In his book, Boombustology, Vikram Mansharamani reminds us that when markets get bubbly, money starts flowing in Picassos, Warhols and the like. Normal folks on main street are hawking cheap paintings at garage sales to fill their gas tanks. But the stock market has doubled in that last two years and Kelly Crow reports, ‘The Art Market Snaps Back.’ In the Friday Journal feature, Crows writes that the market will be tested as $1 billion of Impressionist, modern and contemporary works go to auction next week.
Crow writes that some buyers are shy this time, having been burned just a couple years ago.
But plenty more, flush and giddy, are just now joining in and paying little attention to prices. As a result, the art market’s current state, while off from peak levels, still feels slightly breathless. Record prices are being paid for individual favorites like Pablo Picasso, whose “Nude, Green Leaves and Bust” sold at Christie’s last May for $106.5 million, the most ever paid at auction for a work of art.
We’ve seen this all before. In his book, Mansharamani provides an interesting sidebar with a chart of Sotheby’s common stock going back to mid-1988, just before the final run-up of the Japanese stock market. The stock price for the auction house peaked as the Nikkei was peaking. It ran to higher highs as the Internet bubble was cresting. Sotheby’s stock price ran to an all-time high of $58 with US house prices in 2006/7. The subsequent financial meltdown sent the stock plunging to the $7 range in early 2009.
Now, after the Federal Reserve’s QE1 and 2 have fueled U.S. stock and commodity price runs ups, Sotheby’s stock ended this week at $50.52.
“The speed of the art market’s recovery is astonishing, but it’s a differently revived market,” said Michael Plummer, a principal of Artvest. “The lesson of the crash was to do your homework. Collectors feel wiser for the experience.”
Yep, it’s always different this time.