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- [00:10]
A
Hello and welcome to the SWAG special edition of Slate Money. This is a midweek little treat for all of you who listen to Slate Money. Thank you for listening. And what I've done for the next few weeks is put together a series of shows about swag, which is a financial term which stands for silver, wine, art, gold. It's basically anything that you can buy that you might think will retain its value, even though it doesn't have any cash flows associated with it. We are going to talk about cryptocurrencies, we're going to talk about gold and wine and maybe, I don't know, cars, that kind of thing. But today, to start it off, my favourite subject of all is art. And there is no one better to talk to about the idea of art as an asset class and whether anyone can ever make money buying and selling art than Julia Halperin of artnet. Hello, Julia. Hi, welcome to the show. What do you do at artnet? And do you have a podcast to plug?
- [01:21]
B
Yes. I am executive editor at artnet News and we have just launched our very first podcast. It's called the Art Inc.
- [01:29]
A
So check the art angle out, which is hosted by Andrew Goldstein. Not Julia, sadly. Stay tuned here to listen to Julia. And, yeah, we're gonna talk about big names, we're gonna talk about Banksy comes up and Rothko comes up and Picasso and Warhol. And we're gonna. I think we're gonna conclude that you shouldn't buy any of them, but stay tuned to find out. So let's start with this question of is art an asset class and what is an asset class? Because I feel like this is going to be the big question we're going to be asking throughout this series. But art is a great place to start because it's not something that, you know, financial advisors have historically advised their clients to go into for the sake of diversification or anything like that, but yet they all seem to do it, or a lot of them seem to do it. So what would you say an asset class is?
- [02:24]
B
Well, I would say if you think of an asset class as something that you can buy and hold and sell, then art is an asset class. But it's not a good asset class.
- [02:37]
A
So a good asset class would be one that generally goes up in value.
- [02:41]
B
One that goes up in value, one that doesn't cost you money to keep, one that is pretty liquid, one that is probably fairly interchangeable and consistent across the asset class. And art is none of those things.
- [02:58]
A
There's not a lot of fungibility in Art.
- [03:00]
B
No.
- [03:01]
A
So, like, an ounce of gold is worth the same if it's in New York or if it's in London, no matter, like what, you know, it's just made of gold. That's all it is. But painting, you know, all paintings are unique.
- [03:15]
B
And the other thing too is that, you know, gold is, you know, give or take some major geopolitical drama is gonna hold its value over time, whereas most art is gonna be virtually worthless in the very long term.
- [03:30]
A
So, okay, so this is a great place to start that we have a general. I mean, I think you're absolutely right. I mean, obviously. Right. If you just look at the amount of art that is created every day, there's just enormous amounts of it. And you can go on to Tumblr or Etsy or any number of other places and just see huge amounts of art being created every day. Almost all of it has no value when it's even created, let alone over the long term. Some of it, a tiny, tiny proportion of it, has value when it's created in that often this is the art that is made by artists who are represented by galleries. And somehow that nexus of artist and gallery can persuade people to pay good money for the art. And then if you again, go back, how long has that sort of artist and gallery system been around? Like, maybe since the 19th century.
- [04:24]
B
Yeah, late 19th century.
- [04:25]
A
Late 19th century. So we have maybe what, 120, 130 years, something like that, of that history. And if you look at back over that history, there's been billions and billions of dollars worth of art sold in that nexus. And of that billions and billions of dollars worth of art, the amount, the percentage of that art which is worth more today than it was on the day it was bought would be, I don't know, hazardous. Guess here.
- [04:52]
B
5%.
- [04:53]
A
I think that's way high. 2. 1. I would be astonished if it was even 1, to be honest.
- [05:00]
B
Yeah, 5 is probably high. I mean, although the further back you go, you know, the art world was smaller.
- [05:05]
A
That's true.
- [05:06]
B
So there were fewer artists who were operating in that system, but there were.
- [05:09]
A
So many, just like random academic artists making brown paintings, which are basically worthless today.
- [05:15]
B
And even stuff that like, you know, Henry Frick collected, like, a lot of it was just bad stuff that looks really retro and never made it into his museum.
- [05:25]
A
And yeah, so that's one of the sort of lies about the great collectors, is that they all had these amazing eyes and everything they bought turned to gold. Like, the great collectors have the same kind of pathology that all collectors have, which is that they just buy a huge amount of stuff. And then according to the law of large numbers, if you buy enough stuff, then some small percentage of that will be stuff that goes up in value. And if that small percentage is a large, small percentage, I don't know if it's like 5 or 6%, then maybe that's all you need to go down in history as a great collector.
- [06:04]
B
Yeah, I think that's true. And you know, a lot of those guys, you know, the Morgans and the Fricks and the Gettys, you know, they bought with their ear as much as with their eye. Just like a hedge fund person today.
