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12/01/10 - Art as an Investment? Frank weighs in at Art Basel

With Miami Beach’s annual event Art Basel upcoming, Investor Solutions founder Frank Armstrong weighed in on artwork as an investment.

Armstrong noted that while art provides enjoyment and its purchase can offer a psychological reward, it likely is not a wise investment. Art is not diversifiable or liquid, and requires the cost of insurance and maintenance.

While there is art that sells for millions on auction, most of that art is far too expensive for most to afford and the majority of other art will only lose value. It is also a very trendy industry, meaning today’s valuable art could easily be passé tomorrow, and most of us can’t tell the difference anyway.

Furthermore, the high transaction costs reduce potential investment returns and the various “consultants” are essentially glorified salesmen working on commission who may not be objective. Artworks obviously have great aesthetic value, but as an investment, they are generally unwise.

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