"Investing in Art-The Art of Investing"- that is the title of the publication by Wolfgang Wilke issued by the Dresdner Bank AG Group Economics in 2000, analysing long-term profitability of investing in works of art and antiques. Dresdner Bank is one of the largest German financial institutions with subsidiaries located all over the world. It is immensely characteristic that the bank has got interested in investing into the market of works of art and antiques (apart from the above publication, there were also published reports on investing into modern art: “Art Market: Expensive Modern Art” and “The Market for Paintings: Noblesse Oblige- The Barbizon School” with Wolfgang Wilke as their coauthor). Germany is the third country in Europe, after England and France, as far as the turnover of such market is concerned.
German companies, insurers, financial institutions and foundations do not only appreciate art and antiques as an investment but also participate in promoting modern art and antiques (which can also be observed by the Polish participants of exhibitions organised in Germany)- they are patrons of culture.
Banks and companies in Poland are taking more interest in various forms of patronage of culture and art as well; there exist smaller interest in investing into the market of works of art and antiques. We hope for a change in this matter and there will arrive time for investing some money into the works of art, following the conclusion of the author’s report. Wolfgang Wilke states that diversification is necessary just like the one used in long-term investments and should consider investing 5-10% of the money destined for investment, into the works of art and antiques. Such view is supported by graphs showing long-term trends which present increase in the prices, respecting inflation, of works of art. Here are some tables for example. The first table (pic.1) shows the increase in prices of Chinese porcelain, European faience and Canaletto paintings within the last 200 years.
If we take out the years 1850-2000 ( for which we have the largest number of “measurement points”), we can state that at that time the value of these three kinds of goods increased almost a hundred times. If it was possible, on a half-logarithmic graph showing increase of prices in the time function, to draw a line through measurement points concerning the prices of objects of interest, a line of a constant inclination, that would mean that price increase of objects is of interpretative character. However, such line of minor inclination can be created only for the chosen segments of the time scale. In case of the European faience, we can interpret the measurement points in such a way for the years 1840-1910. In the years covering both Wars and the crisis of 1929 there happened a decrease in their value. Since the post-war time, the value of the discussed objects increased and the line interpreting the measurement points is of similar inclination to the previous one. However in closer look, there can be seen temporary fluctuations of this tendency within this period of time.
As to Canaletto paintings, the prices of them fluctuated violently in the years 1795-1950 and it is impossible to draw a line via the measurement points that would indicate any interpretative increase. However, it is undoubtedly possible for the years 1950-2000. During this half of the century, his works’ prices rose 100 times.
It is also vital to compare the increasing prices of works of art and antiques happening in the years 1800-2000 with the prices of commodities and wheat. It is shown on the second illustration (pic. 2) also corrected with respect to inflation.
Interpretative increase of the objects’ value is obvious on the background of more or less stable prices of goods of everyday use- although, there was a decrease between the First and the Second World War what was already mentioned. It is also important to compare this increase with the ongoing at that time increase of GNP in Germany. The next graph depicts the above (pic.3).
Taking both wars into account and omitting measurements points from that time, we can draw a straight line joining the remaining points, which has the same inclination for GNP and for Chinese pottery. For GNP, though, there has been used a different scale on the vertical axis, despite the fact that the graph is also half-logarithmic. If we applied the same scale in this case, the inclination of the GNP line would be smaller than the pottery line.
Conclusion: the prices of pottery were rising more rapidly than GNP in Germany.
Next, the author is trying to define the relation between the prices increase on the market of works of art and antiques and the globalisation process. In 1995 Angus Maddison (OECD) published his results of studies over the process of globalisation happening in the course of over 100 years. The author decided that the measure of the globalisation processes is the percent increase of international export in the world’s GDP. Following Wilke, graph 4 (pic.4) compares this index to the increase of the world’s prices of Chinese pottery (real, respecting the current inflation).
The graph speaks for itself. There is a correlation between the globalisation and the increase of prices on the discussed market, respecting the slump connected with both wars; it influenced both the process of globalisation and the prices of works of ancient art and artistic craft as well; Chinese porcelain is a good example of such works on the Western markets.
