Does buying ancient art make sense from an investment perspective? Item Number: 100044 $0.00

DescriptionIt can be said that life without art is like a song without music, and I think most of us agree that art and music hold a special place in our lives. I remember when the Beatles first hit the US and transformed music as we now know it. And I also remember very distinctly where and when I bought my first piece of ancient art. That’s all well and good, but should art become part of your long-term investment strategy and a major component of your portfolio?

That very question was posed this week by a writer at The Wall Street Journal. It seems that more and more people are becoming disillusioned by traditional investments and are putting much of their money in assets they can “enjoy.” Certainly one can enjoy looking at their stock portfolio and appreciate when the numbers are headed north. But it is a far different type of appreciation than looking at a marvelous Roman marble bust, or Egyptian bronze, or remarkable Chavin stirrup vessel.

According to the WSJ, “Global fine art auctions raised $3.8 billion during the first half of 2010 – almost as much as during the whole of 2009, according to data provider Artprice. The Mei Moses All Art Index, which tracks auction prices, gained 13.5% during the first half of this 2010, compared with a 6.5% fall in the S&P500 index during the same period.” And if the latest auctions are any indication, 2011 will be a banner year for art and antiquity sales!

Certainly, there are others who strongly advise against buying art as an investment. The consensus among this group is that art is totally speculative and based on tastes in “fashion” that can, and sometimes do, shift. With art, you are betting that what’s fashionable today will still be fashionable 10 or 20 years from now when you are in a position to liquidate. But my argument against this is that ancient art tastes have been virtually resistant to changes in styles or fashion. The cultural elite bought and sold ancient art 2000 years ago, as they did 300 years ago as they did 200 years ago, as they did 100 years ago, as they continue to do so today. Ancient art has a fixed supply, and an inherit mystique and fascination about it. Five years ago we wrote that the best areas of investment in ancient art were fine quality Egyptian artifacts, better quality Roman marbles and Greek Attic Pottery. The latest round of auction results certainly shows that these areas are indeed hot, possibly resistant to traditional market fluctuations, and quite frankly DAMN good investments. Had I acquired more of these examples 5 years ago, held onto them until December and fed them into Christie’s or Sotheby’s, I would have made a bloody fortune!

Nick Brett, underwriting director at insurer AXA Art, says clients are still concerned about the riskiness of stock markets and, rather than leave cash to stagnate, are increasing their passion allocation. But there are caveats. He says: "There is no reason why you should not make a return, if you are well-advised, buy the very best available in your chosen field, and take a long-term view." I couldn’t have said it better myself!

Happy Investing!

Bob

PS >> You can read The Wall Street’s Journal’s article in its entirety by clicking here