Art Market Blog with Nicholas Forrest www.artmarketblog.com

Art Plus Wealthy Egotists Equaled Chaos - artmarketblog.com

The last post I wrote dealt with the reasons for the beginning art market crash in 1991 in which I said that I would continue with this topic for a few posts. The reason that I have focused so much on the events surrounding the collapse of the art market in 1991 is that many of the events that caused the collapse are extremely unlikely to re-occur. My aim is to show that the current art market is so different to the art market in 1991 that the comparisons that people are making between the art market then and the art market now are not relevant.

As I outlined in my last post, the main protagonists of the art market crash were the Japanese who at the time were riding on the back of a booming Japanese economy and had money to burn. A very limited understanding of the art market and an extremely narrow experience with western art combined with a hunger for acquiring goods that would increase their social status and display their wealth to the world led to a situation that would ultimately prove fatal for the art market boom. What the Japanese buyers wanted from the art they purchased was their photo in the newspaper and as much media attention as they could attract. In order to get this attention the Japanese buyers basically targeted works by the most famous western artists and were willing to pay what ever it took to get hold of these works. As a consequence of this narrow and irrational buying the Japanese buyers ended up paying way more than the works were worth. The high prices being paid by the Japanese gave created a false impression of the state art market which in turn gave people a false sense of security.

Because the main motive of many of the Japanese art collectors was to associate themselves with the famous western artists they were far more likely to purchase a second or even third rate work by a famous western artist than a high quality work by one of the many amazing emerging young Japanese contemporary artists. One example was the collector Yasumichi Morishita who in one month bought 100 impressionist and post-impressionist paintings for a total of $100 million dollars many of which were deemed to not have been worth the money he paid. Coincidentally Mr. Morishita was involved with criminal activity (see previous post “Crashing the Art Market, Japanese Style”), as were many of the rich Japanese art buyers, and had been previously charged with two criminal convictions for fraud and extortion.

The immature Japanese art market that was based on an extremely limited variety of works and on values being artificially inflated was never going to last long. The rich Japanese buyers had such an effect on the art market that when they pulled out the art market virtually had a panic attack and collapsed.

**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of http://www.artmarketblog.com, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications.

Crashing the Art Market, Japanese Style - artmarketblog.com

With all this talk of art market crashes and art market corrections I am surprised that no-one has actually looked at what caused the art market crash that took place around 1991. If all those so called art market analysts and art critics out there actually took the time to research the history of the art market instead of making unjustified sweeping statements and continually incorrect predictions they would find some rather interesting and important facts. From the research that I conduced I have come to the conclusion that of the various different events that caused the art market crash of the early 90’s, most of the events are unlikely to be repeated. Since there are several factors that led to the collapse of the art market in the early 90’s which will require a bit of explaining, I will write a few posts on this topic with each post covering a different factor.

One of the main catalysts for the decline of the art market were the rich Japanese who, during the art market boom of the late 80’s, were buying virtually every Impressionist painting on the market that had been painted by one of the famous Impressionist artists regardless of the quality of the work. With many of the world’s most famous artists being of the Impressionist movement it would not seem at all unusual for an art investor to presume that an Impressionist painting would be a good investment. It is also interesting to note that the Japanese were not only buying Impressionist paintings because of their investment value but also because of the prestige and honour associated with owning such a valuable and popular work of art. Because the Japanese economy was flourishing and the real estate market was booming there were plenty of super rich Japanese looking to splash their money about and what better way to prove your financial worth than to buy a really expensive Impressionist painting. An article from the New York times in 1990 by James Sterngold on art investment included a quote from a Japanese art critic and art professor who said of the new art collectors who were buying these expensive works of art artists that “Contemporary Art is too cheap to satisfy their ambitions”. The problem was that although the Japanese had high ambitions they were careless and irrational with their money and did not have enough knowledge of the art market to make an informed and rational decision.

It is quite obvious that the Japanese were so convinced of the profit potential of Impressionist paintings, and of the prestige and honour they would receive for being the owner of an Impressionist painting, that they were paying ridiculous prices even for second rate works. The whole art market boom was virtually being driven by the wealthy Japanese so, when much of the buying of art was exposed as a huge front for corporate fraud and tax evasion in early 1991, the number of Japanese buyers in the market for art experienced a dramatic drop almost immediately. The Japanese had caused an increase in demand for Impressionist paintings but then almost as quickly as they had entered the art market, they disappeared. The sudden decrease in the number of Japanese buyers meant that there weren’t the large number of buyers willing to pay huge amounts for certain paintings leaving the market to question the value of the market as a whole. Once people started questioning the motives of the Japanese buyers all hell broke loose. To be continued…

**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of http://www.artmarketblog.com, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications.