The former graphs referred to long, usually two hundred-year period and it is difficult to identify possible short-term fluctuations of prices of the discussed objects. However closer observation of the location of the measurement points on graph 4 in the years 1800-2000 results in the points’ revealing some anomaly. It seems that the prices of pottery reached the highest point around 1990, after that there was a short-term but sharp decline and they rose again in the period up to the year 2000.
Let us refer to the data using some other parametre than the price. The next graph (pic.5) shows, in the function of time, the average value of transactions on the world’s auction market of works of art compared to the NIKKEI index.
This index was going up since 1985, then it reached its peak in 1990 and plummeted rapidly afterwards. The diagram posts showing the average value of transactions on the world’s auction market of works of art exactly reflect the trend occurring in a small but very rich country on the Pacific Ocean. As a result of an extraordinary prosperity, there appeared immensely wealthy people in Japan who suddenly took interest in art collecting and the art of the Western part of the world, mainly in impressionists’ paintings. There were only a few such people really (e.g. Ryoei Saito who paid 82.5 million $ for one Van Gogh’s paining).
Their extremely valuable purchases had significant impact on the turnover of the world’s market of works of art what induced the increase in prices. All that had a negative effect and lead to the crash on the Tokyo Stock Exchange around 1990 and consequently to the decrease in prices on the market of works of art but only up to the level of the turnover achieved before the increase, i.e. at the turn of 1987 and 1988 (what is also reflected in the graph). The average value of transactions remained stable at this level for the next 8 years (the last diagram post refers to the action season of 1997/1998). There exist data that confirm that in the subsequent three years there occurred turnover increase on the market of works of art and antiques and also rising prices for many objects (such data are obtained from e.g. France).
The author’s conclusion as to profitability of investing in the discussed market is unquestionable, however respecting the thought already mentioned in the report’s title, that investing in the market of works of art is an art in itself and needs to be learnt. There are numerous parametres that have to be respected in order such investments proved to be profitable. The author discusses them but his statements refer to the global market (including Germany) or the German market.
The situation of the Polish market, which is open to the world “one-sidedly”, is different and surely demands for preparing a special report concerning profitability of investing into the market of works of art and antiques. Such report is not easy to prepare. The Polish painting market is still relatively small, despite its wild development in the years 1987-1997. The turnover, which was ca. 1.200,000 $ in 1993, increased six times until 1997. Its increase in the years 1997-2000 is shown in the relevant table. (pic.6).
Despite this increase, the turnover of the year 2000 was only ca. 1 % of the world’s market turnover. Is it possible then, regarding such low sales of paintings and consequently such poor statistics, to define, basing on the sale prices of small amount of paintings of a given artist within relatively short time of our market’s existence, the value of their paintings in any objective way?
When one asks for the price of someone’s painting, there is only one answer: it is worth that much how much a client decided to pay for it during an auction when he had to bit over their competitors.
The basic problem to be dealt with by a collector intending to invest profitably in the Polish painting on our market, is defining directions of profitable investing. They would need to be supplied with information facilitating taking up successful decisions or with data and graphs similar to those prepared by Artprice.
Is it possible to obtain such data for the Polish market? One of the coworkers of Antiquarius sp. z o.o., issuing “Gazeta Antykwaryczna” ( a magazine concerning the market of art and antiques), has been Sławomir Bołdok, once the main expert in the Desa Pricing Body; he has continuously completed his database with results of all auctions of paintings that have taken place in Poland since 1990 when there appeared the first auction houses. The data referring to the years 1990-1997 and 1998-2000 have already been published and a similar book containing data on the period 2001-2003 is ready to be published in our editorial house. The book includes the same ( though yet unprocessed) information as the ones given by Artprice. Thus, basing on them, one can create and provide collectors with graphs, similar to those prepared by Artprice for its clients.
Applying these rules, I tried to develop them for several Polish painters: Juliusz Kossak, Wojciech Kossak and Jerzy Nowosielski (pic. 8, 9 and 10).
