24 Nov 2008

Go easy on investing in art

(Nalini S Malaviya)

As discussed extensively in the past, the global economic meltdown has seriously affected the art market and both primary and secondary sales of art have slowed down.
Some analysts had predicted that since the prices of contemporary artists had risen too sharply in a short period of time, these were more likely to plateau as compared to the modern artists. And this trend is already visible, where prices for contemporary artists are now going through a process of stabilization. This also means that their prices are comparatively lower than what was seen a few months ago.
According to experts, the works by modern artists can be compared to blue chip stocks. And, just as in the stock market one should invest in blue chip stocks now, similarly in the art market one could look at investing in modern artists. Investors could also look at diversifying their portfolio and may want to consider investing in upcoming artists. Upcoming artists may form a high risk category from a financial investment perspective, but as the outlay is also comparatively less, it might be worth taking the risk. When investing in new talent, one should be prepared to hold on for a longer duration to maximize returns. Buyers should also keep a look out for good quality works that may come up at auctions. The slowdown in the art market is irrevocably linked to global financial health, and it may take some time before the recovery process begins.

Therefore, given the current situation, there is no harm in going slow for a while. One should assess and evaluate the situation carefully before investing. This is also a good time to learn more about art in order to be able to make smart decisions.

(Published in Financial Times)

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