- [06:15]
A
Yeah, no one actually buys with their eyes. Right. Or very few. There's one, there's. I know. I think I've met one collector in my life who I genuinely believe buys with her eyes.
- [06:28]
B
How could you tell?
- [06:29]
A
Just walking around her house and looking at her collection. I'm perfectly happy to say who it is. It's this woman called Marilyn Oshman down in Texas who has some extraordinarily valuable works. But the vast majority of. The majority of what she has in her house is not valuable. And she just buys from artists who she loves and she likes to support them and she. And they're wonderful in their own way. And she has absolutely not a care in the world about. About whether she could sell, ever sell any of it. And it's kind of awesome, but it's so rare to find that. And when you do, when you're in the world that we're in and we get invited on, you know, tours of great collectors homes all the time, and it's kind of. Once you've seen one, you've seen them all to a certain degree. Oh, look, there's the Warhol, there's the Richter, there's the Picasso, you know, and you. And these things become sort of instantly recognizable brand names. And if you want to buy art that is not going to be worth zero, it's easy to do that. You just buy a Picasso, right? A Picasso is never going to be worth zero. But is that a way to, I don't know, diversify your net worth somehow? That you have some stocks and you have some bonds and you have some Picassos, does that make some kind of financial sense?
- [07:48]
B
I can't imagine that that's the primary motivator for people doing it. I think that that narrative exists because it can justify a splurge. But I think it's all of this. I mean, you can't discount the sort of social value of participating in this world and feeling like you're part of this sort of rarefied economy that requires connoisseurship, whether you're actually acting that out or not. I mean, even in the most sort of like, brash, macho segment of the auction world, they're still like, is it an A or is it an A plus, you know, or is it an A or is it a B picture? You know, they're still talking about whether this thing is good or not.
- [08:32]
A
So tell me about that, because this is something which you hear, I think, in probably 90% of auctions that there will be an auction. And then at the end of the auction, someone will get asked a question about, how did the auction do? And they will answer with this response, basically saying, well, I think what this auction proved is that there's bids in the market for the very best art.
- [08:56]
B
There's appetite for good material.
- [08:58]
A
Appetite for good material. So is that completely meaningless? Is there any objective criterion of what good material is beyond just randomly, whatever happened to sell well yesterday?
- [09:09]
B
So I actually do think that there is some objective criteria that you can look at for, quote, unquote, like, scare quotes, good material. And that has to do with, you know, nobody wants something that's been shopped around a lot. Nobody wants something that, you know, people want something that hasn't been seen for a while.
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A
But those criteria don't seem to have any obvious correlation with quality inherent.
- [09:36]
B
Yeah, I guess I'm thinking more about, like, the sort of price that you make in terms of quality. I do think people talk about, you know, when you look at, like, a Rothko, like, he's a guy who had good days and bad days, a good Rothko, you know, those squares that was like feathered edges, they, like, float in the picture and you feel like you're being sort of like, absorbed by it. And then he has, you know, pictures that are similar composition, similar shapes on the canvas that just kind of like, keplunk on it. And I do think that you can tell the difference. And I actually don't think it takes, like, an art historian to know that. You just have to stand in front of it and look at it for a while.
- [10:15]
A
Okay, so let's assume all of that. Let's say that Rothko had good days and bad days, that a relatively untutored eye can relatively quickly discern the difference between a good Rothko and a bad Rothko.
- [10:30]
B
If you've seen more than one. Yeah.
- [10:31]
A
And let's say that a bad Rothko will sell for $2 million, and a good Rothko will sell for $20 million. Just pulling the numbers out of thin air here. Then the next obvious question is if we're thinking about art as an asset class, if we're thinking about art as something which will hold its value over time in real terms, or possibly even in, like, S&P 500 terms, if you're being very ambitious, then is there any reason to believe that the $20 million Rothko is a better investment than the $2 million Rothko? Yeah, I think you're right. I think there is.
- [11:12]
B
Yeah, I think so. I think in part because, you know, a good one is always going to be better. So if the desire or the demand or Rothko's standing shifts over time, which happens all the time in art history and in the art market, that might mean that the one that's worse is going to, you know, be pushed to the side. But his best stuff is always going to be his best stuff, and so it's going to hold its value more than, I think, the handful of ones that he did when he was tired.
- [11:37]
A
And I think this is something which you hear a lot in the art world, and I think it is based on some fact that if you care about art as an investment or if you want the art that you buy to go up, you really are better off buying an extremely good piece by, you know, where you're absolutely convinced of the timeless quality of it, rather than, you know, buying something you can afford, I guess.
