Last month the Pursuits section of Bloomberg.com published an article entitled “That $100,000 Painting Bought to Flip Is Now Worth About $20,000.” The article by Katya Kazakina detailed the travails of Niels Kantor, an art dealer and collector, who two years ago had bought the painting below for $100,000:
Hugh Scott-Douglas was already a rising star at the age of 24, when he created the untitled painting to the left. (I’ll call it a painting although it’s actually a cyanotype print on canvas nearly eight feet high.) In 2014, two years after he made the work, a very similar painting would bring $100,000 in sale at Christie’s New York. Kantor had already bought the painting above, so his purchase made him look prescient. If Scott-Douglas’s market continued to rise as it had over the previous two years, Kantor stood to make a tidy profit by flipping the piece to another collector.
The market, however, did not cooperate. 2015 saw a noted softening of the contemporary market as collectors turned away from several once-trendy young artists, and Kantor could not find a buyer for his painting. He cut his asking price to $60,000 and finally decided to unload the work for whatever the market would bear. “I feel like it could go to zero. It’s like a stock that has crashed,” he told Bloomberg. On September 20, the painting sold for at Phillips New York for $30,000, including buyer’s premium. Subtract that premium, plus the commission charged to the seller, and Kantor probably received around $23,000 when all was said and done.
This kind of story would never have happened 75 years ago when auction houses followed an informal practice called “the rule of twenty”; that is, a contemporary work of art would not be offered at auction before it was at least 20 years old. It wasn’t a bad rule to follow. After an artist has been working and exhibiting for 20 years, it’s easier to get a sense of his or her significance. Flashes in the pan are eliminated. As Aldous Huxley once said, “Anyone can be a genius at 20. At 40, it takes some doing.”
The explosion in public interest in contemporary art since the Pop Art emerged in the 1960’s, however, made auction houses eager to get into that market, and the artworks offered have been ever more recent to the point that the paint doesn’t even seem dry yet on some of them.
There’s no point in my complaining about the situation. Auction houses will sell new works as long as someone is willing to buy them. And I don’t want to sound like an out-of-it geezer by demanding to know how a painting by any twenty-something can be worth six figures. If someone is willing to pay a hundred thousand dollars for a painting today, it’s worth a hundred thousand dollars – today. (And assuming the sale is real – there is always suspicion when a work by a young artist sells for a lot of money at auction that the market is being manipulated by parties who have several such works on hand. It’s like a company buying its own stock – the stock will rise, but unless outside investors begin buying as well, the rise can’t continue.)
Unless you find speculating in markets fun, however, and can afford to lose the money you bet, stay out of such schemes and stick to collecting. Most contemporary art will never be worth more than you paid for it, so remember my first rule in collecting: if you don’t like a painting, it’s not a good deal, no matter how famous the artist is or how cheap the price is. Buy only what you really like, and expect to get years of enjoyment out of it. You’ll get pleasure, and if the market for the artist has gone up by the time you or your heirs decide to sell, it’s all gravy.
I am always happy to talk about the market for a particular artist. Call me.
