The cataclysmic events that hit New York City and Washington, D.C., certainly raised a lot of potential issues for the art market. Initially, the feeling was, "Who can think about collecting art at a time like this?" But as the smoke and rubble cleared, eventually the financial markets opened and America got back to business.
As an art dealer, my priority was to make some sort of determination as to how the art market would perform this season. In order to form a consensus, I queried a number of well-known dealers, high profile collectors, and auction house experts. As you might guess, the predictions were all over the place. The one thing that was unanimous was that assuming the November auctions had fresh, good quality material, the better works would do well and the lesser works wouldn't -- a collective opinion that has always been true in both good and bad times. In other words, I learned absolutely nothing from making all of those phone calls.
Thus, I realized that I was on my own as far as deciding how to play it. After much thought, I concluded that I could give myself a number of logical reasons why the art market would hold up and an equal number of logical reasons why it would not. However, the art market is not about logic -- it is about intuitive feeling.
Investors are taught that if they want to make prudent decisions, they have to remain unemotional. One buys stocks and bonds based on a set of prevailing statistics. But art is different -- there is always a heavy emotional factor. Collectors buy paintings because the art means something to them. Sure, they are aware of what they are spending and they are equally cognizant of how similar works have performed at auction. Yet, after they reflect on a potential purchase, the financial concerns are usually put aside and the decision to buy is based on the pleasure they hope to receive from the work.
Dealers, on the other hand, buy inventory based on current market conditions. They need to remain a little more detached from the art. They constantly ask themselves questions like, "Who can I sell this to?", "If I can't sell it privately, how will it do at auction?" and "If I get stuck with it, how do I feel about living with it?" It is this last response that probably matters the most -- and that's where logic falls apart.
I can remember an experience years ago where I had enough money available to buy either a small Joseph Cornell box or a small Roy Lichtenstein painting. Both works were more or less of equal value -- the Cornell was a small "Aviary" box (a box containing a bird cut-out) and the Lichtenstein was a small "Modern" painting (a painting with an Art Deco abstract pattern).
Good business sense dictated that I buy the Lichtenstein. The main reason why was that Lichtenstein had a bigger reputation and a deeper market, which meant it would be more liquid when it came time to sell. Also, since there was more demand for his work than Cornell's assemblages, chances were that it had greater potential for appreciation.
Yet, defying all logic, I bought the Cornell. The bottom line was that I responded as a collector -- I simply wanted to live with it more than the Lichtenstein. I held the Cornell for four years and predictably, when it came time to sell, the Lichtenstein was worth more. While I had some regrets about not making the better financial decision, I balanced out those feelings with the knowledge that I got an awful lot of enjoyment out of living with the Cornell.
What all of this is leading up to is a look at how the psychology of collecting versus dealing will effect the November auctions. I've been told that all three major auction houses have particularly strong material coming up for sale. After some initial panic from September 11th's events, the vast majority of consignors decided to stay the course and not withdraw their property. The sales are going forward and they remain largely intact.
The next question becomes what should your strategy be if you are a consignor, collector or dealer? Let's start with the auction consignors. When you initially approach an auction house with your property, its staff generally reacts with wild enthusiasm. Seduction is the name of the game, and the houses will, within reason, tell you what you want to hear -- big estimates are the way to a seller's heart.
Let's say you agree to the estimate and sign a contract (the deadline is mid-September). Then it's time to wait until November -- and as we know, a lot can happen in two months. What seemed like a sure bet, after last May's strong sales, now could go either way.
The savvy consignor knows that the key to selling at auction is to peg the work at an estimate that is respectful of the object, but not too high to scare off bidders. Regardless of the estimates that appear in the catalogues, once November rolls around, expect the auction houses to call all of their consignors and plead with them to lower their reserves. At least this time around, chances are most sellers will heed the auction houses' advice.
If you're a collector, there should be some decent opportunities. While most collectors are upset about seeing their stock portfolios go down dramatically, the sort of person who buys blue chip art isn't going to miss any meals. If they see a painting come up to auction that piques their interest, they're going to go after it -- but they're not going to overpay.
As recently as last May, the rule of thumb was that it didn't matter what you paid as long as the quality was high. Cases in point were the outrageous prices paid for Bruce Nauman's Henry Moore Bound to Fail ($9.9 million), Andy Warhol's Large Flowers ($8.4 million), and Jeff Koons' Michael Jackson and Bubbles ($5.6 million). It's highly unlikely that these works would attract anywhere near those prices this time around.
Dealers are hoping that an uncertain market will bring more pictures out in the open. The number of people who are under pressure to sell should increase in this current economy. The chief complaint of dealers has been their inability to find material. In a strong market, no one wants to sell for fear prices will go even higher.
However, what I am suggesting is that in this upcoming season, there may very well be a healthy balance between buyers and sellers. If that happens, it means that prices might be 10 percent to 20 percent lower than in May, but stabilize at a level that is still historically high.
The last issue is which artists will do well and which won't. Among the artists who may be on shaky financial ground are the photographers who produce large-scale color works. This segment of the market has enjoyed one of the biggest run-ups in prices. Personally, I think Andreas Gursky is a terrific artist -- it's amazing how much his photographs capture all of the richness of paintings while retaining the integrity of their medium -- but $270,000 for an edition of six seems steep (Prada II, Christie's Nov. 2000). Also, some of the mid-career painters, such as John Currin, Elizabeth Peyton and Lisa Yuskavage might have a tough time maintaining their lofty prices. Yet, some of their colleagues, like Cecily Brown and Jenny Saville, should maintain their high prices -- they are simply superior painters.
Jean-Michel Basquiat, who's had an amazing surge in prices, will probably hold up. The reason why is because there is a group of international dealers who are holding a lot of his works and who are likely to support his prices at auction.
More conservative artists, such as Alexander Calder, David Hockney and Richard Diebenkorn, will also do fine. All three artists are solid from a historic standpoint and have traditionally had more buyers than sellers. Ditto for works from the 1960s by Pop artists including Tom Wesselmann, Roy Lichtenstein and James Rosenquist.
The top Abstract Expressionists are a sure thing, although Mark Rothko has become too expensive too quickly. The Minimalists, especially Donald Judd and Brice Marden, will come through this season in good shape. Finally, those who own some of the major Europeans, such as Gerhard Richter, Francis Bacon and Lucian Freud, have nothing to worry about.
The wild card, as usual, is Andy Warhol. In all fairness, I have to disclose that I own a small late Self-Portrait, so that colors my analysis. However, as the most universally traded artist, Warhol's prices will go a long way toward determining the public's perception of the success of the November sales.
You have to believe that any major works from the 1960s are going to find buyers still willing to pay big prices. On the side of caution, you just hope the auction houses haven't given these works estimates that exceed last May's colossal Warhol prices. As the supply of 1960s material becomes exhausted and expensive, many collectors have been forced to turn to the 1970s and 1980s.
Dealers have been saying for years that the late work should not be overlooked. Only now are collectors, curators, and critics re-evaluating the notion that Warhol did nothing of interest since the "Mao" works of 1973. Suddenly, with more exposure, such as the fine shows that the Gagosian Gallery has done of the lesser known series (such as the "Camouflage' and the "Rorschach" paintings), the art world is beginning to realize that Warhol was a step ahead of his audience.
No one really knows what will happen in November. A lot depends on the mood of America and Europe, the stock market, and the real estate market. But one thing is for certain, the art market will continue to fascinate and for that reason is likely to see few defectors.