« Labatt's unfortunate link with Luka Rocco Magnotta | Main | Are you in Canada's 'one per cent'? Find out here »

June 06, 2021

Is fine art really that good an investment?

Considering that Edvard Munch’s “The Scream” just sold for $120 million, can art prices posssibly go any higher? Quite likely, according to Adam Davidson in this week's New York Times Magazine.

But does that make art a good investment? Probably not, at least for the average Joe. This buyer is spending $120 million, in part, to show that you can blow that amount on something that can’t possibly be worth that much in any marketplace, he says.

Michael Moses, an economist at NYU, decided to crunch the numbers a few years ago. He gathered auction prices for fine works of art from 1875 to the present.

By tracking jumps in their sale and resale price, he was able to calculate the return of several high-profile paintings. Their owners didn't do too badly.

For example, a J.M.W. Turner view of Venice sold at auction in 1897 for $35,000 and then sold again in 2006 for $35.8 million — which yields about a 6 per cent annual return over the century. But that may nor be typical, Moses warns.

Clearly, most people have to start small. With a ton of indexes to monitor the stock and bond markets, there's no reason the same approach can't be applied to other items whose values fluctuate over time.

And, if you're determined to add some colour to your portfolio, there are some pools in which you can participate.

Does owning even a small piece of an art treasure interest you?

By Gordon Powers, MSN Money



Post a comment


Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...