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Art Shop


Courtesy of qthomasbower

Courtesy of qthomasbower

Celebrities and social climbers collect Warhol but what did Warhol collect?

“Keep the coffee tins—aluminum might go up!”

“Keep the batteries—copper might go up!”

According to Bob Colacello who worked with Warhol as the editor of Interview magazine and as his unofficial sales agent, “Warhol was not a collector; he was a hoarder.”

Back then a Warhol portrait started at $25,000. The key was to lure socialites to commission them. Trouble was, Warhol was not a social success. Cue Colacello who was a right charmer. “Pretty society women wanted their portraits done but it was their stockbroker/private equity husbands who were going to pay, so Andy would tell me to play up my Republican side,” says Colacello.

It was society “walker” Jerome Zipkin who amped Warhol’s fortunes. He gave subscriptions to Interview to all of his ladies—party circuit regulars like Betsey Bloomingdale, Nan Kempner, and Carolyn Roehm. The magazine had switched from covering film criticism to doing Q&As with famous people. Society types tripped over each other to land on the magazine’s cover. Colacello pocketed a small commission for each portrait he sold. Once, when a client paid for her’s with a large, uncut Colombian emerald, instead of cash, Warhol offered Colacello his own portrait. “He told me he knocked $3,000 of the price,” says Colacello.

Despite Warhol’s tightfistedness, Colacello managed to amass a small collection of his work. “I wish I hadn’t sold because it kept going up in value. Still, it did buy a place in East Hampton.”

Today, buying a Warhol is like buying shares in Microsoft. Solid, not sexy. But that’s where the similarities end. Art investing is a high-stakes game. Many people think they can clean up but survivorship bias distorts market returns. For every Frank Auerbach painting bought for $1.1 million in 2005 and sold for $2.3 million in 2006, there are hundreds of artists whose careers die a silent death. We only ever hear about the winners.

Unlike the major stock markets, the art market is insular and lacks transparency. Amazon and eBay may sell fancy pictures but the real deals are made privately. Price manipulation is the name of the game because dealers are expected to nurture artists’ careers. To do so, collectors are discouraged from selling works in the open market, and if they do so, gallery owners will bid up prices to keep the mystique alive. Because buying art is aspirational, not selling at auction could be career-ending for an artist.

Liquidity is another issue. Even more than in real estate, sometimes there’s absolutely no demand for a work of art. Like other ‘alternative’ investments such as hedge funds, returns from art are all over the map. However, due to high transaction and commission costs, realistic net returns over a 5-year holding period hover between 1%-5%. Not great shakes.

So why invest in art? Well, it’s pretty. What you lose in financial return you potentially gain in everyday pleasure. It’s doubtful that gazing at your investment statement provides the same spiritual uplift. Being an art collector also raises your social capital. There are art openings, cocktail parties, meet-the-artist powwows and so forth. It’s a special club—particularly at the upper echelons—that provides a global passport to hobnobbing.

But if the art market is a little too rich for you, then follow Warhol and invest in physical commodities. Aluminum, copper, iron…demand is bound to pick up one day.



Photo courtesy of Jason Meredith

Photo courtesy of Jason Meredith

The dress was pink chiffon. Cotton candy pink. It was strapless, with a fitted bodice, nipped in tight at the waist, and the skirt a big cloud of translucent chiffon. I simply had to have it and price was no object. That evening, I tried it on again in my bedroom. Under the overhead lights, I noticed that the pink was faded and yellowed in certain spots. Looking at myself in the full-length mirror I had to admit that the huge volume of chiffon made me look even shorter than I was. Suddenly I realized I had neither the shoes, handbag or jewelry to match the dress. It also occurred to me, I would never, ever in this lifetime be invited to a cotillion, which is the only kind of event at which a 16-year old girl could wear this froth. Plus, even if I were invited to one, I had no boyfriend to take me. Shit.

What I didn’t know then and sort of know now is, before you go chasing after the ‘wow’ pieces, build a solid wardrobe of boring but hardworking staples like the little black dress. Things that will actually benefit you in the here and now, not in some fashion fantasy life.

Same goes for investing. Many so-called investors chase after the latest thing that some pundit is touting in the press, instead of concentrating their efforts on building a set of core holdings and then, if the urge continues, venturing beyond for some badaboom action.

Since most of us, including the pros, are terrible stock pickers, studies show that owning a basket of well-diversified equities, either directly or through ETFs, mutual or pooled funds is, over the long term, the best strategy.

Staying fully invested, even through downturns, has proven to be successful too. A recent study by  Bernstein Global Research looked at 1,000, 12-month periods from 1926 until 2013. Those investors who put all their eggs in the market at one time averaged returns of 12.2 percent, whereas those who bought in gradually made 8.1 percent. The worst performers were those who stayed in cash on the sidelines. They netted 4.1 percent.

If I were building a core fashion wardrobe it would look like this: Marlowe cashmere v-neck sweaters in white, oatmeal, black; Gucci or Chanel wool gardardine slacks in black, grey; Chanel little black dress; Akris white shirts; Repetto loafers, Prada sport shoes; Max Mara camel hair coat; Hermes Evelyne or Jypsiere bag; Cartier Tank Francaise watch; Cartier Love bracelet; Tiffany diamond ear studs; Tiffany Elsa Peretti Diamonds-by-the Yard pendant. Done!

If I were building a core investment portfolio it would look like this: Pipelines (Transcanada, InterPipeline); Consumer (P&G, Unilever); Financials (Scotia, TD, RBC); Industrials (Deere, Fluor, Dupont); Technology (Microsoft, Apple, Intel); Pharmaceuticals (Pfizer, J&J, Merck)…you get the idea.

Yes, they are boring but they spit out regular dividends, raise their dividends annually, and give upside potential on their common shares. Short of private placements or insider trading that’s the best deal in town given the amount of risk assumed.

Just like I leave room in my closet for a few sizzlers, I carve out a small percentage of my portfolio for excitement. So far my choices have always done well in the long-term but with lots of volatility in the short term.

It’s wise to remember the words of investor George Soros: “If investing is entertaining, if you’re having fun, you’re probably not making any money. Good investing is boring.”

I never wore the pink chiffon dress. The next day, overcome with buyer’s remorse, I went back to the vintage shop to return it. The manager put up a good fight but, in the end, she took it back. Feeling immense relief, I put the money back in my wallet and soon found some other stupid thing to buy.