It’s very interesting to consider the relationship between the art market and stock market volatility, that nowadays offers so much evidence, as well as a nuanced view of the connections.
In recent James Tarmy’s Bloomberg article you’ll read ArtAssure’s Asher Edelman, caution that art may not be the safe haven many believe it to be in an economic downturn. He says
“I would have given you a different answer three years ago and that answer would have been, from observation, that roughly six months from when the stock market gives up its bull run, the art market gives up its bull run, too.” Not because people lack the money to buy art, he adds. “Anyone who had $100 million in May 2008 still probably had $80 million that November,” he says. “These markets are driven much more by psychology than they are by economic factors.”
In fact, he said he don’t believe anymore that when money comes out of the stock market, it goes into the art market, as he explain that investors actually tend to run for safety and short-term liquidity. But Art could be considered a liquid investment only if sellers were willing to get 60 percent to 70 percent of what they had paid retail.
“I know people like to think that [they can sell art whenever they want], because they try to make a case that the art market is safe and hard,” he says. “But I can tell you, sitting here, that it ain’t easy to sell a piece of art if you’re not putting it at auction at a reduced price.”
While you’ll hear Hauser + Wirth’s Marc Payot take the opposite tack, pointing out that market misfortune can be an opportunity for buyers who can provide illiquid art holders some quick cash for their prized works. Of course, those words comes from one who occupies something of a comfortable middle ground in which one man’s credit crunch is another’s opportunity.
When a slumping stock market impacts art collectors whose businesses are more exposed to volatility, he says, “that’s a moment where access to certain pieces is possible. So if you know you want a specific [artwork], a moment where the market is softer is a great time to be active.”
Finally, one well-established dealer says the roller-coaster market has already been quite good for business:
“In my experience, when the market goes up and down, up and down, that’s good for art,” says Christophe Van de Weghe, a New York dealer who will be exhibiting at Tefaf New York next week. “Over the last 30 years, volatility has been very good for us dealers.” […] An additional group, specifically hedge fund managers (many of them Van de Weghe clients) will spend even more on art, “because they tell me that they make more money when there’s volatility in the market,” he says. […] Since the market peaked in January, (the Dow is since down about 7%, “we’ve been selling more,” he says. “The art market has been very bullish.” But he concluded by saying “Listen,” says Van de Weghe, the New York dealer. “All I can tell you is that if there’s a correction, I want to be owning a Picasso.”