Theory of errors: error Mei-Мозеса
ARTinvestment.RU   05 февраля 2020

In the section "Theory of delusion" from now on, we will eliminate the myths that successfully disguised as fact and negative influence on the development of the art market and the investment climate. First on the operating table lies Mei & Moses All Art Index

In December 2002, American economists Michael Moses and David may have written research , article in the publication of the American Economic Review entitled "Art as an investment and the lack of effectiveness of masterpieces." After analyzing auction data from 1850, the authors came to two main conclusions:

1. To use art as a financial investment instrument market, there are enough data to analyze — should only translate "the language of art" in the clear investor language;

2. Masterpieces of classical art known to the market such as Old Masters, could work in favor of the investor poeffektivnee, but they are well balance portfolio comprising, say, post-war and contemporary art.

Among other things, the article contained one careless phrase that plunged to the delight of some readers and seriously puzzled others: "Over the past 50 years the average return on investment in the arts was 12.6 %, while the yield of S&P500 — 11.8 per cent". "thrown" into the haystack, match, quote instantly sold by the media, triggering a global conflagration. These data referred to everything from art-дилеров in private conversations with collectors to auction houses press-релизах, addressed to the buyers@the semicolon from specialized publications about art to the relevant business-дайджестов. In darkness, no one to look did not dare, and in the minds of collectors firmly settled next message: art is more than 12 % annual returns as an investment more attractive than stocks on the stock market.

Proposed to figure out where in the absolutely true (in the original) the phrase stuck wrong interpretation:

  • In-первых, the sample for such a long period is incorrect in relation to the art market. Art-рынок modern form emerged only in the mid-1980-х years. When Mei and Moses started your own website with customizable indices, meticulous market researchers chose the period 1984-2014 and saw a figure of 7.6 %, slightly less attractive, but the most truthful.
  • the Phrase "average yield" (the authors mean CAGR, compound annual growth rate) loosely quoting has changed to "profit" (which investors interpreted as ROI, return on investment). Accordingly, they calculated that 12.6 per cent or 7.6 % — rate after "cleaning" the amount of sales from negative cash flow: maintenance costs, fees for transactions and other. But no: from this value still have to subtract 1-3% for competent management of the collection — without which the art object is to delay investment portfolio dead weight.
  • And who ever said that the comparison with the S&P500 (a share index of the five hundred largest companies by capitalization, traded on the new-йоркской stock exchange) — is an indicator which is equal? The volatility of equities is much higher objects of art, besides 50 that over the last 30 years among the "five hundred" cleaned up more than half of the companies. While changes in TOP-500 the most expensive artists were not more than 10% of participants: this ranking is more stable in names — and, therefore, in the figures.
  • the Fourth paragraph, towhich came first Anders Peterson from ArtTactic: why we put the data of S&P500 on all the artists market with the auction sales (15 million) and not, say, TOP-100? Said — is made: studies Anders together with Artnet in the report Deloitte Art & Finance Report 2019 show that the CAGR of the first hundred of the best-selling artists in the period from 2000 to the end of 2018 is 8 % (and the S&P500 3 %).

the Findings from the AI: certainly, the 8 % CAGR in TOP-100 artists and about 7 % on average in the market sound less appealing than 12.6 per cent, but more importantly to inform the investor at the entrance, than to have his dissatisfaction with the process or the output. Moreover, any asset that has a projected ROI of over 5 %, but confirmed a clear dimension that is perceived by the investor is positive and provides an opportunity for further discussion. Main — should not assume that management costs collection will eat 3% per year from the expected 8 % increase in cost. Proper management of collection can greatly increase the value of meetings and individual work — just not all the owners of the number of "averages on the market" realize this.

Started the index in 2001 with a database of 4.5 million repeat sales, Michael Moses and David may by 2016 have brought the base up to 45 thousand and sold the mechanics of the Sotheby's index for undisclosed amount. Now the pair is inseparable economists preparing new tools for investment analysis of art objects that should appear on the updated the website in 2020. Special interview with Michael Moses for AI expect soon on our website.



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Индексы арт-рынка ARTIMX
Индекс
Дата
Знач.
Изм.
ARTIMX
13/07
1502.83
+4,31%
ARTIMX-RUS
13/07
1502.83
+4,31%
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