Tags: JimChanos | art | bubble | Sothebys

Jim Chanos: Art is a Bubble, and You Can Short it Through Sotheby's

By    |   Monday, 07 April 2014 10:39 AM

Renowned short-seller and art collector Jim Chanos, president of Kynikos Associates, says art is a bubble, and the best way to short it is by selling the shares of Sotheby's.

"Anybody who buys art should be looking to hedge it right now," he told CNBC. "The contemporary market has gone bonkers."

Wealthy investors around the world are snapping up everything from Francis Bacon paintings to Jeff Koons sculptures, driving prices ever higher. "Art is a socially acceptable form of conspicuous consumption," Chanos said.

Editor’s Note: Retire 10 Years Earlier With These 4 Stocks

So what should an investor do to deal with the bubble?

"For people who don't want to sell their art, the best thing is to short the stock of Sotheby's," Chanos said.

He noted that Sotheby's stock price has always spiked during speculative bubbles, including the leveraged buyout wave of the late 1980s, the dot-com bubble of the late 1990s and the housing bubble of the mid-2000s. He called the current period the "central banks" bubble.

Sotheby's shares have generated a total return of 36.6 percent over the last year, compared to 24.1 percent for the S&P 500. The stock closed Friday at $42.89.

Financial advisers say investors should be very careful about investing in art, The Wall Street Journal reports. One reason for caution is that strength in one part of the art market doesn't necessarily translate to others. Artists and styles quickly gain and lose popularity.

Last year, while the S&P 500 offered a total return of 32.4 percent, the Mei Moses All Art World Index, which measures repeat sales of artworks at auctions, gained only 1.5 percent.

Editor’s Note: Retire 10 Years Earlier With These 4 Stocks

© 2021 Newsmax Finance. All rights reserved.


StreetTalk
Renowned short-seller and art collector Jim Chanos, president of Kynikos Associates, says art is a bubble, and the best way to short it is by selling the shares of Sotheby's.
JimChanos,art,bubble,Sothebys
283
2014-39-07
Monday, 07 April 2014 10:39 AM
Newsmax Media, Inc.
 
Newsmax TV Live
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved