Last fortnight, in this column, we looked at how it is a no-brainer to buy the painting of Hussain or Pyne, but quite like the large-cap stocks at the bourses, while there will be relative stability of price, windfall gains that accompany price ‘discovery’ will not happen. Moreover, buying the masters today would burn a hole even in some deep pockets. That is where the new artists come in.
They are comparatively cheaper but can offer huge returns at rates that are far better than those offered by the big names. The key is to identify tomorrow’s dark horse. But caution is advised. Buying a new artist is the art equivalent of buying into a small-cap stock at the bourses, where the gains could be astounding, but the risks are equally high. If you’re risk-averse, play safe and stick with the masters. While trying to identify tomorrow’s art maestros, do look out for the three crucial Cs: content, continuity and consistency.
Like in any other investment avenue, diversifying one’s portfolio by buying paintings across a number of artists makes good business sense. Even if one or two of those you chose actually makes it big, you stand to make a lot of money. As for the others, since you bought them because you liked them, there’s always the pleasure of seeing them on your walls.
When it comes to encashing your investment, do not be in too much of a hurry. You need time to allow your investment to mature. The longer you let a painting adorn your walls, the greater its chances of growing in value. While there can be no general rule that applies here, on an average, most experts suggest holding periods of between three and ten years, depending on how fast the work appreciates.
When you do decide to sell your treasures, the best way is to go through a reputed art gallery. It is a good idea to go through the gallery that sold you the painting in the first place, as they may often reduce their commission charges in some cases.
The main principles behind successful art investment are understanding market trends, tracking new artists and being able to spot the winners early. A common myth is that a painting’s market price will grow all the time. Often, the works of many great artists have been known to stall temporarily, or worse, still drop after their early promise has been belied. Yet, if you do spend some time and effort buying the right painter, you can get a very significant return on your investment.
So, at the end of the day, there are three golden rules that budding art investors must take note of: (1) Know the artist to buy; (2) Know the price to pay; (3) Know the price to sell.Easier said than done, but if you get these three basic facts right, you are in the game.
Ashok Kumar
heads LKW-INDIA. He can be reached at ceolotus@hotmail.com