- [12:05]
B
And I also think that's why that dynamic is why the market gets sort of twisted up into knots. Because when people are making decisions based on, you know, seeing a jpeg, knowing the name and the date maybe, and not paying attention to the actual, you know, thingness of it, then the sense of what's valuable gets completely blown out of proportion, and you sort of lose that thing about merit and inherent value. And then you just get into, you know, bidding on names.
- [12:36]
A
And yet the whole idea of people buying names and, like, you know, I don't know who's hot right now, George Condo or someone like that, like, you know, some random piece from 20 years ago, which you might have been able to pick up for a couple thousand bucks not that long ago, is now worth, you know, half a million or something, and you're like. And that's just because of the name on the bottom. And, like, we definitely see this with, you know, we saw this with Picasso, famously, and even. Even with Warhol that, like, there are certain artists where anything by Them becomes worth a lot of money just by dint of the fact that it's by that artist. And even that hypothetical, not so good Rothko is still worth a couple million dollars. That's still a lot of money.
- [13:19]
B
Yeah, I think so.
- [13:20]
A
How does that work?
- [13:21]
B
I mean, I think that there's a whole system that's built to keep those guys, you know, their material moving. And really when you look at it, especially when you think about somebody like Picasso or someone like Warhol, I mean, the art market is really small compared to other markets. And those artist markets are run by generally a pretty small number of people who have a lot of them.
- [13:45]
A
Everybody else's markets run by an even smaller number of people than that.
- [13:49]
B
But in terms of the volume, like I would say, I don't know, I'm guesstimating, but I think you could say that in the last year, maybe a thousand Picassos sold at auction and there were maybe 30% of the total price. The total value of those were probably run by like 10 people. And so I think that that kind of, you know, people being really active in these markets is generally, and especially in the areas that are really closely watched, like the evening sales at auction, where people see those things as symbols for where the market is headed. You know, there are people whose job it is to kind of keep those things ticking along and keep those things moving so that you don't have a radical fluctuation in those assets.
- [14:38]
A
So one of the things I occasionally say when people ask me whether it's possible to make money by buying and selling art is to say, well, yes, it's actually, it happens all the time. And the people who do it are called art dealers. And if, if you are a professional art dealer and you are buying and selling art, and especially if you are relatively deep pocketed and can hold a bunch of art in inventory for decades and wait for it to go up in price and sell it. If it's gone down in price, then it is possible to make a really quite enormous amount of money. You know, the, the Wildenstein, the nomads have done it. Like quite a few collectors have done it, but they do it in a super professionalized way. And then what happens is you get a bunch of, I don't know, hedge fund managers or whoever coming into the market and being told, oh, you should buy this because it's going up in value. And then they buy it and then they see some auction data points which kind of implied to them that probably they were quote unquote smart because Their quote unquote investment has gone up in value. And then they congratulate themselves on being really smart and they buy more and more of it. And they never realize that it's actually really difficult to sell these things if you ever want to sell it. And they do quite a good job of ignoring the fact that a large number of paintings that they bought may have gone down in value. And it's a very disciplined and capital intensive, full time job to be an art dealer. And if you're not an art dealer, then I don't think anyone like really makes money on this.
- [16:22]
B
I don't think so either. And I also think that the people who make money, the dealers who make money, you also have to like kind of not care about it. And you kind of have to not care about artists because dealers who really like bleeding heart dealers put their money in, you know, living artists or they support scholarship to kind of promote artists who haven't been paid attention to. And that stuff is like, you do it because you love it. You don't do it because you want to make money.
- [16:51]
A
Right. And indeed, if you, if you look at the dealers who've made the megabucks, there's, there's a couple who have a business representing living artists in the primary market. But in a way it's much easier to not do that and just be a secondary dealer.
- [17:07]
B
Yeah, it's way easier. Way, way easier. And there are, you know, these are sort of small outfits, they're like guys who worked at Gagosian and they went off and started their own shop and there are two guys and, you know, they don't really do shows, they just sell art and they like, they do deals and that's what it is.
- [17:26]
A
Yeah, and there's nothing romantic about that.
- [17:28]
B
No, no, it's not. And it's, those are the conversations where it becomes, I think, sort of more crudely about the asset. This is when you see like the same, you know, Basquiat popping up over and over at an art fair and the guy's just trying to move the product.
- [17:45]
A
So let's put dealers to one side because, you know, I think if you're trading in anything, then that's, that's a clearly a profession where you can make money being a trader and start talking a bit more about collectors who can in many respects have like a significantly enormous percentage of their net worth died up in art, you know, because they've caught the bug. They love, they love the, the social entree it gives them. They, they probably love the art you know, and they probably love the artists, and they love the ability to support these things. But there is a. I have this idea that there's a level, a price level, above which no one really buys art without considering the question of whether it's going to retain its value. And I think that price level is relatively low. I think. I think basically, once you reach, I don't know, 15, $20,000.
