Art as an Investment

Art as an Investmentby Dr. Steve Sjuggerud, Investment U Advisory Panelist
Monday, October 28, 2002: Issue #184

The numbers in today’s headline are true. Stocks fell 27% while this investment rose an extraordinary 256%.

No, I’m not talking about our current bear market. I’m talking about 1966-1975 the LAST major bear market, which also happened to include the Vietnam War. But this remarkable performance in relation to stocks was not an isolated case…

During the Korean War period (1949-1954), this investment rose 108%, while stocks “only” rose 67%. And in World War II, this investment class beat stocks again.

It has beaten stocks in times of war and in times of recession in the past. And it’s doing so again.

While stocks have lost a third of their values or more since mid-2000, this investment has only fallen by 8%.

It’s not in just bear markets where this works. It’s ALL markets. Since 1960, both stocks AND this investment have grown at 10%+ a year. So what is it? Believe it or not, I’m talking about art as an investment.

Why Fine Art as an Investment Holds Up Well In Bad Times

Contrary to popular belief, art does not tank in value during times of stock market weakness or war. Fine art’s 256% rise in the last great bear market (1966-1975), during the Vietnam War, is a testament to that. According to an exhaustive study by NYU professors Jianping Mei and Michael Moses – using figures from the 27 recessions dating all the way back to 1875 – fine art investments hold up very well in bad times. It is a good store of value.