Only recently has art investing been viewed through the lens of modern portfolio theory and considered as a potential alternative investment in a portfolio of assets. Though research continues to shed more light on what has been historically an opaque market, studies show that art can offer long-term return potential that is uncorrelated with other asset classes.
If artists, art critics, and art buyers really had any interest in reducing the widening gap between the rich and the poor, they would be focusing their efforts on developing countries, where spending a few thousand dollars on the purchase of works by indigenous artists could make a real difference to the wellbeing of entire villages.
The latest auctions here demonstrated how buyers have now split into two main groups: Longer-term investors who hold to more traditional notions of collecting and who tend to focus on Impressionist, modern and classic contemporary works; and short-term speculators, known as “flippers,” who busy themselves with cut-and-run deals in the red-hot market for emerging artists.
Art is, quite possibly, the least commoditised asset in the investment universe, offering the potential for great returns but also—as is rarely explained by its market proponents—subject to enormous risk.