4 Important Art Investment Tips for Newbies and Wannabies

by Gayle B. Tate

This morning I find myself running to my office with a package in hand, looking desperately for something to cut the tape with. A painting has just arrived by Priority Mail, and I can’t wait to open it. It is something that was offered by a seller through our web site and, perceiving that I got a bargain, my heart is pounding with anticipation.

I am not disappointed. Today, it’s a landscape painting by Emerson Glass (American impressionist 1916 – 1987) that jumps out at me with volumes of color and the feel of the prevailing winds in the Rocky Mountains. I bought the painting for $700, and trust I will do well with it when it comes time to sell.

For the moment, I just want to see it hanging in the space that I made room for in my office. I put a light on it and sit back to take it in.

After the initial exuberance of my new find, my mind eventually settles into my daily business mode and I begin to think about what kind of investment I just made with this new acquisition, and what is the long term outlook for it.

I realize that if I enjoy this, then someone else will too. But, how much is such enjoyment worth? Is this a purchase for our home or an art investment? Will I make a profit? How long should I hold it? How did I come to buy this particular artwork rather than something else?

Here are a few discoveries I have made during 43 years of doing this very same thing, day by day. These topics are being discussed in our YouTube video series: “Investing in Art.”

1. Do Your Research and Keep a Narrow Focus

The basic truth is this: if you buy what is attractive to you, surely it will also be attractive to someone else. But, is that enough? No; not if you wish to make a profit.

So what is the answer?… Study first, buy second. Tangibles, like art, jewelry, antiques and other objects of virtue are different from any other kind of investment on the planet. Especially for works of art, keep this one profound truth in mind: you make your money on the day you buy!

I doubt if many investors buy stocks without first exploring their area of interest. They track their proposed stock, look at the current price and trends, talk with professionals and then make a decision whether to buy or not. It’s the same with art investment. Look for an artist, art style or period of art history that you find attractive. Zero in on an artist, group of artists or style that you like, and limit your initial purchases to that area.

2. Don’t Buy on a Whim

Don’t go shotgun shopping for everything, hoping to find a winner in there somewhere. Doesn’t work. However, there are certain schools of art that have proven their value over time.

Many American and European artists and their associated “schools” (common styles or backgrounds of influence) have nicely maintained their values and shown excellent growth over many years of exposure in the art marketplace. A brief list of these schools include, but are not limited to: Hudson River, Askcan (New York) artists, American and European impressionists, regionalist artists of various areas of the east coast and Midwest, Taos Founders, California impressionists, western impressionists… and on and on.

There are also schools of abstract imagery, like the expressionists and, well, you get the picture. Each school has its founders and followers. Each has good and poor quality work being produced. But importantly, each school has its own stamp of style and execution that defines it as a specific philosophy that the artists follow.

3. There are Great Artists Still Waiting to be Discovered

Another art investment clue: Buy low, sell high… duh. Simple? No.

As you develop taste for your favorite school, look for certain artists that are emerging or still on the “discovery” side of the market. Birger Sandzen (American impressionist, 1871 – 1954) was a virtual unknown until the mid 1980s. Now his work is hot in the marketplace and sells regularly in five and six figures, work that could be found for under a thousand dollars not that long ago.

The real secret is, there are many good solid artists that can still be found for under a thousand dollars, and some of the best for under five thousand.

4. Beware of Fads

Something to remember is: Fads seldom make good investments. If you see an artist that is being “pushed” as an investment, listen to your inner voice. If it is saying “you must be kidding!”… stay as far away from it as you can.

Everyone has a sense of beauty and order on the inside of them — everyone — whether you realize it or not, and that inner voice will help you. No matter what any dealer or gallery tells you (including us), it’s the auctions and the public arenas of competition that determine the real value of goods being sold.

I read current sale results every day for many artists that I track for what is happening in the marketplace. Especially in today’s volatile economy, being informed is vital if you wish to invest wisely. But, whether you are investing fifty dollars or ten million, remember your inner voice. Usually, it has more wisdom than you realize. Use it wisely.

About the Author

Gayle B. Tate is the founding owner and director of G. B. Tate & Sons Fine Art since 1967. He specializes in American and European paintings, sculpture, drawings and fine prints. His services include authentication and appraisal of fine art, and in addition, has worked with federal authorities and insurance companies to solve and prevent art fraud issues and theft in the marketplace. He was also past president of the Southeast Professional Art Dealers Association, Tampa, Florida.

After 35 years of operating a physical art gallery on the east coast, Mr. Tate retired to his private offices in 1997, and currently works through his office in Laramie, Wyoming. You are invited to visit his web site at http://www.gbtate.com.

