Investing in Oils

Investing in Oils

A study shows that investing in paintings can be unpredictable indeed

Oil paintings can be a good investment – problem is, they can also be a rotten investment. Knowing the difference means knowing a lot about what makes buyers, critics, and auction houses tick. And even then, the market can be unpredictable.

In Art Auction Trends, James Coleman compared the investment value of selected artists’ works to the consumer price index and the Standard & Poor’s 500. Between 1971 and 1991, 68 percent of the artists studied by Coleman kept pace with inflation and 54 percent outperformed the S&P 500. Sounds good – but how do you tell if your favorite artist is in the winner’s circle?

It’s hard. Consider the work of the highly regarded American impressionist Mary Cassatt. Her work was a good investment over the long run, but its value declined steadily throughout the 1970s. Despite a brief spike in 1981, the median price for Cassatt’s watercolors and drawings by 1984 had dropped well below the increase in the consumer price index and the stock market, and almost below the median price for her work sold in 1971.

Collectible Locks. Just collect what you like! Illustration: Megan Jorgensen (Elena)

Nonetheless, those who stuck to their guns made a killing when the median price for her work skyrocketed four years later, surpassing the increase in the CPI and nearly tripling the rate for the S&P 500.

How does one find stability in such a market? A painting’s ability to survive in a recession without a big price drop is a good sign of stability.

Better yet, just collect what you like. That way, you can ride out the bad times in good company.