Collectors now ‘asset managers’
How did the Great Recession happen?
Books have been written analyzing the complex causes of America’s financial slide in December 2007, culminating the next year in the most severe economic downturn since the Great Depression. Real estate collapse, steep drops in mortgage securities, Wall Street bankruptcies — the ruination was vast.
The contemporary art market didn’t much mind. In fact, it could be argued (and I will) that the Great Recession had a significant role to play in cementing the idea that contemporary art could be an asset class, like stocks, bonds, equities or money markets.
Once, that was a minority view. Today it’s common.
A survey in the Deloitte 2017 Art & Finance Report indicated that nine out of 10 wealth managers now believe art and collectibles should be included in large portfolios. Wealth needs to be parked somewhere, and with real estate temporarily on the skids, historically low interest rates and expanded popular interest in art, the prospect of transforming cash into paint freshly slathered on canvas only became more commonplace among ultra-high-worth moneybags.
This has in turn fostered a boom in the art advisor business, bankers themselves not being necessarily adept in maneuvering in the art world snake pit. The boom has narrowed the field of asset-class artists, since supply is virtually unlimited, but demand is far from it. Buying just any old thing won’t work.
This has led to marvelous nonsense. I’m not an art market specialist — I find the topic mostly boring, since mercenary values are unrelated to artistic principles — but it can certainly be amusing to see what investment-minded art buyers do.
What’s worrisome about the asset class phenomenon — especially when it plays out as public spectacle in the social milieu of an art fair — is the pressure it applies downward to lower tiers.
Not the small shoestring galleries, which come and go and provide a welcome measure of liveliness through the constant exposure afforded to untried artists, but the established, midrange ones. Commercially, the midlevel has always been the most difficult business to sustain, but it is the arena in which many artists are tested for the long-haul. The Great Recession, which hit the middle class hard and rattled the rich, was instrumental in chilling those vulnerable galleries.