boom-and-bust cycles. Over the last five years, for instance, the art market gained 7.3 percent, while the S&P fell by 2.4 percent. For investors, this is significant. In theory, fine art could be used to minimize volatility in an investor’s portfolio.

It goes against what I originally thought, but it’s really interesting.

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Posted March 30, 2005 under Investing

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