- [18:40]
B
Do you think it's different depending on how rich you are?
- [18:42]
A
I mean, it is. Yeah, maybe. I mean. So look. So, okay, let me ask you a couple of questions. The first question is, what is the cheapest work of art that you think has a decent claim to being able to retain its value?
- [18:58]
B
Hmm. Well, I think I don't want to recommend this because it's like, don't do it. Like, you know, don't do this. Don't do this. But there are people who will, you know, go to the Columbia MFA shows, they'll go to the Yale MFA shows. There are certain art schools that have a reputation for turning out people who become stars.
- [19:16]
A
But that's a super gamble.
- [19:18]
B
Oh, yeah, yeah, yeah.
- [19:19]
A
But that's, like, that stuff will start. Yeah, but what I'm saying is, like, if I don't want to, like, if I. If I spend, you know, a million dollars on a Warhol, on a minor Warhol, then there's a big liquid market in Warhols, and I'll know that, you know, I could probably sell it tomorrow and not lose more than about 20% of what I paid, maybe, if I'm lucky, Whereas. Yeah, and you can do that. And possibly there are some sort of works on paper that are cheaper. But, like, in general, if I. If I say to myself, hey, you know, I'm decorating my house, I have empty walls. I want to put something on those walls, I have two choices. I can either put art on those walls, which I buy and I know I could never sell, and it's basically worth zero. And that's. And that's just the consumption expense, and I will lose that money forever. Or I can try and pick out works of art that conceivably will retain their value or maybe even go up in value. And if I do that, then maybe I can even afford a bit more because I haven't really lost that money. So the first question is, how much? What's kind of the minimum amount of money that I. That I need to spend to even get in that ballpark?
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B
So I would say maybe like 4 or 500k.
- [20:35]
A
Okay.
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B
Because there are Artists that are subject to kind of wild speculation where it feels like a bubble that's gonna burst, they don't. Generally, I think it hits around like 3 or 400k, and that's where somebody who started, you know, three or four years ago at 10 or 20k can get up there to that level pretty quickly. But I think that's a ceiling that's hard to break if you don't have, you know, a longer career, museum support, other things like that. So I feel like there is a threshold there right below the 500k mark, where I think you have to have a little bit more of a foundation to hit it.
- [21:19]
A
So if you don't have sort of half a million dollars per piece kind of budget, then don't kid yourself that you're making an investment. Yeah, no, but if you do have that kind of multimillion dollar budget, then on some level, even if it's a bad investment, and even if it goes down in value, it does on some level have the ability to retain its value or, or have a. An actual value over the long term.
- [21:46]
B
I think you have a shot. You have like a good. You have a solid shot.
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A
Right? So that, that. Okay, so that's. That's an awesome answer. I really like that there's somewhere around like, half a million dollars per piece, which seems so.
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B
It's so much money.
- [22:03]
A
It's so much money.
- [22:04]
B
It's like I have to just think with two brains. When you think about the art market, like, I have to think about the brain of, like, my money and like, what I spend at the grocery store and what, how much money I make in a year. And then you have to, like, go sit in a room and hear people bid in increments that are like three times what you make in a year. And just be like, those two things are separate things. Those are not. They're not the same dollar. You just can't put them together. Real cry.
- [22:26]
A
So what does that mean for the people who are spending $50,000? Because I feel like on some level, if you're spending 50 or $100,000 on an artwork, like, you don't do that. If you genuinely believe that the minute you put it on your wall, it's worth zero.
- [22:43]
B
I think, well, first of all, I think that you must convince yourself that this is a good idea. And I think, well, I just think. I don't know. Would anyone buy something worth $50,000 just because they love it?
- [22:58]
A
That's what I'm asking you. Just because I had this. I remember I. I interviewed an art collector, you know him, called Adam Lindemann.
- [23:06]
B
Oh, sure.
- [23:06]
A
And I asked him this very question once. I was like, how much would you spend? What's the most you would spend for an artwork which you knew was worth nothing just because you loved the art and because you loved how beautiful it was and you wanted to live with something that gorgeous? And he looked at me like I had three heads. It was like, I would never buy that.
- [23:24]
B
I think you have to delude yourself into thinking that you're doing both at the same time. Right. I mean, you must think, if I love it this much, somebody else will love it this much because I'm smart and my taste is good taste. And so it can't be a bad idea because I like it. Like, it's the reverse of. There was this famous line that was said by a former contemporary art auction head at Sotheby's, Tobias Meyer, who said the best art is the most expensive because it's the one that people wanted to buy the most.
