Investors and collectors have been going nuts for high-priced art in recent years — a Paul Gauguin painting just sold for almost $300 million.
So is the art market in a bubble? Perhaps, says ace economist
Nouriel Roubini of New York University. Roubini argues in a commentary on his website that art is a new and separate asset class, there are a number of serious distortions in the art market that suggest that there is some shady behavior going on and there is a need for regulation and reform of the art market.
Art has no fundamental pricing model, he notes. After all, its value is just in the eye of the beholder.
"This lack of a fundamental pricing model means that art is subject to fads, fashions, manias — and potentially bubbles," Roubini says.
But that same factor makes it difficult to determine whether the art market indeed is in a bubble now and whether that bubble is about to burst, he explains.
"The fact that art trades in a way that cannot be reduced to a fundamental valuation makes answering these questions more complicated. Despite this uncertainty, there are those who say, 'This time is different.' Those who believe that often cite the rising forces of globalization, which are now enriching a whole new class of wealthy individuals, whom they believe are going to demand art both for its aesthetic value and for investment purposes," he writes.
"However, it's worth mentioning that we've had booms and busts in the art world in the past." So buyer beware.
If you do decide to invest in art, first seek something you will enjoy on your wall, because that's where it might stay, art experts tell Newsmax magazine. Then look for investment value.
"You buy something because you love it, and after you love it, you learn what makes quality," said Frank Robinson, former director of Cornell University's Johnson Art Museum.
"You buy something beautiful, put it up on the wall and enjoy it. Your children grow up looking at it. Every work you own has its own cluster of associations — who you bought it with, how it moved from house to house. And then you pass it on or sell it."
© 2023 Newsmax Finance. All rights reserved.