As this past April 15th rolled around, I was faced with the yearly task of funding my Keogh retirement plan. I often buy mutual funds. One year I might pick a high-tech fund, the next a basket of retail stocks. This year I invested in health care. As any stock market analyst will tell you, once you’ve established your time frame, the next step is to diversify your assets. Buying a quality mutual fund allows you to diminish your risks -- one hopes that companies that perform poorly are offset by those that increase in value. While mutual fund returns are rarely spectacular, over the long haul, most tend to outpace inflation, which is all you’re trying to accomplish if you have a conservative retirement plan.

While contemplating which fund to buy, it occurred to me that if I had a created my own personal mutual fund for blue-chip art, I would have been far ahead of the game. I never pursued this strategy because prior to 2006, it made more sense for me to buy art and sell it as quickly as I could. You made more money by reinvesting than holding. I earned a nice living trading the works of my favorite artists: Andy Warhol, Joseph Cornell, John Chamberlain and Ed Ruscha.

But with the May 2006 auctions, those days began to vanish for me. Little was left to buy by any of these artists for under $200,000 that represented good value. Currently, with the least expensive mini-Chamberlain sculpture priced at $225,000, Warhol paintings from his insignificant "Toys" series going for over $200,000, mediocre Cornell boxes having achieved a $300,000 foundation, and Ruscha’s semi-important "Stencil Letter" (not "Ribbon Letter") drawings averaging $250,000, I realized I needed a new plan.

As a private dealer, you obviously want to buy art that you’d enjoy living with that’s also underpriced. Even if your picks don’t appreciate as much as you thought they would, at least you get stuck with paintings that bring you pleasure. That’s how I always felt about the artists mentioned above, which made it hard to part with their works when it was time to sell. But as the collector Rick Dirickson once told me, "You’re in the moving business, not the storage business." With the value of art seeming to double with each round of auctions, the pressure to cash out felt like being squeezed by a python.

Since little "name" art felt undervalued, I turned my attention to brokering deals -- not as lucrative as owning inventory but far less risky. Still, I wanted to buy a few things that I thought, like mutual funds, would go up gradually over a period of time. With a modest $50,000 to invest, I decided I would create my own mutual fund for art and vest it with works in the $5,000-$10,000 range.

Oddly enough, what triggered my thinking about what to buy was the work of a Western "cowboy" artist. About a year ago, I was in Arroyo Designs, a furniture shop in Tucson that specializes in handcrafted mesquite tables and chairs. Ringing the walls was a group of six plein-air paintings by Bill Anton. His rugged Arizona landscapes struck me as being nothing out of the ordinary. Instead, it was about how they were painted. A mesa’s red rocks glowed, as if the light source came from within. A sunset captured the fleeting moment that illuminated a distant mountain range and "called" it forward. A desert storm darkened the sky in the immediate foreground, while patches of blue stealthily crept up from behind. I left Arroyo Designs feeling refreshed. More important, I got emotionally involved with the pictures -- which convinced me I should buy one.

Over time, I established a relationship with the artist. I grew comfortable with the work and commissioned a small 12 x 16 in. painting for $5,000 -- the first picture to go into my portfolio. I was thrilled that Anton agreed to paint it in between working on his large-scale canvases. My investment logic was that here was an established painter, considered one of the best of his genre, who was auctionable -- his work comes up regularly at Coeur d’Alene Art Auction in Reno -- and has sold for more than $89,000. Yet, you could buy a small painting for only five grand. Compare that to some of the absurdly priced hot young contemporary painters, such as Barnaby Furnas, Jonathan Meese and Dana Schutz, who can’t paint nearly as well.

Another artist I’ve included in my portfolio is the young South African photographer Pieter Hugo. Last year at Art Chicago, I walked into the Yossi Milo Gallery booth and was struck by a 68 x 68 in. color photograph of a Nigerian man, standing in the middle of a road, holding the heavy chain of what appeared to be the ugliest dog I had ever seen. Upon closer inspection, it turned out to be a muzzled hyena! The quality of light in the photo, combined with the exotic nature of the subject matter, and its large scale, made an impression on me. I inquired as to the price of Mallam Galadima Ahmadu with Jamis and was told $16,000. While I was tempted, I talked myself down by rationalizing that I didn’t deal in photography.

Recently, while looking at art books at Moe’s in Berkeley, I came across a new publication on the work of Pieter Hugo, The Hyena & Other Men. I was stunned -- the artist had made it. A call to the Milo gallery revealed his first one-person show in New York garnered reviews from the New York Times, the New Yorker and the Washington Post. Not only that, but the same photo I had fallen in love with was now up to $22,000. Although I was disappointed that I hadn’t bought earlier, I knew it was always better to spend a little more and know the artist was on his way, rather than roll the dice and buy at the first opportunity, when you usually crap out.

Mallam Galadima Ahmadu with Jamis ultimately proved to be too large for my apartment. Instead, I bought a different photograph from the series, Abdullahi Mohammed with Mainasar, a 44 x 44 in. print, in an edition of nine, for $9,500. The day after buying it, I noticed a Hugo photo on the cover of Juxtapoz magazine, which I took as a good omen.

