Looking back to secure the future

Using the past to predict the future of art collection

Art is an investment that is not just financial rewarding, however, it is also something that carries a certain amount of risk, especially during a global crisis. But the good news is that there is a way of predicting what will happen to art during troubling times by looking at what has happened in the past. 

The Past: Window to the Future

Looking at what has happened in the past to help predict the future is not a new concept. Fortunately there have been several global economic events that we can look back at to see how the value of art recovered afterwards. The most useful data actually comes from 12 years ago when the 2008 recession hit. Looking at how the art market reacted at that time and the path it took in the following years can help you to know when to invest and sell. 

Protecting your investment

A mural by street artist “TV Boy” depicting a famous film “Roman Holiday” with Gregory Peck and Audrey Hepburn as she holding a banner reading “Clear Air Now” is displayed on a wall near ancient Colosseum, in central Rome on March 14, 2020, during the COVID-19 outbreak caused by the novel coronavirus. (Photo by Andreas SOLARO / AFP)

The Covid-19 outbreak has a lot of people worried about the future, as well as concerned about the risk of recession on a global scale. For those art collectors amongst us, safeguarding our investment is a priority that cannot be ignored. Fortunately there are a few ways that you can actually use the crisis to your advantage, which includes not being afraid to sell masterpieces. 

Even when the market is bad, it can still be an excellent time to sell a masterpiece. The reason for this is that art at the top end of the market is extremely resilient. People are always willing to pay for that once-in-a-lifetime piece, no matter what global economies are doing. If you look back at 2009, when the recession was at its worst, Andy Warhol’s 200 One Dollar Bills painting was only estimated to sell for $12,000,000. It sold for an astounding $43,800,000 at auction in November 2009. 

Liquidity can be a problem for some art investors during times like these and know the best way to turn your art into liquid cash flow can be problematic. If you need to cash in some of your art assets, the best pieces to sell are those valued between $100,000 and $1,000,000. 

Finally, different countries have different art markets and all are effected differently. When one is in downturn, the others may be booming. Check the different markets in the UK, US and China to find out the best place to sell or buy. 

Buy Low 

The first thing that people often stop spending money on during times on uncertainty is art. However, because people stop buying, it can be the best time to increase your investment in your art collection. There are several reasons for this. Firstly, buying art supports the art world. If the money stops, the art stops. By continuing to spend money on art, you are ensuring that the market survives through leaner times. Secondly when you are investing in anything, the best advice is to buy low and sell high, no matter what you are investing in. People that make money out of their art investment are those who buy art when it is selling for 35% to 45% under its market value. If you have the capital, now is the perfect time to invest in art ready to sell when the market recovers. 

Make the most out of online

Online art purchases could be the only way that art can be purchased for the foreseeable future. This has granted unprecedented access to auctions as well as the ability to research artwork that is up for auction. Sotheby’s online-only auction of Banksy’s artwork on 26th March brought in $1,400,000, going far beyond the pre-sale estimate and almost half of those that purchased the artwork were first-time buyers. 

For more on the effect of Covid-19 on the art community, check out our other articles.

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