- [23:53]
A
It's the efficient markets hypothesis applied to the art world, which everybody knows is the polar opposite of an efficient market and is full of the most egregious forms of money laundering and insider trading and information opacity. And that line about, if you don't know who the fish is at the table, it's probably you. Applies to probably 99% of people who buy art.
- [24:21]
B
Yeah, I think on some level, in the same way that, like, I have to look at the money being spent with. Of two minds. Like, I think when you're buying art, you have to do that too. You have to sort of, like, just delude yourself into thinking that, because I think this is worth this, somebody else eventually will too. And that's the dealer's job. That's like, kind of the system's job, is to convince you that that's the case.
- [24:44]
A
And the system does it so well.
- [24:47]
B
So it's very good.
- [24:48]
A
There's this incredible industrial complex devoted to persuading people that art is an investment that you can make. And that, like, oh, yeah, I think old masters are cheap right now relative to contemporary. Or like, these lines on charts that you see which plot something or other against the S&P 500, where the thing that's being plotted is never something that's actually investable. And there's. It's full of, like, confirmation bias. I mean, oh, my God, like, don't get me started on the problem with the May Moses index of, like, how. How much art is worth. But this there's so much of it coming at collectors the whole time. And, and on some level it's so easy. Like one of the, one of my favorite stories is that great American artist known as Thomas Kincaid.
- [25:42]
B
Oh, yes. Painter of light.
- [25:44]
A
Painter of light. He would, he would put dots on his paintings. But yeah, I mean, like, no one in, no one in the sort of high end world ever, ever took him seriously. But he managed to persuade hundreds of thousands of Americans that his art, which wasn't even original paintings, it was just like reproductions, that his art was always everywhere going to go up in value. And he did it through this unbelievably simple mechanism of owning a bunch of shops which would sell his paintings and then raising the prices every three months. And then the shop could in all honesty say, well, look at this painting. You can buy it today for $3,000. But if you bought it last year, it was $2,000, it's gone up in value by a thousand dollars. And people were like, oh, wow. And they bought it. I mean, they didn't just buy the art, they bought the story. And of course it all ended in deers and all those paintings were worthless. But like, it's so easy to persuade people because there are so many narratives in the market of like, you know, all of these expensive paintings that get sold at auction, and every single one of those expensive paintings was owned by someone and that someone made lots of money. And if they can do it, why can't I do it too?
- [26:52]
B
And also, I mean, all of the data that's available is auction data. And if you really want to track apples to apples, you have to track things that, you know that have come to market before. So you're already dealing with a really, really narrow slice of the market that you know has been deemed resaleable.
- [27:11]
A
Right. Because again, to our original point, if you look at all of the art, even the art that has been purchased from relatively reputable galleries over the past 130 years, if you took a representative slice of that art to Sotheby's or Christie's, they would immediately throw out 95% of it and say, we have no interest. We're not even going to try and sell this, that we're interested in maybe four or five of these pieces which we think we can put into a sale, and maybe one of them would make an evening sale. You know, I, I wrote a lot back in the day about the Berkshire Museum when it was doing its deaccessioning and they had a huge art collection of thousands and thousands of works. And Sotheby's came in and said, give me this one, that one, that one, and that one, because that's where all the value is. They just went down the list of the most expensive pieces until the point where Sotheby's wouldn't accept them anymore. And they said, okay, sell all those. And it wasn't that long of a list.
- [28:03]
B
No. And so on the one hand, they're telling buyers, this is so special. You will be so special if you own this. And then on the other hand, they're telling sellers, I can only sell two of these. The rest of them are not. I can't work with it. And that is really representative of how the market works.
- [28:24]
A
Okay? So we can agree that the smart and really probably only way to buy art is to assume that it's worth zero the minute it goes up on your wall. And then if you don't love it enough to spend that much money on it, then don't spend that much money on it. But given that people are not going to do that and they're going to get themselves, like, if they spend X on it, then it must be worth X on some level. Do you have an opinion on the question of whether people should find artists they love and just buy directly from those artists? Whether they should find artists they love and buy from galleries, because galleries are a useful way of ensuring someone's value, or whether they should buy in the secondary market, in an auction or somewhere like that where the artist actually gets no money at all. But at least, you know, there's an underbidder who can kind of ratify the amount that you're paying.
- [29:18]
B
I would say that if I were, you know, advising like a friend who just, you know, came into money and wanted to buy art, that the thing to do would be to go to a bunch of galleries, see not only which artists you like, but also which, like, the, you know, snooty art term is like, which program you like. Because the idea is that any dealer is gonna see a lot more art than you're gonna see. Like, you have another job. And so if you like what this person has put together as, you know, a sort of selection of artists, and you like that point of view, that's already kind of one call. And then within that, you know, you can support an artist in there that you like. I still don't think it's a good idea. You really don't for that. You know, if you. If you're trying to, you know, like, I don't know, buy bonds. But. But I think that there are so many other reasons to buy art. I mean, there's. And there are reasons that, you know, these same reasons are reasons that rich people buy art. I mean, it's to kind of participate in an exciting world where you're constantly being presented with things that you don't understand and that, you know, are pushing you to look differently. And I would pay a reasonable amount to be able to live with something like that, but I wouldn't expect to make money later on it.