The Next Star Artist ? - artmarketblog.com

With entries for the Next Star Artist competition (http://www.nextstarartist.com) closing on the 23rd of May I thought that I would showcase some of the entrants who have websites where you can view their work. Below are links to the websites of those entrants who included a link to their website in their entry and are listed in no particular order. There are some absolutely amazing artists in the list so sit down at your computer with a nice cup of tea (or coffee) and enjoy looking at the work of some fantastic artists, one of which might the be the Next Star Artist !!!

http://www.talentdatabase.com/channels/1-Art/profiles/1284602-Robert-Kernodle/portfolios/1284002/portfolio_items

http://www.eunicelieveld.com

http://www.bomijin.com

http://WWW.THERYMERGALLERY.COM

http://www.postkaraoke.com/

http://www.michaelorwick.com

http://www.mixedmediaexpressions.com

http://www.ormaxx.ch/

http://www.mikeschreuders.com

http://www.josemariacasas.com.ar

http://www.nofi666.webs.com

http://www.myspace.com/wbroberts

http://www.derekmccrea.50megs.com

http://www.colleenpatriciawilliams.com

http://www.caitlinflynn.com

http://www.thesexyartist.co.uk

http://suguru.goto.free.fr/

http://www.nicksocrates.com

http://www.marabethquin.com

http://www.veryabstract.co.uk

http://www.bartoszkolata.com

http://http://www.lornaritz.com/

http://www.oddnavy.gr

http://www.kylejosephpatterson.com

http://www.matthewhatt.com

http://www.bielskyte.com

http://www.derekmccrea.50megs.com

http://www.ewallace.com/

http://www.tintedcanvas.com

http://www.patrickmillard.com

http://darrell-roberts.com/

http://www.myspace.com/phenom527@gmail.com

http://www.skipbleecker.com

http://www.taylorflemingart.com

http://www.artbreak.com/monamoon

**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of http://www.artmarketblog.com, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications.

Fossicking for Profitable Art - artmarketblog.com

Definition of Fossick:
Pronunciation:
\ˈfä-sik\
Function:
verb
Etymology:
English dialect fossick to ferret out
Date:
1852
1.Australian & New Zealand : to search for gold or gemstones typically by picking over abandoned workings
2. chiefly Australian & New Zealand : to search about : rummage
Australian & New Zealand : to search for by or as if by rummaging : ferret out

With all the current art market action I am often tempted to jump on the same bandwagon as all the major news reporters and report the results of the various sales and fairs that attract so much attention. That is, until I do a search of the news and come across 80 odd articles reporting the same thing after which I am no longer tempted to conform to the mass media and am encouraged to continue along a more alternative path.

Having got that off my chest I will now get on with today’s topic that comes from a very recent experience I had while looking at some online galleries for an artwork to invest in. My method of choice for deciding on an artwork to invest in follows the following series of steps:

1. Decide on what medium I want to invest in (painting, print, photography etc.)
2. Decide on a price range
3. Find an online gallery that stocks works of art in my chosen medium and price range
4. Go through the works on offer and begin researching the artists and their career history to ascertain investment potential

The only things I did differently on this particular occasion was to have a look at the back catalogue of works that the website had for sale. Most galleries that sell works online will release one work say every month or so and will often have unsold works in a back catalogue, especially if the work was a limited edition print or a limited edition photograph. While looking through the back catalogue I began doing some research on some of the artist’s whose limited edition prints that were for sale had originally been launched in 2006. For some reason people seem to assume that because an artwork is still in the inventory after a couple of years that it is not a desirable artwork but you never know what the artist has done since producing that artwork.

One particular artist that I researched had gained significant international attention, been on television and been touted as the next big thing all in the 3 year time period between the artist’s print being offered for sale on this particular website and me visiting the website and researching the artist. I immediately purchased one of these prints for the small sum of $400 which in reality is probably now worth 5 times that meaning that I made a 500% profit in a matter of seconds. The moral of the story is: It pays to check the back catalogue of an online gallery because you never know what you will find.

**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of http://www.artmarketblog.com, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications.

How to Exploit Dirty Art - artmarketblog.com

In modern society everyone seems to be determined to fit in as much into their day as possible and most people seem to be under the impression that with every single event in their lives, no matter how small, “time is of the essence”. Because of the hectic lives most people lead these days there has been a drop in the demand and value of artistic objects that require some sort of ongoing maintenance such as brass and silver. No longer is it considered worth while to get out the silver table ware on a Sunday afternoon and have a good old family polishing session. The change in lifestyle has also affected the desirability of silver with the use of silver ware declining due to the huge reduction in the number of people who entertain on a regular basis or are not entertaining the sort of crowd who would appreciate being served from a silver teapot.

There is also a tendency for people fail to properly care for their artworks for the same reason that they neglect their silver or brass ware. If you have ever been to an art auction you would most likely have seen an array of paintings covered in layers of dust and who knows what else being put under the hammer. Savvy collectors and dealers will buy these paintings, clean them up, and then sell them on for an easy profit that is basically the result of people’s lack of free time.

Just because people aren’t interested in silver at the current time doesn’t mean that they won’t be interested in silver in 5 or 10 years time so you might like to take advantage of the low prices being asked for antique silver many of which will be no more than the value of the metal its self. The same philosophy goes for paintings in need of cleaning or repair, just make sure that the cost of cleaning or repair will not be greater than the profit you are likely to make.

**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of http://www.artmarketblog.com, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications.

