The Markets for Different Eras of Art

While there are many ways to categorize the different periods in art history, when investing in art, the eras are commonly divided into “Old Masters,” “Impressionism and Modernism,” and “Post-War and Contemporary.” These three eras are primarily inclusive of European and North American art, which is not to say that art from the rest of the world does not have value. However, the composition of “blue-chip” or “investment grade” works continues to skew western, with only five of the 200 most valuable works of art having been created by non-European or North-American artists.

Old Masters

The “Old Masters” market refers to work produced in Europe prior to 1800. This is a highly mature market, so much so that this era was dominant in the collections of Henry Clay Frick and J.P. Morgan, which is to say that these works have been expensive before anyone alive today was born. Because of this, significant returns are less likely to be realized. That is not to say that outsized returns are impossible, however a lack of volatility makes this an unappealing era for most speculative art investors.

Impressionism and Modernism

The “Impressionist and Modern” movement, generally considered to be from the late 19th century to the mid-20th century, is similar to Old Masters in that it is a mature market with extensive scholarship and a very well documented transaction history that often dates back more than a century. There is undoubtedly continued demand for Impressionist and Modern works. In fact, five of the ten highest prices ever reached for a single work have been from this era, having been sold for more than $990 million cumulatively. It offers higher upside and higher risk than Old Masters, but overall, the return profile of assets from this era is more conservative than more Modern work.

Post-War and Contemporary

This is a very different market to that of Old Masters or Modernism/Impressionism. Many of the astounding prices that are often associated with the art market come from this era. Post-War and Contemporary art is an umbrella term for predominantly American art of the Pop, Abstract Expressionist and Contemporary movements that followed the Second World War and continues today. The real turning point in the Post-War and Contemporary market was the infamous Scull auction at Sotheby’s in 1973. Robert Scull, a taxicab entrepreneur, had purchased hundreds of then-contemporary works, for what was at the time between $1,000 and $2,000 per painting, and sold fifty of them for a total of $2.2 million. The astronomical prices and performative nature of auctions today are downstream effects of the success of the Scull auction, which commercialized the “art world” and transformed it into the “art market.” As contemporary art continues to be produced, it is probably the least understood era. It also continues to have a primary market, thus creating opportunities for rapid appreciation, and fueling the speculation that has occurred in the art market for the last several decades.

Historical Performance

As you can see from the following graph, the Mei-Moses Art Indices show that both the Post-War & Contemporary Art Index and the Works of Art Index have outperformed the S&P 500 since 1995, while the Old Masters Index and Impressionist Index have not. This is why Vincent focuses on investing in Post-War and Contemporary Art.

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