- [30:34]
A
I feel like the reason to participate in the primary market on some level has to be because you think that art making is a good and important thing that happens in society and you want to support that. And you can't support art making without artists getting paid somehow. And if you participate in the primary market, then those artists are getting paid, and paying artists is, on its face, generally a good thing. And if you buy stuff at auction, you're, like, cheating.
- [31:06]
B
And if you buy stuff directly from the artist, then you're not supporting the kind of system that can keep artists from working and making money. Because a gallery, you know, a gallery has artists that do well and make money and. And artists who don't. And so, you know, they're sort of floating some people at. At any given time and, you know, making money from others. And so I do think, I mean, there's been a lot of talk about the gallery system, especially in kind of the middle tier, struggling, because there is such a polarization in. In the market. And I think there is, you know, inherent value to that system. As much as I ragged that up.
- [31:45]
A
Yes, supporting galleries is like, it's less obviously good than supporting artists, but it's still important, still has. There's a role, especially like the smaller galleries who really do struggle.
- [31:55]
B
And these are people who, you know, they give artists, you know, legal advice. They give them, they help them with materials. They help them figure out what decisions to make. You know, like, art school does not have a class called like, you know, jobs like being. Being an artist. And that's kind of what it's part of what galleries do.
- [32:14]
A
So tell me about, like, when. When I was, you know, I'm an old person, you probably don't remember this, but back. Back when I was small, I remember this world and it existed in New York and it existed in London and I'm sure. And it definitely existed in Chicago and in Paris and a bunch of other places as well, where galleries would, you know, have their locations, often in relatively posh parts of Town, they would often be like at street level and they would put paintings on their walls and people would walk in and decide whether they like those paintings and if they like those paintings. And when I say people, I mean real normal people like you know, dentists and lawyers and you know, just normal upper middle class professionals would look at the art and say I like that art, and would buy the painting and then, you know, get wrapped up in brown paper and they would take it back to their home and put it on the wall and enjoy the painting. And as the art world has globalized and become part of this big like art fair monstrosity and become financialized and an asset class and that kind of thing, I feel like that seems to have gone away to some level. I can't kind of imagine in my head right now as, you know, 45 year old dentist wandering into an art gallery and saying, that looks pretty, I'd like to put that on my wall. Is that like a thing of the past now?
- [33:46]
B
I think it's definitely shifted a lot away from that. That is a class of collector that is definitely a vanishing breed. But I don't know if it's just the art world's fault. I mean, I think that that's the result of income inequality. And you know, in the same way that like being a journalist used to be a good job where you would have disposable income, you could buy an apartment.
- [34:06]
A
I mean I feel like dentists still have disposable income, but they might not have half a million, but they could probably afford a thousand or two.
- [34:14]
B
Yeah, but do you think in when you were small, were they spending a thousand or two, do you think? Yeah, yeah.
- [34:20]
A
At least in, you know, 20, $19.
- [34:22]
B
Yeah, yeah. Cause you can't, like you couldn't. A gallery isn't gonna sell much that's $1,002 anymore. Like eight is probably the basement. And so I do think that some of it is just how much the cost of living has changed and disposable income that people have and the fact that they're using it differently, plus the fact that the sort of starting price for an artwork has definitely gone up over that time. And then obviously you have the like whole art world is snobby component where galleries don't want to sell to just anyone.
- [34:56]
A
Although realistically, if it's not a huge gallery, they will.
- [35:00]
B
And I was going to say, I also think that's changing because galleries need money now just as much as any business. And I think they're getting a Little bit less choosy as time goes on.
- [35:10]
A
So everybody's favorite art critic is this guy called Dave Hickey, who has been around the art world in a sort of curmudgeonly way for, since, I don't know, the 60s, 70s. And he was an art dealer back in the day, back in, like, the 70s. And he wrote this in 1997, but he was referring back to, I think, like the 80s. Ish. He said, when I was an art dealer, any biggish work of art was worth $500. Any littleish work of art was worth 200. Today, a biggish work is worth $1,000, and a littleish work is worth 300. Like that. I feel like that was the day when you could, you know, if you were upper middle class and had a bit of disposable income, it was a fun place where you could play. And on some level, maybe there was a lottery ticket aspect to it. And, you know, if lightning struck, it was conceivable that maybe that, you know, work you bought for $1,000 would. You would wake up a couple decades later and it would be worth half a million, but you wouldn't expect that. But it was conceivable. Now, like, the cost of a lottery ticket, as you say, like the bargain basement, is like 10,000.