They concern changes of the average price in dollars for paintings of these artists, with division into large, small and all formats and the amounts obtained from the sale of their paintings in the subsequent years. The diagrams present the number of the paintings sold in a given year for the period of 14 years which was used to create the graphs and during which, in case of e.g. Wojciech Kossak, there were sold 194 paintings. The diagram allows to define the movement of prices within the analysed period of time and any occurring increase and decrease tendencies of the paintings’ prices of these painters. Especially convincing is the diagram concerning Nowosielski paintings, for whom the increase tendency is more than obvious. Someone who has been deeply interested in the painter, who knows his output, who carefully observes the market, could have prepared such graphs in a slightly different way than me, in order they provided more readable and clear information. Such a person would have to apply to the figures, that are the basis of my graphs, “correcting coefficients” for an each object sold (respecting the beauty of a work of art, provenance, the subject and the time of creation), identifying and rejecting some “price jumps” not justified by a work’s quality.
Therefore, here we have the first piece of advice for those wanting to invest profitably into works of art. One needs to check scrupulously and analyse our art market until they have learnt it thoroughly; when drawing conclusions from one’s analyses, use an expert’s assistance. Especially when such research and analyses are performed by financial institutions who intend to invest money in works of art. The approach of private investors may be slightly different. Usually they are art lovers, they have already taken to collecting and they buy what they like; the only thing they want to know is whether the value of the objects bought will be, within some time, growing rather than falling down. Collectors trading on a Stock Exchange or investing in real estate, want to multiply money somehow by the way of their interest in art.
Is it possible, basing on the information coming from the art market, to suggest some rules whose knowledge would be the first step towards learning difficult art of investing in art? Surely it is.
Rule no.1: pay a good price for the best, rare and rarely appearing objects on the market. Remember that a painting of exquisite beauty, painted at the time of an artist’s period of best creativeness, depicting an attractive subject, with full documentation of its origins, may be even several or several hundreds more worth than other paintings of this author painted in the same technique.
How to recognise a painting’s exquisite beauty? Despite the popular statement that nice is something whoever likes it, there are some criteria that allow to differentiate between an extraordinary and an average piece of art. It order to identify what a paining is like, one can precisely analyse all elements that prove the technical brilliance performed by an artist during the process of creating an object. However, its beauty is also proved by something immeasurable. Despite this, a collector who has been interested in paining for years and has been purchasing it, who has seen many great works of art and has managed to develop good taste, is able, after nearly one glance, to discover that they have just been shown an extraordinary work of art. They will be hugely satisfied, having bought such a painting intuitively, when later they will hear from an expert that they have not made a mistake, that it was a perfect choice. Recognised experts of a given artist’s painting may try to make some evaluative comparison, as far as the class of a painting and the technique are concerned. When they additionally observe the art market, thus their knowledge does not limit to the history of art, they can also take current “market tastes’’ into account while formulating their opinion. The latter can be helpful for an entity intending to invest money in works of art.
Do many extraordinary paintings appear on the market? Unfortunately that currently seldom happens; those who bought them in the past do not usually want to sell them. When such an object appears on an auction, it quickly reaches a high price. It is therefore better to find such a painting in an art gallery where it has been put by someone uninterested in painting, an hair to a former owner and a less experienced art dealer assigned an “average price” to the work of a given artist. In such a case one should decide to buy the painting at once. There is little probability that the painting stays unnoticed for a longer time. How to identify “better” and “worse” items in an artist’s output? Usually such data can be found in brochures concerning a given author. In case of Tadeusz Makowski e.g. the best period of his artistic creativity covered only a few years around 1930. Paintings from this period possess such renown that even less interesting pieces from another time “shine with reflected glory” and are sold quite expensively.
Does thus the art of investing in art consist in buying works of renowned artists of stable position on the market or maybe of those less popular? Investing in works of more renowned artists seems to be safer, but the growth of their value may appear to be minor, though the decrease as well. Investing in works of less popular artists, often even the deceased ones, who are just beginning to be interesting for collectors thanks to various promotional events (exhibitions in museums and art galleries, articles in the professional press), might be profitable. Especially when we buy before such events have happened, though we know they are in preparation. After such events, the prices of works of such artists rise significantly. Does it always happen like that and for how long?- it depends on good recognition of tendencies prevailing on the market and on determination (and money) of those who started the promotion. In the world’s market the position of works of a given artist is determined by promotion and continuous reminding. The latter also refers to the works of widely known and already promoted artists e.g. Picasso. There still appear books and albums concerning his output and are reviewed by the press. Their aim is to prevent the audience from forgetting the painter.