26 comments to 4 Important Art Investment Tips for Newbies and Wannabies

  • I am completely clueless about art. I often times just wouldn’t buy a piece I liked because I was afraid other would view it as ‘tacky’ or whatever. Now, I just buy it if I like it and that is it. I never consider art an investment for me because I am not educated enough about it.

    How wonderful though for you to have been surrounded by art for so many years.

    • What you are saying is what has made the art market what it is in the first place. The level of investment is not created so much by one’s “education” as it is by one’s appreciation.

      If two people appreciate the same thing, and both would like to own it, suddently a competition has developed for that artwork and the price is adjusted accordingly, and a market is created. The art market is all about beauty, creativity and quality of execution. Appreciation for these things is not the result of education, but of simply looking.

      Objects of beauty are a pleasure to look at. Value is created by such beauty, just as the lines of a fine automobile or the taste of a good steak. If we can’t afford the newest Mercedes, perhaps we can find a well kept used one. If we can’t afford a steak at Delmonico’s, perhaps we can find one at the grocery store and cook it ouselves.

      I have found that the everyone has a certain gift or talent to do something… so if it’s not in creating works of art that’s their deal, then the extra income they make doing what they do might be a payday for the one who is giften to create. If the one who creates can find extra income from the work of his hands, it just might end up in the hands of the other… the dentist, doctor, candlestick maker or whoever. So, it works both ways.

      My counsel is simply this: keep on doing what you are doing. There might come a day when you find someone else who appreciates what you do. And with that in common, you just might find some business in there somewhere. At least it’s interesting to think about.

  • I’d be interested in learning about insuring art? If you have a couple of nice pieces that you’d like to protect.

  • Since I don’t know crap about art, but I love non-correlated returns, I was interested in art hedge funds. I did a post on a it a while back that I’m too lazy to link to, but in essence, you can get 8-12% low volatility, non-correlated returns over long periods of time which is every investors wet dream. Problem is, you’ve gotta be “accredited” which means rich as shit. But art is an asset class nonetheless, always an interesting topic right up my alley as an “evolutionary” investment Darwin-style

    • My own personal experience with such funds have never been very pleasant. For two reasons: first, because investments in art are too personal, too intimate. Second, because of the overall liquidity issue with artworks.

      While it’s true that genuine art investment funds are (or should) be run by professionals, they are seldom run by ART professionals. A broker on Wall Street might be a genius on investmenting, but probably not on art. This is a sure recipe for disaster. The markets over the past two years has proven that with great emphasis.

      Investments (in the true definition of the word) require involvement in the marketplace. If one is truely interested in art as investment, he/she will have to dig a bit… follow the artists or styles of their choice and track progress, just like any public stock that they would be intereted in. After all, that is what investing is about in the fist place, isn’t it?

  • Great points. I think the most important tip is to make money at the time you are buying it. So many people overpay for something with the hope that it will rise in value. This is not how it should be. At the time of purchase, you should be able to turn to your left and re-sell it for more than you just paid.

    • My point exactly. It’s not always as easy as it sounds, but after 43 years in business, I can tell you that it’s very doable. With our economic difficulties of the past two years, the overall market has “adjusted” itself. Translation, prices have slid down to where they should have been in the first place.

      Especially in the high end of the market, greed really took over in the mid 2000′s, and we saw prices soar to rather unbelievable levels. We knew it couldn’t last forever… and voila!, it didn’t. The problem is, many of the investors were into their purchases for multi-millions. Such people (especially if they are greedy) won’t take a loss of the size of these typical adjustments. So, if they bought solely for investment, they now have something they don’t want hanging in a place they do look at.

      Pure investment makes poor bedfellows with the art market. If one can’t enjoy his purchase, then he shouldn’t be makeing it in the first place. The few people I’ve met who buy with greed in their eyes have never been satisfied with their purchases. Too bad.

  • Wow, I really enjoyed this post! It shows the author very much like art. I have some questions though. I saw a comment about insurance – can’t wait to read that upcoming post – but I always thought and heard that Art should be very well conserved. Certain temperature, certain lighting and all that. The author said he put a light on it?? Am I mistaken? Are they some “rules” one should respect to make sure its investment is well conserved?

    • Forgive me if this seems a bit simplistic… but I put a light on my latest painting so I can see it. No secrets or tricks… I’m just getting older.

      For keeping an artwork in good shape, simple common sense will usually do the trick. Don’t leave a painting on the floor for the dogs to chew on; don’t put a fine print in the washer; don’t rub a bronze sculpture with a brillo pad… that sort of thing. If one simple enjoys his art purchases, that is the beginning and the end of acquiring. In face, that’s how the art market got started to begin with: if an artwork is enjoyable and at least two people would like to have it, the competition for it creates value.

