Why Use These New Financial Tools?

by Kevin Radell

Mingling with tastemakers and those "in-the-know" at auctions and art openings, a new breed of art buyers wields calculators, pie-charts and price indices so as not to miss a bargain. These invaders underscore the art market's movement toward liquidity, transparency and greater efficiency.

For good reasons, art continues to build its base of believers among financial engineers and investors, undeterred by future market corrections expected to occur. The pioneering work of Professors Michael Moses and Jianping Mei, among others, provides statistical evidence that fine art has not only historically maintained its value as an asset category, but has held its own for half a century when compared to traditional investments. The anemic performance of stocks and bonds in recent memory, art's tangible nature and its "dividends" of lifestyle enhancement, complete the formula for long-term popularity of this new darling of portfolio diversifiers.

artnet embraces the New World with an initial suite of financial products for the savvy investor, venturous curator and those in between. Sensitive to the demands of a visual industry wherein knowledge, taste and judgment necessarily reign, artnet's reports and indices apply statistical methods to the vast reservoir of auction data within the renowned artnet Price Database.

The 2.9 million auction records in the artnet Price Database comprise the industry’s leading primary research source for auction estimates, certified appraisals, insurance policies and investment valuations. artnet's financial, technical and curatorial staff work with corporate and individual clients creatively to support a wide range of analytical projects involving individual artists, art movements and specific collections.

Similar to comparable real estate reports, artnet's Sales History Reports originated during the fall '04 auction season when they first appeared on Sothebys.com for each lot offered in the New York Sotheby's sales. The winning combination of visual and financial information related to similar auction transactions is easy to interpret and delivered in a timely and affordable manner, thereby assisting investors and collectors with valuation estimates for unique pieces.

The artnet liquidity reports address a key concern of investors in any asset category: the extent of market availability for exit strategies. Lot transactional data, sales volume, bought-in trends, price levels and auction estimates are portrayed graphically over time in formats that professional investors understand.

In an information age hungry for investment alternatives, artnet bridges the communication gap between fine art connoisseurs and financial minds. Therein lies the value of these new financial tools.

For more information, contact Sonja Sanne at ssanne@artnet.com or at 212-497-9700 ext. 383