Shaping an Art Collection: A Few Words about Motives in Collecting
with an emphasis on American Representational Art
Collecting art for its beauty and the opportunity to share it with others
Most people wisely collect representational art because of its subjective beauty. They pause to glance with pleasure at their works as they pass through the rooms of their homes or offices. The works regularly lift their spirits. They don't think much about what they paid for them, or what they might be worth in monetary value. If monetary value is constantly on their minds, they might be better considered traders or dealers, or at least latent ones.
TFAO's catalogue Collections of Historic American Art provides insights into the motives of significant collectors. A collector may consider giving an artwork to a museum immediately after its acquisition to help a museum fill a niche in the museum's collection. Or, while building a collection, a motive may develop in the collector's mind to donate blocks of works or even the whole collection to a museum at a future time. Advanced collectors may choose to share access to works in their collection though lending art to museums for special exhibitions or may eventually wish to start an art museum.
Alan Bamberger's essay "Donate Art: A Primer" provides insight on how the staff of museums may approach gifts of art and explores the motives of donors.
The National Gallery of Art's audio podcasts page contains informative conversations with titles including:
Collections may grow out of relationships between collectors and living artists.The
with E. Gene Crain, conducted by curator Susan M. Anderson in 1999 as
a part of the Archives of American Art Oral History Program, gives insight
into an example. In the interview summary "...Crain describes the focus
of his collection of some 1000 works of art, and how it grew out of his
longstanding relationships with artists Millard Sheets, Phil Dike, Rex Brandt,
and others..." Another collector who had a strong personal relationship
with an artist was the novelist and filmmaker Michael Crichton, who collected
the works of Jasper Johns. Crichton eventually wrote an essay in the catalog
for a Johns museum exhibition.
Collecting for monetary gain
Regarding objects in a collection as investments may prove to be a successful endeavor, yet there are risks.
The more notable the artist, especially "first tier collectible" deceased artists, the greater the risk that an object attributed to the artist is a fraud. This is a greater risk than most persons imagine. Rather than have TFAO quote statistics, you are urged to head out to visit in person the owners of several prestigious galleries. Ask discreetly the percentage of fraudulent objects that are offered to them for acquisition. If your contact is exceptionally candid, you may also find out the percentage of paintings bought by the gallery later found to be fraudulent. You may learn of entire rooms of fake art either bought back from purchasers or never sold. A reputable dealer will always buy back a work upon having evidence presented calling into serious question its authenticity.
The monetary value of art is subject to the whims of fashion. An artist or style of art may be intensively popular for a few years then drop out of favor for decades or centuries. Money can be made while the momentum is favorable, but lost when fashion moves on.
Since art is far from a necessity of life, in hard economic times its monetary value can be mercilessly marked down. On the other side of the coin, patient investors wait for gloom to settle over art markets before making their move.
Transaction costs can be high for art, when compared to other classes of investments. Before buying or selling, especially at auction, familiarize yourself with all of the costs.
Art in galleries is commonly marked up 100% above cost. Markups are occasionally much higher than this, sometimes lower. Therefore if you buy an object at retail markup from a gallery be prepared for a sharp discount if you want to sell it soon afterwards.
Artists seeking to preserve their reputation among galleries who represent them will not discount their art. Be wary of purchasing the works of artists who are willing to undercut their dealers. What may seem a bargain may prove not to be so later on.
Some works by living artists appreciate in retail value beyond the general rate of inflation. However there are so many thousands of excellent artists - who usually more supply more blue chip works than can be absorbed in the market - valuations beyond cost of living increases is difficult.
Occasionally, the value of a living or recently deceased artist's works is accelerated by the marketing skills and intensity provided by a dealer, spouse or other relative. The marketing efforts may be well above the norm, even spectacular. Upon retirement of the marketer, the momentum of price movement often wanes. Sometimes the artistic merit of the works do not withstand the test of time. If that happens, the value of the works can languish or fall dramatically.
Holding costs for art objects can be substantial if fragile or needing conservation. These costs are a drag on investment value.
Trading works beyond a certain level may have special tax consequences. Be sure you have legal advice before buying and selling quantities of works.
The above observations and suggestions are directed to individuals buying and selling original art.
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