I continued to make small purchases. One was a painting by the New York abstractionist David Row. Like the musician Bruce Springsteen, who’s often described as the last of the great rock & roll "true believers," the same can be said about Row’s faith in abstract painting. Recalling Mark Rothko’s spiritual quest and Franz Kline’s raw power, Row creates paintings that invite the viewer in and hopefully alter his or her emotional state. 

While his work has been capably represented by the Von Lintel Gallery in New York, I often sensed he was destined for bigger things. Early in his career, Row was handled by the venerable Andre Emmerich Gallery. He even sold a number of paintings to the legendary dealer and collector Thomas Ammann. Call it a gut level reaction, but I think David Row is "due." At $10,000 for an 18 x 24 in. canvas, his work represents great value.

My purchase of a Chuck Arnoldi painting was triggered by his recent show at the Frederick R. Weisman Museum of Art at Pepperdine University in Malibu. The museum exhibited Arnoldi’s so-called "Wood" paintings, which is perhaps the acme of his oeuvre. Arnoldi received attention early in his career when he joined together eucalyptus branches and slathered them with colorful paint. He progressed to laminated sheets of plywood that formed a "canvas," then used a chain saw to carve deep lines into its surface, giving new meaning to the term "action painting." Sometimes, Arnoldi cut out actual chunks of painted wood, which he then nailed onto other paintings. The work’s brutality wrestled with its elegance, creating a remarkable tension. I decided to purchase a 22 x 30 in. painting from this series.

On a pure investment level, acquiring an early Chuck Arnoldi painting makes sense. Just like the stock market, which prices in the future value of companies, you have to look down the road with an artist, too. Arnoldi, who’s now in his 60s, has produced a 40-year trove of work. You sense it’s only a matter of time until the greater art market realizes there’s an opportunity. Basically, he’s undervalued. Small paintings start at $7,500 and major works jump to around $45,000. By New York standards, this is beyond reasonable, especially for an artist with a long track record. With a large monograph in the works, Arnoldi’s finally going to get some promotion.

Daniel Douke, another Southern Californian veteran, falls into the same category as Arnoldi, with a long career, a recent museum show with a catalogue (the Luckman Gallery at Cal State L.A.), and a diverse, innovative body of work. While we all know that context is everything in the art market, I sense that things are about to change for Douke in a big way. After years of being O.K. Harris’s best kept secret, Douke has recently signed on with the Thomas Levy Gallery in Hamburg (which also represents Mel Ramos). Douke has a show coming up with the new Peter Mendenhall Gallery in Los Angeles. Mendenhall has made a serious commitment to Douke by hiring John Yau to write the essay for a forthcoming catalogue. And still more European representation may be in the works.

The painting that I bought from Douke is one of his "boxes." They’re shaped canvases that project out from the wall. Painted on all four sides as well as the front, they faithfully reproduce anything from an Apple computer box to a freestanding Penske box for motor oil. Douke further transforms the work by painting the abrasions, tears, and smudges that often mar a cardboard box’s surface. Like all good art, Douke’s computer boxes reflect their times and prompt you to see your surroundings with fresh eyes. Updating Warhol’s Brillo Boxes always felt like risky business to me, but Douke pulls it off.

Recently, I came across an old 1960s toy model kit of a Tyrannosaurus Rex. The box illustration depicts a T. Rex prowling through a prehistoric landscape populated with other marauding dinosaurs. I commissioned Douke to paint the box (a 16 x 16 x 4 work costs $10,000). The genius of his art is how its material illusion has become the logical development to Photorealism. When you buy the innovators, you usually make money.

Finally, I bought a Tony Fitzpatrick collage. He’s currently exhibiting at the Chicago Cultural Center and has become the city’s unofficial artist laureate. Fitzpatrick continues to develop a personal iconography, utilizing bits of urban flotsam and jetsam, that combines the mystery of a Joseph Cornell with the soul of a Philip Guston. What’s remarkable is that he could go down in history as the first artist to make it purely based on his works on paper, a testament to the imagery’s tattoo-like indelible quality.

Part of what make the collages an attractive investment is the artist himself. Fitzpatrick has a host of loyal collectors who not only respond to his art, but also want to participate in his "scene." While there’s no rule that an artist has to be charismatic to succeed, Tony’s bad boy reputation, having been honed in the ring as a former professional heavyweight boxer, has become part of the work’s mystique. Spending time with him is a vicarious thrill, both authentic and provocative. 

Once the $50,000 is spent, my intention is to hang the art, enjoy it and keep it for a minimum five years (preferably ten). By diversifying -- contemporary art, Western art, painting, photography, collage -- I’ve created a portfolio that hedges my bets. The key is having the discipline not to sell the minute I detect a work has appreciated. Realistically, I don’t expect every artist I pick to pan out. But even if only one or two artists in the fund make it big, its value will far exceed $50,000. And if it doesn’t, as the French say, "Tant pis."

RICHARD POLSKY is the author of, I Bought Andy Warhol. Comments can be directed to Polskyart@msn.com