What is an art
Investing in art is often confused with art collecting. An art
investor acquires art primarily for the purpose reselling the
work in the future for profit. An art investor may never sell
the work, but that was not the original intention. An art
collector acquires art for the enjoyment of its aesthetic or
intellectual pleasure. The art collector may eventually sell a
work, but that was not the original intention.
An art investor may also be confused with a dealer. Both the
investor and the dealer intend to sell their acquired art, but
the time frame for each is quite different. The art investor
thinks in terms of years, even decades while the art dealer’s
frame of reference is much shorter. The art dealer hopes to turn
over his art in a very short time -- sometimes in days or weeks.
The art investor normally purchases the art from some
intermediary such as a dealer or an auction, whereas the art
dealer normally deals directly with owners of art. Dealers
usually generate most of their income from their art whereas an
investor does not.
An art speculator purchases the art for much for the same
reasons as the art investor. The fundamental difference is the
kind of art each purchases. The investor purchases investment
grade art, while the speculator purchases art that is
anticipated to become investment grade art. Thus, speculators
will be much more likely to purchase contemporary art as opposed
to the investor, who seeks art from artists who have established
reputations, usually historic reputations.
Investment grade art is always high-priced so art investors are
always affluent. An art collector can purchase art for virtually
any amount. Even people with very moderate incomes can be
collectors. Dealers require capital to finance their inventory.
Often, dealer’s inventories are funded by others, including art
investors, who may be clients of the dealer. Depending on the
art in which they deal, an art collector may be very affluent or
An art speculator requires some affluence, because even
speculative art can be costly and since the goal is long term
investment, no income will be generated in the short term.
It has been estimated that only one in fifty adults ever
purchases an original piece of art. Perhaps, half of these
people may be called “collectors.” Even though art collecting is
an activity of relatively few people, American art collectors
could be numbered in the thousands whereas the number of true
art investors is probably in the hundreds. How many people can
afford to buy a painting for a million dollars and put it in a
vault for forty years?