bruce@hp-pcd.UUCP (bruce) (09/22/84)
$-----------$ Does anyone out there in net.invest.land have any experience with art as an investment? I am considering the purchase of a newly offered print by Salvadore Dali. It is a nice print but I certainly wouldn't consider spending that much (~$1500) on something just to put on my wall. Does this sound like a reasonable place to put some of the money that I have to invest? Any ideas about possible return on investment (ie will the value really double when the artist dies?) Are there risks associated with art sale? Are there any tax consequences that I should know about? Does the IRS have to know? -- Bruce Stephens (hplabs!hp-pcd!bruce)
wildbill@ucbvax.ARPA (William J. Laubenheimer) (09/25/84)
> from Bruce Stephens (hplabs!hp-pcd!bruce): > Does anyone out there in net.invest.land have any experience > with art as an investment? On my budget? You've got to be kidding! But I do know a number of people who collect art works. > I am considering the purchase of a newly offered print by > Salvadore Dali. It is a nice print but I certainly wouldn't > consider spending that much (~$1500) on something just to put > on my wall. > Does this sound like a reasonable place to put some of the > money that I have to invest? All of these friends, plus all the advice on investing in collectibles which I have read, stress that their desire to build a collection arose not from any desire to make money, but from appreciation of what they were collecting. ("What? Sell my three original Carl Barks [Disney animator - most closely associated with Donald Duck] cels? Never!!!") Be it stamps, coins, fine art, or even comic books, reliable expert opinion (as opposed to the "experts" who are trying to sell you on something) is virtually unanimous that investing in collectibles is a bad idea unless you also appreciate the object as the object. So, if you are attracted to the print as art, and appreciate it as art, it is worth considering. If not, you'd be better off investing your $1500 somewhere else. > Any ideas about possible return on investment (ie will the > value really double when the artist dies?) Hard to say. Since you are dealing with an artist who has been famous for a long while, you may be able to get some idea by asking a reputable art dealer (or better yet, several reputable art dealers) in your area about other Dali prints which have been released in the past several years. This may give you some ideas about general trends. To determine what might happen after Dali dies (which could be quite soon, as he is in a Spanish hospital in poor condition, recuperating from a fire in his bedroom), you might try looking at prices of reproductions by other artists who have died recently (e.g., Picasso). You are much more likely to see appreciation if the artist's personal touch is involved, such as if the prints are numbered and signed by the artist. > Are there risks associated with art sale? Plenty. This is the main reason why it is not worthwhile to buy if you aren't especially interested in what you are buying. The major risks stem from the fact that art is not particularly liquid, has a limited market, and is difficult to sell. One example of this: say you are short of cash and decide to auction it off. Well, you might just luck out -- Christie's is having an art auction in three months. You say you needed the money tomorrow? Gee, that's too bad. OK, i'll try my friendly neighborhood art dealer. He says he'll be happy to sell it for you, but he doesn't know when an interested buyer will come along, and no, he can't advance you any money on it -- you'll just have to wait until he sells it. The bank isn't interested in it as collateral either. So you scrape up the money some other way, and notify Christie's that they can enter it in their catalogue. You are asked if you want to post a minimum bid, so it can't be sold for less than you hope to get. Back to the art dealer -- you pay him $50 or so to have him tell you he thinks it's worth $2500 now. Back to Christie's -- they ask for $250 up front, since their cut is 10% of minimum bid whether it sells or not; 10% of purchase price if sold. Or you can put it up with no minimum, and hope some bargain hunter doesn't scoop it up for a mere couple of hundred. Ouch! > Are there any tax consequences that I should know about? > Does the IRS have to know? Works of art are treated as capital items. The purchase price (less any taxes/commissions) is the cost basis. The sale price (again less any taxes/commissions/other costs associated with selling - this includes things like appraisal fees, appraisal fees to set cost for insurance purposes (but not the insurance itself) [you should probably adjust the cost basis for this]) less the cost basis determines the net gain or loss, to be reported on Schedule D. The gain or loss is long-term if you held the work for more than the current holding period; otherwise it is short-term. If you bought the print publicly, assume the IRS knows about it -- the gallery owner will have made a record of the sale. If you wind up selling the print publicly, or if it goes into your estate, you'd better have records indicating what you got it for. Otherwise, give it away before you get audited.
smh@mit-eddie.UUCP (Steven M. Haflich) (09/29/84)
(All figures below come from my very fallable memory, and should be taken with a grain of salt.) Some years ago, when Picasso died, NPR did the obvious stories which mentioned the number of original works still in Picasso's estate, and the price that recent sales of original Picasso's had brought on the market. My multiplication of these numbers yielded a dollar value for the estate approximately 1/1000 of the yearly GNP for the United States. This is a not-inconsiderable sum! Of course, if the "estate" had attempted to unload even a small fraction of these works, the market would have been saturated, and the going price would have dropped precipitously. (Translation: This poor academic would love to own an original Picasso, just like more wealthy connaisseurs, but I spent my last sawbuck on food!) Moral: Art markets are both capricious and very soft. Unless you like the art object well enough to leave it permanently on your parlor wall, invest in something relatively stable and which you know more about, like venture-capital software houses. :-) Have a nice day!
johnl@cca.UUCP (10/01/84)
#R:hp-pcd:-870000700:ima:9200001:000:575 ima!johnl Sep 24 09:50:00 1984 For the small investor, art is a lousy investment. The market for it is quite thin, and dealer commissions are very high, often as high as 100%. (This means that if you bought something, its value doubled, and you sold it, you'd just break even.) The conventional advice is to buy art you like, and it it happens to make you fantastically rich, that's a pleasant but unlikely side benefit. In the particular case of Salvador Dali, a recent National Public Radio piece on him reported that a lot of slimy numbers have been hyping his stuff of late. John Levine, ima!johnl