      In regard to insurance… we have had a great deal of experience with insurance companies, and found something interesting: they are managed by people, and usually ordinary people at that. If someone can present a staight forward honest and simple answer to their questions, he/she will usually find great cooperation. The person at the other end of the phone or letter is always very relieved to hear the kind of answers they need.

      Article on insuring art to come next month, so keep your eyes peeled. Thanks for your comments.

  • I don’t know anything about arts but these are great tips for those who are interested. In one of the hospitals near my house, there’s always art exhibits for the paintings/art created by handicapped people.

    • The real truth is… you probably know a lot more about art than you realize. It’s built into every one of us, and is also known a “taste” or “sensitivity” or “personality”. When you look at any kind of artwork, think of it as the equivilent of that sports car you have been drooling over on the TV commercials. There is SOMETHING in any artwork that touches you one way or the other. There is no law that it has to be a Picasso or Monet in a museum. If it’s the artwork created by the handicapped and hanging on the hospital walls, so much the better for your soul or personal esthetic. Bravo!

  • That’s interesting. I always think of art as more of a speculative purchase than an investment. Have you found that your purchases have tended to increase in value?

    • Last year about this time, the central boiler in our home blew up. Timing was cruel, as it can be, and we had no money to replace it.

      So… I took a bunch of etchings that I had accumulated over the previous couple of years for $20 – 50 each, and put them up for sale on eBay. In about ten days, I paid cash for our new boiler with money from the sale of the etchings. My profit margin was about 60% over what I had paid for them overall.

      For one time or another, I have repeated this scenario many times over the past 43 years of business: keep my eyes open for attractive goods, set them aside for the proverbial rainy day, and cash them in when needed. Generally speaking, my purchases overall have increased in value at about the same rate as this group of etchings.

      If I have a talent, it’s simply a good eye for beauty… and that comes simply from looking. It’s not complicated. As one learns to SEE, the rest falls into place.

      The art market is one of the few places where genuine investments can be found regularly for under a hundred dollars… and that with a realistic expectation for making an interesting profit. I have made profits of up to a thousand percent or more by just cultivating an eye to SEE (not just look).

      If you would like to hear more stories, just let me know… I have lots of them.

  • @Gayle,
    Well, thank you for making it clearer. I thought it was a lot harder than that. You’re right, it is better being able to enjoy the piece you own (at least for a while) than investing in something you don’t see…

    • The best thing about it is this: what you like might not be what I like… but, it doesn’t matter! It’s simply the joining of vision with others who do like what you like. That’s what makes a market.

      There are many forums for joining in vision: the internet, social media and art magazines. However, it’s the public auctions that are the main venue for the gathering of like minded people. Get to know them. Subscribe to their catalogs or offerings online. With the advent of the internet, such information is plentiful, and available immediately at your fingertips.

    • PS… don’t be like me and get too giddy waiting for your puchase to arrive in the mail!

  • Great tips on art investment! My extended family (grand dads, uncles, dad) invest in fine art a lot, and one of the approach that never ceased to amuse me is that they can identify a great artist, befriend him, and support him in hard times. The artists often comes to the house and they have chat together.

    This has payed off and they are still doing it until now, and some of the artist eventually became famous, one of them even became the most acclaimed painter in my home country. I can tell you the ROI is amazing..

    • This is one aspect that we encourage. I do admit one caveat: that is, that if you are interested in the long term outlook for any artist (as an investment), that you examine carefully what the vision of the artist is for the long term.

      If the person is actually a shoe salesman, doing art on the side, you might reconsider his commitment to the long term. If the artist is totally dedicated to his craft, and has shown his commitment over a reasonable length of time, then it’s also reasonable to assume his commitment will last for a lifetime.

      A friend once said, “it’s hard to get worse at something you practice at every day”. Quality in one’s craft is the product of time and effort, not daydreaming. If a person is an artist, he/she has a job, and it’s usually greater than 9 to 5. Passion for one’s vision and pursuit of excellence will always pay dividends in due season.

      I too strongly believe in supporting such a commitment and passion. If they succeed, I succeed. But they will never succeed if there is no one there to support them along the way. Your investment is not only in their art, but in their lives as well.

  • Mark Zuckerberg

    woot woot nice post!

  • Has some great and very important points for art lovers who are seeking to get into the art market. Well written.

  • Herein lies another can of worms. If you would like to open it, we are happy to take on the challenge and go with it… all the way to our freshman year at college.

  • Herein lies another whole world of planning. If you would like to open it, we are happy to take on the challenge and go with it… all the way to our grandson’s college graduation day.

    We do have an regular mutual fund for him (College 529 Plan), but also have a few artworks set aside for his college funding. He’s 13 now, so when the time comes, I fully expect the art will have outpaced the mutual fund by a long shot. But be mindful that I am NOT giving up our 529 Plan… just adding insurance to it.

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