- [36:22]
B
Yeah. And I think, too, that part of it is, you know, when I think about people I know who are in finance who say, you know, I want to buy art, there's this big fear now of just of, like, looking stupid, of choosing something quote, unquote bad. And I think it's sort of the. It's the reverse of the coin of people, you know, buying art because they want to feel smart. It's like these are two different personality profiles. But I think that there is something about the sort of, like, consciousness and psychology of the art world as it's evolved since the 70s or 80s, you know, maybe because, you know, people now have access to all of this information online, and so they feel like there's information overload and they should know more that it doesn't feel as, like, fun anymore. You know, it feels like you're being.
- [37:10]
A
Judged, which is so sad.
- [37:12]
B
Yeah. Because it is fun.
- [37:13]
A
It should be fun.
- [37:14]
B
It's fun to look at art, and.
- [37:15]
A
It'S fun to live with art.
- [37:17]
B
Yeah.
- [37:17]
A
And it's really great to live with art, and I can highly recommend it. Just don't expect to make any money doing it.
- [37:23]
B
Yeah.
- [37:23]
A
I mean, seriously, if you. If something which is that much fun, shouldn't Be profitable, really. Like, it's something which you should be paying for.
- [37:32]
B
And, you know, I'm gonna make a very weird analogy, which is that I kind of. I just got a dog and I kind of feel like living with art is like getting a dog. It's like you put a lot of money into it, and then every day you sort of take this joy in it that has no purpose at all. It's like I am just wasting time looking at this thing and walking this dog and like, throwing a toy across the room or sitting on my couch and like, looking at this print on my wall. And it's like. It's like wasted energy that somehow still extremely elevates her quality of life.
- [38:04]
A
I couldn't agree more. And just like the amount of joy that you get from a mutt is exactly the same as the amount of joy you get from some incredibly expensive pure breed. Like, getting. Getting joy out of it has no correlation whatsoever with the. With the price that you paid for it.
- [38:21]
B
Yeah. Oh, completely. Completely.
- [38:23]
A
I mean, especially if you're like Steve Wynn and like, you know, shoving your elbow through your Picasso and.
- [38:28]
B
Yeah.
- [38:29]
A
Creating gaseous. And it just creates, like, pain. And if you're worried about insurance and all of that kind of stuff, then maybe you're doing it wrong. Maybe we should all just try and find something we love and don't care about the value of.
- [38:40]
B
And in the same way, like, when it becomes part of your life, like when it becomes. I'm still really stuck on the dog analogy, but, like, when you bring this dog home, it becomes. You don't like. You forget what you like. You know, I got a rescue. But if it's a rescue or purebred, like, you don't eventually, it's like it's your day to day and you don't really think about what you paid for it. And I do think that's true living with art too. I mean, probably not if you paid a lot. A lot, but it becomes part of your world. It becomes part of the fabric of your life. And I do think that if you look at it and you only see the price tag, then you're doing it wrong.
- [39:16]
A
I feel like this is one of the problems with the way that the art world has evolved in the past couple decades is that most of the professionals that you deal with when you are buying art or heaven forfend selling art, that's how they look at art. They look at art and they see price tags.
- [39:36]
B
Yeah. I don't know. I think that a lot of people get into it for the love of the game. For the love of the game and the love of the thing. I think it's like, you know, as a journalist, you're thinking about that great story that's gonna take forever. That is the labor of love. And that people might not read, but you love it.
- [39:53]
A
You are. But I remember when I first started working in magazines, and then about six months to a year after working in magazines, I found myself, like, unable to pick up a magazine without, like, mentally counting the number of ad pages. And I was on, like, the editorial side, but it's like, oh, oh, look what they put. Have. Look who they got for the outside back cover. You know, you kind of, like, once you understand the industry, you can't not look at it that way even if you want to.
- [40:18]
B
No, I think that's true. I think it's still the kind of thing, though, where I think there are a lot of people in the market who. In the same way that, like, I think when I'm assigning stories, like, one for me and one for, like, there's a Banksy story, and therefore I can do something on an artist no one's heard of, I really believe that there are dealers who are like, okay, like, we have the Christopher Wohl, and he'll buy us, like, this artist, this, like, female artist from Lebanon that I'm really passionate about. That's going to be a real. Like, it's going to be work.
- [40:46]
A
Yeah, exactly. You've got to. If you don't have a passion, you won't last that long. Maybe you will. I don't know. I have no idea who lasts in this business. I think no one can predict longevity.
