Art Investment: “Is he dead yet?”

For nearly three decades I have been entertained by the art business but only because the closest of friends called Norman Adams has been buried in its politics, all his life.

Over the decades the first question experts of art keep asking when dealing with the value of an artist's works: Is he dead yet?

Being exposed to the politics of art... certain things keep amazing me. Two are outstanding.

1: How can buying art from a gallery be an investment?

2: How can  limited edition prints with high numbers, >300, ever be an investment?

ONE:  It does not take a genius, like Einstein, to figure out the mathematics of investing in art. 

When it comes to buying art, or prints, from a gallery, the mathematics of the investment follows the Quadruple Factor: The price of the art has to quadruple before art/prints can be considered an investment. And the rule that then haunts this quadruple-factor: when the price of a piece of art/print quadruples then Pavlov’s Law makes forgeries and fakes abound so that the original artwork is taken out of the picture.. so that at least 80% of all originals in Museums must be -- according to Pavlov’s Law -- fakes or forgeries. 

TWO: But far more with prints than original art, forgeries and fakes start to abound when the prices of prints start to quadruple. There have been books written about all the rackets that feed off Salvador Dali prints. The same rackets seem to haunts Leroy Neiman prints ... and any other type of big-numbered (> 300) prints that have supposedly quadrupled in price.

Quadruple factor: When a gallery sells an original piece of art it usually sells it for double the price the artist gets. So when you buy an original from a gallery you are paying probably twice as much as it is worth because 50% of the money goes to the gallery. So the price of the painting has to double before it becomes an investment.

Let us say that the price of the painting has doubled and you want to sell it. As a rule you have to find a gallery that will sell it for you, usually for 50% commission. So if the painting sells for double the price you paid for it you only get back what you paid for it – when the price of the painting has, in fact, QUADRUPLED.

If you pay $10,000 for a painting in a gallery the price of the painting was worth $5000 -- what the artist got paid for it. When the painting quadruples its value to $20,000 you break even: The gallery sells it for $20,000 of which the gallery gets 50%, $10,000 which leaves you with $10,000 -- the price you paid for it.

So for this art investment the value of the painting has quadrupled -- from $5000 to $20,000 -- and the “gallery” has made $15,000 -- 300% the value of the original painting so you can break even.

The “Is he dead?” factor.

It has always amazed me when people pay sometimes thousands of dollars for a print -- like L/E limited edition and S/N signed and big numbered (>250) prints -- of an artist and never even consider paying $50-$100 for one of the artists sketches/drawings, for an artist’s doodling.

First: a sketch or drawing is rarely party to the quadruple-factor. Secondly, doodling/sketches are rarely forged.

The story behind an artist’s death.
 

Before an artist dies there is a big difference between his original paintings, his illustrations and then his sketches.

For an established artist, who is still alive, the value of his originals are related to its size. Larger pieces as a rule sell for more than the smaller paintings. Another rule is that illustrations sell for a fraction of the price of “gallery paintings.” And then sketches are as a rule relatively worthless. While the artist is alive there is a huge gap between these three types of art. An illustrator would be considered a criminal if he tried to sell an illustration as an original piece of art... and he would be considered an even a bigger criminal if he tried to sell a sketch as an illustration let alone an original piece of art.

With death the picture/economics and especially the language changes, radically.

Once an artist dies the differences between an original painting, illustration and sketch mostly vanish. The once famous and most mostly forgotten illustrator and Western Artist Frank McCarthy died in 2002. The same sketches that were relatively worthless while he was alive are now selling for thousands of dollars at auctions without a word about the fact that they are sketches. This would have been immoral if not unethical if not outright impossible while he was alive.

AGAIN: It amazes me that people will pay thousands of dollars for a relatively worthless print in a fancy frame and yet they would not consider spending a cent for an artist’s sketch.

While an established artist is alive his sketches can often be purchased next to nothing. With his death they literally turn into gold-mines. The Economics:

Dead or alive: original art has to quadruple before the investor can start to realize a profit ... but then forgeries start to surface to more than likely kill the prices.

With doodlings, drawings and sketches – they cost next to nothing when the artist is alive and the instant the artist dies the distinction between sketches and originals and illustrations start to vanish. 

When an established artist dies his artwork usually disappears from the market into the control of millionaires and billionaires making the originals relatively unavailable to buy by the average invester/buyer. 

Because the distinction between paintings, illustrations, sketches disappear after an artist dies the sketches the artist sold for maybe $100, while he was alive, suddenly are worth thousands ... and the owner of such sketches would be foolish to sell these sketches for thousands because each year they increase in value to be worth tens of thousands.

Norman Rockwell’s sketches are going for tens of thousands of dollars while his illustrations are selling for up to $15 million (November 2006) ... and the sketches of Gustav Klimt are selling for hundreds of thousands .. while his originals are selling for up to hundreds of millions(November 2006).

At the same time, after an established artist dies, his originals will rarely surface and the best, most impressive, paintings an artist ever did will vanish into the control of lawyers and their billionaires, and otherwise museums.

ART INVESTMENT

 If an average person spent $50 dollars a month buying the sketches of an  artist established in History, while he is alive, like James Bama, Don Crowley...Norman Adams, then after just one or two years he would have invested enough to retire in luxury from the pure profits of those sketches when the artist dies.

While the print owner is discovering that fakes and con artists make his big-numbered limited print worth less than fancy frame, the owner of sketches, drawings, could easily be realizing 500% to maybe 10,000++ % or more in profit.

There is a phenomenal advantage to buying the sketches of established artists while they are alive. Not only are the prices cheap -- compared to the price of fancy prints, let alone original paintings --  but for the low price of one of these sketches the artist will more than likely sign it for free IF HE IS ALIVE -- a signature that costs nothing and yet the signature on a sketch could well make the difference between a  200% profit and a 10000++% profit when it is finally sold.

While the investor who spend a few hundred dollars on sketches is looking at 100% to + 10000% profits the print owner/investor who spend thousands and thousands on prints in fancy frames is just finding out, that because of the quadruple-factor and fakes, the fancy frames are worth more then the prints... fakes like the ones that made “con artists” and Salvador Dali and LeRoy Neiman and Chagall .... millions if not billions of dollars at the expense of thousands and thousands of duped “investors”... who, even if they do have an authentic “original print,” will have to spend a small fortune paying someone to prove it.