Unfortunately the awareness of such conditions is low in Poland and few art dealers and collectors deal with such activities with respect to former artists. On the other hand, contemporary painting is the source of examples of spectacular successes of such activities and which is most attractive from this point of view. Contemporary painting is thus a good investment for “the brave”, both for art dealers and collectors.
Jerzy Huczkowski - "Malarze polscy XIX i XX wieku"
German companies, insurers, financial institutions and foundations do not only appreciate art and antiques as an investment but also participate in promoting modern art and antiques (which can also be observed by the Polish participants of exhibitions organised in Germany)- they are patrons of culture.
Banks and companies in Poland are taking more interest in various forms of patronage of culture and art as well; there exist smaller interest in investing into the market of works of art and antiques. We hope for a change in this matter and there will arrive time for investing some money into the works of art, following the conclusion of the author’s report. Wolfgang Wilke states that diversification is necessary just like the one used in long-term investments and should consider investing 5-10% of the money destined for investment, into the works of art and antiques. Such view is supported by graphs showing long-term trends which present increase in the prices, respecting inflation, of works of art. Here are some tables for example. The first table (pic.1) shows the increase in prices of Chinese porcelain, European faience and Canaletto paintings within the last 200 years.
If we take out the years 1850-2000 ( for which we have the largest number of “measurement points”), we can state that at that time the value of these three kinds of goods increased almost a hundred times. If it was possible, on a half-logarithmic graph showing increase of prices in the time function, to draw a line through measurement points concerning the prices of objects of interest, a line of a constant inclination, that would mean that price increase of objects is of interpretative character. However, such line of minor inclination can be created only for the chosen segments of the time scale. In case of the European faience, we can interpret the measurement points in such a way for the years 1840-1910. In the years covering both Wars and the crisis of 1929 there happened a decrease in their value. Since the post-war time, the value of the discussed objects increased and the line interpreting the measurement points is of similar inclination to the previous one. However in closer look, there can be seen temporary fluctuations of this tendency within this period of time.
As to Canaletto paintings, the prices of them fluctuated violently in the years 1795-1950 and it is impossible to draw a line via the measurement points that would indicate any interpretative increase. However, it is undoubtedly possible for the years 1950-2000. During this half of the century, his works’ prices rose 100 times.
It is also vital to compare the increasing prices of works of art and antiques happening in the years 1800-2000 with the prices of commodities and wheat. It is shown on the second illustration (pic. 2) also corrected with respect to inflation.
Interpretative increase of the objects’ value is obvious on the background of more or less stable prices of goods of everyday use- although, there was a decrease between the First and the Second World War what was already mentioned. It is also important to compare this increase with the ongoing at that time increase of GNP in Germany. The next graph depicts the above (pic.3).
Taking both wars into account and omitting measurements points from that time, we can draw a straight line joining the remaining points, which has the same inclination for GNP and for Chinese pottery. For GNP, though, there has been used a different scale on the vertical axis, despite the fact that the graph is also half-logarithmic. If we applied the same scale in this case, the inclination of the GNP line would be smaller than the pottery line.
Conclusion: the prices of pottery were rising more rapidly than GNP in Germany.
Next, the author is trying to define the relation between the prices increase on the market of works of art and antiques and the globalisation process. In 1995 Angus Maddison (OECD) published his results of studies over the process of globalisation happening in the course of over 100 years. The author decided that the measure of the globalisation processes is the percent increase of international export in the world’s GDP. Following Wilke, graph 4 (pic.4) compares this index to the increase of the world’s prices of Chinese pottery (real, respecting the current inflation).
The graph speaks for itself. There is a correlation between the globalisation and the increase of prices on the discussed market, respecting the slump connected with both wars; it influenced both the process of globalisation and the prices of works of ancient art and artistic craft as well; Chinese porcelain is a good example of such works on the Western markets.
The former graphs referred to long, usually two hundred-year period and it is difficult to identify possible short-term fluctuations of prices of the discussed objects. However closer observation of the location of the measurement points on graph 4 in the years 1800-2000 results in the points’ revealing some anomaly. It seems that the prices of pottery reached the highest point around 1990, after that there was a short-term but sharp decline and they rose again in the period up to the year 2000.
Let us refer to the data using some other parametre than the price. The next graph (pic.5) shows, in the function of time, the average value of transactions on the world’s auction market of works of art compared to the NIKKEI index.