- [40:56]
B
No. And I think that there are people who's, like, in any business, there are those people whose passion is money, and, like, that is their true love, and they've been able to make good money in this business. But I still think probably in terms of, like, sheer number, like, you don't get into art because you think you're gonna make a fortune.
- [41:15]
A
And it's. It's hard to sell art at the highest levels without on some level being able to have an infectious sense of enthusiasm for whatever it is that you're trying to sell.
- [41:25]
B
Yeah. I think you have to make people feel like they're, you know, participating in something that matters, even if it's just something that matters because it's worth a lot.
- [41:37]
A
The one other thing we should touch on is the question of selling art. Like, obviously, nothing can ever be an investment or even worth Anything if you can't sell it. And this is a part of the art market that almost no one talks about. If individuals own art and they, for whatever reason need or want to sell it and it has some non zero value, what are their options and how disillusioned and disappointed are they likely to be?
- [42:10]
B
I actually think that this is. I agree, it's like the least talked about component of the art market. And it's also, I think, kind of the most problematic. Like it's the part that works the least well. And that's because you've got, okay, you have a few options. You have consigning something to auction, you have consigning something to a gallery, you have, you know, finding somewhere online to sell it. And that's kind of what it is. And even within those, those are really narrow pathways. So an auction house may not want it. They might not set it at a price that you want. You know, when you talk about it being illiquid, you know, if they've got two pieces already by that artist in their sale, they're going to say wait six months, wait a year, you know, and that's how they do business. Galleries might keep something for, you know, two years and not be able to move it. I mean, even at the high levels, like I have seen the same Basquiat at, I think, you know, Hong Kong, London, New York, and then someone else saw it in Maastricht in a year and it's still like, as far as I know, still in the mix, still in the market, has not found a buyer. And you know, there are some options online, like, I mean, where I work artnet, you know, you can consign to an online sale, but there, it's just, I mean, it's a pretty underdeveloped part of the marketplace at this point.
- [43:32]
A
And the people buying that artwork by definition aren't going to be supporting the artist because they're buying it from you rather than from the artist. They're not even really supporting the gallery that much. You know, if they, if you do to consign it to a gallery, maybe they gallery will take a cut, but you don't really know how much it's I. And one of the, again, one of the things which you used to hear back in the day was, well, if you buy a work of art from, from a gallery, then they'll always buy it back for whatever you paid for it. And of course that, that just is not true.
- [44:03]
B
Oh no, that's extremely untrue. I mean, you know, it is considered like, especially at a certain level, it's good manners to offer it to the gallery first because they can kind of control who sees it. They can protect the artist market and make sure that it doesn't get shopped around too much. They can, you know, keep the prices at the level that they've been working at. You know, there are reasons why it's sort of good behavior to offer it to the gallery. But it's true that short of an artist like Jeff Koons, who can kind of set his own terms, artists don't see any money from even the sale, the resale through their gallery.
- [44:35]
A
My one advice, if anyone listening to this is thinking about offloading a work of art, if it's a living artist, then just give it back to the artist. It seems to be like, you know, artists really do appreciate that even if they can't sell it very easily, they like having it and owning it and having it back in their, you know, control.
- [44:56]
B
Yeah. The other tip I would say, too, is that, I mean, I think this is probably less true today, but still somewhat true, is that you can also ask for a trade. Yeah, like that.
- [45:05]
A
I have done that.
- [45:06]
B
Yeah, me too. You know, if you have something and you would want to sell it and you bring it back to the gallery, you can get, you know, something of similar value by a different artist. Sometimes you can also go back to the artist and say, you know, can I trade it for something else? And that is, you know, a rare case in which having, like, a illiquid asset like art is kind of fun.
- [45:27]
A
Yeah. No, trading out is fun. Go ahead and trade it. Don't expect to make a huge amount of money on it, and you will be fine. I feel like we've started off this season with an asset class that both of us are very down on in terms of an asset class for all of the existence of fine art investment funds notwithstanding. Presumably we would both agree that investing in a fine art investment fund is a spectacularly bad idea.
- [45:55]
B
Very, very bad idea. Very bad idea.
- [45:59]
A
So with any luck, maybe later on in this series we'll find something which is less spectacular. It's hard to think that we'll find something which is a worse idea.
- [46:08]
B
Honestly, I'm like, I'm going to listen.
- [46:09]
A
Bitcoin, maybe.
- [46:10]
B
Yeah, Bitcoin, I think, is maybe worse, but I'm going to listen. I'm waiting to hear what would be a better idea.
- [46:16]
A
We'll find a better idea which would be just lighting your money on fire. At least you get warmth. Maybe we'll find the worst idea. But, Julia Halperin, thank you very much for coming in and starting off this little mini season for us.
- [46:29]
B
Thanks for having me.