Barron's Streetwise
Art Episode Gets Better With Age
Sep 1, 2023
In this podcast, they discuss investing in shares of paintings and shortcuts to tell great artists apart. They also explore the potential returns of investing in art and introduce Masterworks, a platform for buying part ownership in fine art. The chapter highlights the importance of choosing the right artists and tracking price momentum in the art market. They compare the performance of the art market to stocks and other assets, and discuss the impact of selection bias on art indexes.
27:09
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Quick takeaways
- Shared ownership of fine art through platforms like Masterworks allows small retail investors to access the art market and democratize access to a traditionally exclusive asset class.
- The price of art is influenced by factors such as the reputation and market demand for specific artists, and while the average return on art tends to be about half of what stocks offer for the same level of risk, momentum-based strategies like those used by Masterworks can potentially outperform the overall art market.
Deep dives
Shared Art Ownership and Investment Opportunities
Shared ownership of fine art through platforms like Masterworks has become a way for small retail investors to access the art market. Masterworks, founded by Scott Lynn, allows investors to buy shares in special holding companies that own and sell paintings. The company selects artists based on research and tracks their appreciation rates over time. While art returns have outperformed global stocks and US housing over the past two decades, there are risks associated with investing in art, including subjective valuations and fluctuating demand. The market for shared art ownership aims to democratize access to a traditionally exclusive asset class.
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