I frequently see references to the concept of purchasing art as an investment or as a means of diversifying one's investment portfolio, a vision that is reinforced in the popular imagination with strategically edited clips of Antiques Roadshow where lucky people find out their yard sale item is worth thousands of dollars. Sometimes that happens. I'm certainly not going to claim it doesn't--I've personally held a client's amazing art pottery find worth several thousand dollars that was encountered at the Goodwill for $1. But these occurrences are much more akin to buying a winning lottery ticket at your neighborhood 7-11 than a solid investment strategy. In many cases, if you have available capital to invest, you're better off directing it to a mutual fund or similar traditional investment infrastructure than buying paintings with the expectation that a few years down the road they will greatly increase in value. As an appraiser, it frustrates me to see people (usually people who stand to gain) encouraging purchases of art as an investment, especially because it leads to situations where well-meaning collectors can be taken advantage of, and most of all because it strips collecting of what I feel is its biggest appeal: the opportunity to surround yourself with objects that bring you joy and enrich your quality of life each day. Monetizing art collecting as an investment activity reduces the ancient, passionate practice of building a collection to a dry act of turning paintings into units of stock that can enhance one's "portfolio." The word Wunderkammer (note the emphasis of "wonder") was used in 16th century Europe to refer to a large piece of furniture that was a quite literal cabinet of curiosities housing a collector's treasures, and many art historians consider the Wunderkammer a precursor to modern museums.
I tell my clients that the only way to be sure they are making a good "investment" is to purchase a piece they fall completely in love with and that speaks to them on a soulful level. Those beloved pieces are the ones you'll never regret purchasing, even if they are worth a fraction of what you paid for them 10 years down the road, because you will have adored living with them every day. You have no plans to sell them, because you cherish them, and your initial monetary outlay has accrued years of personal joy living with those objects. That is the only reliable form of art as investment--an investment in your happiness. Intriguingly, many of the works I've come across that actually did turn out to be a good financial investment followed a Warren Buffet style of investment rather than the quick flip we envision in our current culture--the clients purchased it many years ago because they loved it and lived with it for decades as it quietly grew in value.
With that said, there are better and worse sorts of purchases one can make, and in this post I hope to outline some basic tips that may help guide those new to collecting. Below I've outlined a variety of factors to consider when embarking on an art purchase.
The very first thing to ask yourself is what do you hope to accomplish by building a collection? Is it to appear erudite, or delight your childhood self that loved opening a new box of crayons, or impress your neighbors and finally silence your arrogant sister-in-law, or to surround yourself with the warmth of handmade creations? These are all perfectly valid reasons, but before you begin to assemble a collection it's useful to take a long, hard look at your driving motivations and visualize what you hope the collection will become. This will help you better target the sorts of artists and works that will suit your collection's vision.
Once you have a sense of why you feel drawn to build a collection, the next step is to pay attention to what style of art attracts you. Do landscape paintings sooth you, or do you enjoy Impressionist cafe scenes? Maybe sculptures make your hands itch to throw clay on a potter's wheel, or portraits help you feel a connection to the past. Over time you may notice patterns of art historical styles that you consistently find appealing. One easy way to explore this is to visit a museum with a large, comprehensive collection and wander through the galleries. Do you find yourself gravitating to a certain wing? My personal taste is highly eclectic, but it will come as no surprise to regular readers that I can most often be found in the galleries devoted to 20th century art.
Did you discover that the Dutch Masters make your heart beat faster or you want to fill every wall of your house with Van Goghs? Don't despair, you don't need to be a billionaire to afford original art in the genres that most speak to you. One of the many wonderful things about the world of art is its variety. With a little research, one can find contemporary artists making works in a variety of styles encompassing the entire span of art history, as well as older antique works.
One of the biggest headaches in my line of work is the issue of authenticity, or is the work what it says it is? A great way to bypass this altogether is to purchase works directly from the artist who made them. Not only does this help support artists, but it gives your purchase a solid provenance (make sure to always save your original receipt!) Some contemporary artists sell directly to collectors and some have gallery representation. Generally speaking, a work purchased through a gallery is often at a higher price point (including the gallery's profit for selling it). Purchase of a work directly from the artist or the gallery representing the artist is considered a very good provenance in the appraisal world, and will help support a work's value and authenticity in the future.