The Art Auction Roller Coaster - artmarketblog.com

Here in Australia there have been some rather interesting developments in the art market the most important of which is the closure of two long established auction houses. Now before you start jumping to conclusions about the state of the whole art market there are a some things that you should know about these two auction houses and the circumstances in which they closed. Firstly, both these auction houses were relatively small and focused purely on the lower end of the market (mostly up to $20,000) and secondly, both these auction houses didn’t go out of business as such but were taken over by two of the larger auction houses and their business absorbed into the larger companies. One of the auction houses was taken over by their parent company and the owner of the other auction house, along with his client base, was taken in by Bonham’s and Goodman.

What the events of these two auction houses tell me is that the art market in Australia is most likely currently undergoing a change that is in line with a general shift in the financial status of the lower income brackets. As with many countries the wealthy are getting wealthier but those in the middle and lower income brackets who would be the primary buyers of the lower priced art are having to be more conservative with their spending because of a general air of uncertainty surrounding the economies of several countries and the associated increased costs of living. The art market in Australia as a whole has not been affected primarily because of the immense amount of wealth that is still available to be spent particularly on the higher priced and better quality works.

The decreasing number of buyers at the lower end of the market should be seen as an opportunity to acquire some bargains as opposed to a sign of things to come. There will always be ups and downs in the various different sectors of art market so it is important to remember that a shift in one particular price bracket does not equate to a shift in the whole art market.

**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of http://www.artmarketblog.com, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications.

Buying Art Through an Artist’s Blog - artmarketblog.com

Buying art online is often made more difficult by the inability to interact with the artist and experience their perosnality, practices and procedures. For me one of the most interesting and exciting aspects of being involved in art is going beyond the artwork it’s self and getting to know the personality of the artist, their methods, influences and aims. I always end up feeling more passionate and excited about art after I have spent time talking to an artist or hearing an artist talk about their work especially when the artist shows passion for their work. One way of experiencing the process of the creation of fine art without leaving your computer is through artist’s blogs. Artist’s blogs are also a great way to buy art as well because you can purchase from the artist directly and get to see a wide range of works. I have listed a few of my favourite artist blogs below for you to browse, hope you enjoy!!!

Works by Tracy

http://worksbytracy.blogspot.com/

The 30 Day Artist

http://www.30dayartist.com/blog2/

Amy Stein

http://amysteinphoto.blogspot.com/

Sarah Sudhoff

http://www.sarahsudhoff.blogspot.com/

Lynda Lehmann

http://innersights.blogspot.com/

Jafabrit’s Art

http://jafabrit.blogspot.com/

Aron Geng

http://arongent.blogspot.com/

Tattfoo Tan

http://www.tattfoo.com/blog/indexblog.html

Flores Knistoff

http://www.floresknistoffiii.blogspot.com/

Cara Philips

http://caraphillips.wordpress.com/

Volkan Diyaroglu

http://postkaraoke.blogspot.com/

**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of http://www.artmarketblog.com, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications.

Regulating the Art Market - artmarketblog.com

The art market is generally considered to be an unregulated market which basically means that it is not controlled or governed according to rule or principle or law. Another term for an unregulated market is a free market the definition of which is, according to the Farlex financial dictionary, “A market economy based on supply and demand with little or no government control” (ie. taxes, subsidies or regulation).

The reasons that people are calling for the art market to be regulated are:

1. To prevent or control insider trading (insider trading is where someone who has access to non-public information through their position in a business or organisation and uses that information as the basis for conducting a market trade with the intention of benefiting from the use of the information)

2. To prevent monopolisation

3. To prevent price gouging (where sellers ask for a price that is much higher than what would be deemed fair under the circumstances)

4. To police the existence of questionable practices such as the inclusion of “right of first refusal” clauses in sales documents

Although the art market is technically unregulated there is one piece of legislation that acts as a sort of regulation and that piece of legislation is the resale royalty (droit de suite). For those of you no familiar with the resale royalty, a very broad definition is “the right of artists to receive royalties from the resale of their works”. In countries where the resale royalty has been implemented art dealers (basically anyone who sells art that attracts a resale royalty) is required to provide a report of eligible sales to the governing body of the resale royalty. According to the UK legislation artists are able to demand that any “art market professional’ (sellers, buyers, intermediaries, sale rooms, art galleries and art dealers) provide information needed to secure payment of royalties. By requiring that an art market professional provide such a report the resale royalty promotes transparency, accuracy, ethical practice and is basically a form of regulation.

Although some level of regulation would seem to be a requirement in a global market estimated to be worth 30-40 billion dollars a year, there are some compelling reasons that too much regulation could be bad for the art market. History has shown that there is very little correlation between the art market and other investment markets such as the stock market and real estate market. One of the main reasons that people are currently moving into art investment is because the art market has shown to be relatively immune to the factors that cause the other investment markets to be highly volatile or to perform badly. It would seem that one of the reasons for the lack of correlation is the lack of regulation of the art market which would suggest that if the art market were to be regulated to the same extent as other investment markets that the art market would then become susceptible to the same factors that affect other investment markets.

So, do you think that the art market should be more regulated and if so, how?

**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of http://www.artmarketblog.com, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications.

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