This index was going up since 1985, then it reached its peak in 1990 and plummeted rapidly afterwards. The diagram posts showing the average value of transactions on the world’s auction market of works of art exactly reflect the trend occurring in a small but very rich country on the Pacific Ocean. As a result of an extraordinary prosperity, there appeared immensely wealthy people in Japan who suddenly took interest in art collecting and the art of the Western part of the world, mainly in impressionists’ paintings. There were only a few such people really (e.g. Ryoei Saito who paid 82.5 million $ for one Van Gogh’s paining).
Their extremely valuable purchases had significant impact on the turnover of the world’s market of works of art what induced the increase in prices. All that had a negative effect and lead to the crash on the Tokyo Stock Exchange around 1990 and consequently to the decrease in prices on the market of works of art but only up to the level of the turnover achieved before the increase, i.e. at the turn of 1987 and 1988 (what is also reflected in the graph). The average value of transactions remained stable at this level for the next 8 years (the last diagram post refers to the action season of 1997/1998). There exist data that confirm that in the subsequent three years there occurred turnover increase on the market of works of art and antiques and also rising prices for many objects (such data are obtained from e.g. France).
The author’s conclusion as to profitability of investing in the discussed market is unquestionable, however respecting the thought already mentioned in the report’s title, that investing in the market of works of art is an art in itself and needs to be learnt. There are numerous parametres that have to be respected in order such investments proved to be profitable. The author discusses them but his statements refer to the global market (including Germany) or the German market.
The situation of the Polish market, which is open to the world “one-sidedly”, is different and surely demands for preparing a special report concerning profitability of investing into the market of works of art and antiques. Such report is not easy to prepare. The Polish painting market is still relatively small, despite its wild development in the years 1987-1997. The turnover, which was ca. 1.200,000 $ in 1993, increased six times until 1997. Its increase in the years 1997-2000 is shown in the relevant table. (pic.6).
Despite this increase, the turnover of the year 2000 was only ca. 1 % of the world’s market turnover. Is it possible then, regarding such low sales of paintings and consequently such poor statistics, to define, basing on the sale prices of small amount of paintings of a given artist within relatively short time of our market’s existence, the value of their paintings in any objective way?
When one asks for the price of someone’s painting, there is only one answer: it is worth that much how much a client decided to pay for it during an auction when he had to bit over their competitors.
The basic problem to be dealt with by a collector intending to invest profitably in the Polish painting on our market, is defining directions of profitable investing. They would need to be supplied with information facilitating taking up successful decisions or with data and graphs similar to those prepared by Artprice.
Is it possible to obtain such data for the Polish market? One of the coworkers of Antiquarius sp. z o.o., issuing “Gazeta Antykwaryczna” ( a magazine concerning the market of art and antiques), has been Sławomir Bołdok, once the main expert in the Desa Pricing Body; he has continuously completed his database with results of all auctions of paintings that have taken place in Poland since 1990 when there appeared the first auction houses. The data referring to the years 1990-1997 and 1998-2000 have already been published and a similar book containing data on the period 2001-2003 is ready to be published in our editorial house. The book includes the same ( though yet unprocessed) information as the ones given by Artprice. Thus, basing on them, one can create and provide collectors with graphs, similar to those prepared by Artprice for its clients.
Applying these rules, I tried to develop them for several Polish painters: Juliusz Kossak, Wojciech Kossak and Jerzy Nowosielski (pic. 8, 9 and 10).
They concern changes of the average price in dollars for paintings of these artists, with division into large, small and all formats and the amounts obtained from the sale of their paintings in the subsequent years. The diagrams present the number of the paintings sold in a given year for the period of 14 years which was used to create the graphs and during which, in case of e.g. Wojciech Kossak, there were sold 194 paintings. The diagram allows to define the movement of prices within the analysed period of time and any occurring increase and decrease tendencies of the paintings’ prices of these painters. Especially convincing is the diagram concerning Nowosielski paintings, for whom the increase tendency is more than obvious. Someone who has been deeply interested in the painter, who knows his output, who carefully observes the market, could have prepared such graphs in a slightly different way than me, in order they provided more readable and clear information. Such a person would have to apply to the figures, that are the basis of my graphs, “correcting coefficients” for an each object sold (respecting the beauty of a work of art, provenance, the subject and the time of creation), identifying and rejecting some “price jumps” not justified by a work’s quality.
