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Art Market Watch

HOW TO SURVIVE THE COMING ART MARKET CRASH

by Charlie Finch
 
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The problem with buying fine art is that, unlike short selling on the regular market, you cannot really make money by betting that the value of fine art will fall in the future. Adam Davidson, of NPR's Planet Money, pointed out the obvious in last Sunday's New York Times Magazine: the blue chip art market has no resale possibilities, because that market is about the alpha wolf signifiers of its wealthy (and mortal) collectors, not true exchange.

But, should the high-end market collapse, and the kind of transparent real market conditions which I have been advocating in this space for 15 years emerge, short and long selling ("puts" and "calls") become a possibility. A collector (or better yet, the auction houses) taking a chance on a suddenly devalued Warhol, after following the tide of valuations on one of Artnet's brand new indices, could sell options to other collectors on the future performance of said Warhol. For an advance premium, buyers of these options could collect on what would not just be one piece put probably a  basket of Warhols, by betting on the future index value of said works at a given date (hmmm, Artnet itself might try it).

This strategy would be more optimal for a Dana Schutz or an Adam Pendleton or a Dustin Yellin, in that galleries themselves, temporarily unable to raise cash in a crash environment by either selling or borrowing against inventory, could sell such options themselves to collectors, hopefully giving the artists in play a slice of the profits. This is a foolproof way, as well, to keep interest in emerging art stars alive during a severe down cycle.

And the best thing (for me, at least) is that, with collectors, auction houses and galleries forced into a true speculative market, naturally, our politicians will enact regulation to monitor this promising market and maybe even require auction houses to disclose buyers, sellers and the real competition of "capitalism" to us poor art reporters. Soooo, let's get crashin'.


CHARLIE FINCH is co-author of Most Art Sucks: Five Years of Coagula (Smart Art Press).


 



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