Investing in art

Couple interesting stories recently about fine art as an investment. Some highlights from an article in Market Watch about how Americans are still buying art at record prices despite the faltering global economy.

Art, as an investment, has held up well over time, beating or competing with stock market returns. Hard assets in a recession are go-to assets as they typically fight inflation. The art world may be gaining sales and ground because of that, as over the past two years both volume and prices have soared.

. . .

Sophisticated art buyers caution others about purchasing a work to make money. They say a piece of art should be bought for aesthetic purposes first, value second.

This article from U.S. News and World Report reminds us that art collecting isn't just for the wealthy! But you need to do your research if you're thinking about art as an investment. Advice from Walter Manninen, who started buying art in his 20s and says that the value of his collection has outperformed the stock market.

Art's popularity as an investment tool may, in part, have grown out of its success as a hedge against inflation. But any investment professional will tell you it's an ultrarisky asset. That includes Manninen, who has an M.B.A. in finance. He views his purchases, in part, with a banker's eye: Each brings great pleasure, and each adds value. A self-educated collector, he began by reading art magazines and journals, researching artists—and their place in the art world—and scoping out galleries and museums when he traveled. When he buys, he considers elements like a piece's physical condition and chooses works that were created in an artist's prominent medium and subject matter—a landscape painting from a landscape painter, for example. He also relies on the savvy of close advisers.

Manninen's experience offers a key lesson: Art buyers need to do their research if they want their works to appreciate over time.