Therefore, here we have the first piece of advice for those wanting to invest profitably into works of art. One needs to check scrupulously and analyse our art market until they have learnt it thoroughly; when drawing conclusions from one’s analyses, use an expert’s assistance. Especially when such research and analyses are performed by financial institutions who intend to invest money in works of art. The approach of private investors may be slightly different. Usually they are art lovers, they have already taken to collecting and they buy what they like; the only thing they want to know is whether the value of the objects bought will be, within some time, growing rather than falling down. Collectors trading on a Stock Exchange or investing in real estate, want to multiply money somehow by the way of their interest in art.
Is it possible, basing on the information coming from the art market, to suggest some rules whose knowledge would be the first step towards learning difficult art of investing in art? Surely it is.
Rule no.1: pay a good price for the best, rare and rarely appearing objects on the market. Remember that a painting of exquisite beauty, painted at the time of an artist’s period of best creativeness, depicting an attractive subject, with full documentation of its origins, may be even several or several hundreds more worth than other paintings of this author painted in the same technique.
How to recognise a painting’s exquisite beauty? Despite the popular statement that nice is something whoever likes it, there are some criteria that allow to differentiate between an extraordinary and an average piece of art. It order to identify what a paining is like, one can precisely analyse all elements that prove the technical brilliance performed by an artist during the process of creating an object. However, its beauty is also proved by something immeasurable. Despite this, a collector who has been interested in paining for years and has been purchasing it, who has seen many great works of art and has managed to develop good taste, is able, after nearly one glance, to discover that they have just been shown an extraordinary work of art. They will be hugely satisfied, having bought such a painting intuitively, when later they will hear from an expert that they have not made a mistake, that it was a perfect choice. Recognised experts of a given artist’s painting may try to make some evaluative comparison, as far as the class of a painting and the technique are concerned. When they additionally observe the art market, thus their knowledge does not limit to the history of art, they can also take current “market tastes’’ into account while formulating their opinion. The latter can be helpful for an entity intending to invest money in works of art.
Do many extraordinary paintings appear on the market? Unfortunately that currently seldom happens; those who bought them in the past do not usually want to sell them. When such an object appears on an auction, it quickly reaches a high price. It is therefore better to find such a painting in an art gallery where it has been put by someone uninterested in painting, an hair to a former owner and a less experienced art dealer assigned an “average price” to the work of a given artist. In such a case one should decide to buy the painting at once. There is little probability that the painting stays unnoticed for a longer time. How to identify “better” and “worse” items in an artist’s output? Usually such data can be found in brochures concerning a given author. In case of Tadeusz Makowski e.g. the best period of his artistic creativity covered only a few years around 1930. Paintings from this period possess such renown that even less interesting pieces from another time “shine with reflected glory” and are sold quite expensively.
Does thus the art of investing in art consist in buying works of renowned artists of stable position on the market or maybe of those less popular? Investing in works of more renowned artists seems to be safer, but the growth of their value may appear to be minor, though the decrease as well. Investing in works of less popular artists, often even the deceased ones, who are just beginning to be interesting for collectors thanks to various promotional events (exhibitions in museums and art galleries, articles in the professional press), might be profitable. Especially when we buy before such events have happened, though we know they are in preparation. After such events, the prices of works of such artists rise significantly. Does it always happen like that and for how long?- it depends on good recognition of tendencies prevailing on the market and on determination (and money) of those who started the promotion. In the world’s market the position of works of a given artist is determined by promotion and continuous reminding. The latter also refers to the works of widely known and already promoted artists e.g. Picasso. There still appear books and albums concerning his output and are reviewed by the press. Their aim is to prevent the audience from forgetting the painter.
Unfortunately the awareness of such conditions is low in Poland and few art dealers and collectors deal with such activities with respect to former artists. On the other hand, contemporary painting is the source of examples of spectacular successes of such activities and which is most attractive from this point of view. Contemporary painting is thus a good investment for “the brave”, both for art dealers and collectors.
Jerzy Huczkowski - "Malarze polscy XIX i XX wieku"