Another issue to keep in mind is what medium you'd like to purchase: a wide range is available including original works in oil, acrylic, watercolor, pastels, graphite as well as printed works including etchings, lithographs, silkscreens, and digital prints. Artists typically work in a few of their favorite mediums, such as mainly in oil. Some artists work exclusively as printmakers and don't offer original works for sale, only limited edition prints. The best choice for you depends on your taste and your budget, but there are a few basic patterns between medium and value to keep in mind. Generally speaking and with all other factors being equal, there is a food chain of value based on medium to consider, with oil at the top, followed by acrylic, then watercolor, then pastel and ink, and then graphite. Prints have a separate, lower food chain, with one-off prints such as monotypes at the top, then etchings, lithographs, and silkscreens, then digital prints at the very bottom. I would advise being cautious about a digital print unless it is very cheap and you love it as they have an unrestricted production size and can be endlessly printed with no direct aesthetic input from the artist, so they tend to have very little appreciation value. I also am leery of gicleés on canvas, which are a fancy way of saying a print on canvas that looks like a painting but isn't. The "artwork" one can purchase at big-box stores with a printed canvas over stretchers are examples of gicleés. This technology also does not have high appreciation potential, even for "artist accented" gicleés where brushstroke touches have been applied over the print (which is a very sneaky technique I've seen at times).
Also, a few words on what the "limited" in "limited edition print" means: I've seen editions of 3,000 advertised as "limited," which is just silly. I would not advise purchasing a print from an edition over 300 as the value will be severely compromised by a larger volume of prints in an edition. Also, beware of prints with an embossed artist signature in the print but no pencil signature. Salvador Dali prints should not be touched with a ten-foot-pole. There are a notoriously large number of suspect Dali prints floating around the marketplace, and the lack of trust in the works has even harmed the value of the respectable ones.
Whenever feasible I would recommend purchasing an original painting over a print, although prints can be a great way to access work by an artist whose paintings are out of your budget. Is it important to you that you have a "name" artist, or are you searching for something beautiful to hang on your wall and the trendiness of the artist is not a concern? If you are open to lesser known or emerging artists, you have a rich array of options open to you. I've found Instagram to be a surprisingly useful tool for introducing me to new artists (you don't need to create an Instagram profile of your own to view the accounts of others). If you discover an artist whose work you're particularly attracted to, following them on Instagram can help you learn of discount codes, new inventory or sometimes even sales conducted through Instagram. If your collecting style is more analog, strolling seasonal art fairs and local galleries is a great way to train your eye and perhaps encounter a work that speaks to you. While the art world has a (well-deserved) reputation for being expensive, there are some wonderful paintings out there priced in the low hundreds, and starting in this budget range can be a good way to get your feet wet in the process of building a collection and learn more about your tastes. I would never recommend someone jump straight into collecting very high end, expensive art without taking time to experiment in a range where you feel less budgetary pressure.
If having a "name" artist is important to you, your collecting path is a little more complicated. Because many people find having a "name" artist is important to them, there are quite a lot of wrong paintings out there meeting this demand with the right "name" on them. Sorting this out requires art historical connoisseurship and expert knowledge, time, and money. Depending on the quality of the wrong painting, it can be quite difficult to spot its dodginess. What many collectors end up doing is spending a premium to purchase from a reputable gallery that has built a reputation selling that particular "name" artist's work. It will usually be an expensive purchase, but the collector is purchasing the promise of authenticity as well as the work itself. This probably isn't the answer you are hoping for, but in my experience this is the only reliable strategy for obtaining a real "name" artist's work. Sometimes people get lucky, but in general if you are presented with an opportunity to purchase a "name" artist's work at a deal that seems too good to be true, that's because it probably is. Particularly for antique paintings, I would highly recommend inspecting them in person whenever possible, as you can check the veracity of the condition report provided to you and see if the patina appears correct for its age.
As a separate caveat, sometimes even "name" artists considered to have very stable markets can experience market disruption, and spending money on a "name" work doesn't guarantee that it will experience healthy appreciation in value. For many years Andy Warhol works were thought to be among the "blue chip" purchases of the art world, but last week the Art Market Monitor reported analysis by Artnet that Warhol's market dropped 74% between 2015 and 2016 (http://www.artmarketmonitor.com/2017/01/19/where-did-the-warhol-market-go-2016-sees-74-drop/) I suspect that the massive sell-off of the Andy Warhol Foundation's holdings starting in late 2012 may have contributed to this (http://www.nytimes.com/2012/09/06/arts/design/warhol-foundation-to-disperse-collection.html) but my bigger point is that even if you do everything right and only purchase safe, blue chip artists, events like the Warhol liquidation may occur anyway and dash your investment dreams. That's why you'll be happiest when you purchase art you love and invest in your own happiness.
