Considering art as an investment opportunity? An area couple shares their strategy.
Deep in a cave on the Indonesian island of Sulawesi, in 2018, archaeologists discovered what some suggest may be the oldest figurative artwork in the world. The depiction of three wild pigs painted on the cave’s limestone walls is estimated to be 45,000 years old, the oldest surviving representation of an animal ever found, according to a paper published in Science Advances.
Whether this is the oldest work of art in the world is up for debate as so too is the definition of art, but what is for certain is that the desire to make and possess art is as innately human as the urge to gather in groups or imagine what may lie beyond the stars. Far from those humble cavern drawings, our more modern art can generate some serious coins.
Much has been discussed of late, especially, around investing in art and whether it’s a sound way to grow capital. This may be a conversation that Black folks want to get in on, because if there are two things that are bound to come up when we get together, it’s protecting our culture and building generational wealth. Investing in Black art may be just the way to leapfrog two hurdles at once.
But art collecting isn’t something you want to jump into face first at 2 a.m. after a bottle of wine. Do your research, take your time, learn all that you can about the market and, here’s the fun part: immerse yourself in your local art culture. If you’re going to make it worth your while, it’ll require some strategizing and a bit of savvy. Lean on local curators and asset managers who specialize in alternative investments, and, perhaps this is obvious, but you should have an appreciation for the art itself.
Planning a Portfolio
Sherida and Taft Parsons of Birmingham have a spreadsheet to keep track of their most valuable works of art; they’ve got 80 or so. Sherida started collecting in college. “Now, the price point was quite different,” she says with a smile. Still, she started with prints, Black calendars and photos of her family, using software to convert those into art. “And then in medical school there was a Black art gallery that was having a going out of business sale, and I was able to get what I felt was my first real art. It was a Charles Bibbs piece, and they had some African art. Everything that I could afford at that time, I grabbed it. It spiraled from there.”
She and husband Taft are both doctors; they met in school in Milwaukee. “Our income has changed, increased, and that has changed what we’ve been able to purchase. We’ve been able to accumulate more blue-chip art, so art that has value right from the start rather than like an emerging artist or an up-and-coming artist. You know, those pieces may have value much later on, sometimes not until the artist passes away.”
Like the stock market, how stable and well-established a brand is matters to the risk. Purchasing shares of Apple is going to be a safer bet than investing in an unknown startup, for example. The same applies to artists. One thing you’ll want to consider when thinking about investing is whether to lean toward or away from contemporary or budding artists. Yeah, it’ll feel good to have an artwork from the latest buzzed-about artist hanging on your wall, and, so, if it moves you and you want to support, grab it.
As to whether that piece will appreciate, though, there’s no way to be certain. Taft says, “As the financial investment in art has grown, I think that we have been more considerate and thoughtful about the investment potential.” But, they’ve got more than what’s on that spreadsheet. “There are other pieces around the house that we just like, pieces that we got on vacation. You know, you’re in Jamaica on the beach and some guys are painting,” and then it’s about the memory and the mood.
Art is just one slice of the pie for the Parsons, another way to diversify their overall portfolios. Unless you’re playing in the million-dollar leagues, you’re unlikely to get rich investing in art alone. “Yes, we have stocks, mutual funds, real estate,” Taft says. “This is a way to be in another financial market that moves differently.” On average, contemporary art returns 7.6% to investors each year, according to Artprice, compared to an average annual return 10% from the S&P 500. That said, the art market is less susceptible to the political and economic factors that influence traditional markets making it potentially more stable.
A Digital Discussion
In March, Twitter CEO Jack Dorsey put the first tweet ever sent on the platform up for auction online. As of this writing, the bid had reached $2.5 million. What does that even mean, right? It’s already out there so anyone can screenshot it – and look, I’ve got the first tweet. But Dorsey is dealing in nonfungible tokens, which are unique strings of code authenticated through blockchain technology and linked to a digital file: an image, music, a video clip. It’s a certificate of authenticity of sorts, a way to prove that, although this content may have been replicated countless times, this one is the original. NFTs have grabbed the attention of the art world for its ability to be used to buy and sell digital art using cryptocurrency.
Christie’s auction house recently sold its first purely digital artwork for $69 million, the highest price paid for an NFT to date. The work is a collage of 5,000 drawings by the digital artist Mike Winkelmann aka Beeple. “The first 10 minutes of this sale we had more than 100 bids placed,” Noah Davis, a specialist in post-war and contemporary art for Christie’s, told Yahoo Finance. “We went from an opening bid of $100 to more than $1 million. We had bidders from seven different countries.”
Taft says he and Sherida have no plans to get into the digital space any time soon. “Here’s the thing that goes on in what they call ‘the secondary market’ – which is the auction houses and things like that – there’s something hot that people with a whole bunch of money want to get because it’s the hot thing to do, and it may or may not last,” he says.
“It may just be a flash in the pan, and things that are a flash in the pan, you know, they will be very expensive for a short period of time, and then that value is going to drop off. This happens with fine art as well. There’s a hot artist for a short period of time, and then they’re not,” Taft says. Others have also questioned the staying power of NFTs, and some have suggested that what you’re actually paying for when you buy one is an ego boost more than anything.
Because, again, owning that line of code does not stop others from accessing, copying or reproducing that work. For the artists, though, NFTs could be a way to reclaim ownership over their art. It’s also worth noting that royalties can be attached to NFTs so that artists get a cut each time that work is traded, past the initial sale.
Do What You Love
“So many people are getting into art,” says George N’Namdi, art dealer and founder of the N’Namdi Center for Contemporary Art in Detroit. “I want you to invest in art, but I want you to understand why. The monetary reason is the least amount of why you do it.” N’Namdi started procuring art in the ‘70s, and he’s since amassed a personal collection of about 150 pieces. He says a desire to preserve Black culture was why he got started, and the rest followed.
Art is different from most traditional investments in that there’s an emotional element involved. Sure, you’ve got an attachment to the home you raised your children in, but your shares of Adidas stock? Probably not. As N’Namdi notes, you’re not likely to sell off a cherished work that elbowed you in the spirit when you first saw it on a whim to make a few extra, or even a few extra thousand, bucks. He says people get rid of art because of what he says are “the three Ds”: debt, divorce and death.
Past that, you hang on to a piece because you love it or you love the artist, and you want it to take up space in your world. Then, OK, decades down the line maybe the work has appreciated so that its financial value holds up against its emotional worth. “Buy it because you like it, buy it because you have a mission of preserving our culture and sit back and enjoy it. And it will come. You will have an asset that you’re looking at every day,” N’Namdi says.
Or, if you do plan to eventually part with it and pass it on, who better than to you children? For the Parsons, their three kids – ages 16, 12 and 5 – are a part of their strategy. Taft says, “It is certainly nice to collect art that will have long-lasting value that, in a general sense, will increase over time and we’ll be able to pass it down to our children as part of a generational accumulation of wealth.”
Sherida adds that the couple takes care to educate their children about the family’s art collection, about its value and cultural significance. “We won’t always be here,” she says. “So, we have to educate our children as to what it is, who the artists are, the value of it, what it means to their future – and we are helping to cultivate their love of art.” That right there is the main motivator. More than the money, the Parsons say they’re looking to foster an appreciation of beauty and an expression of self.
Taft says, “We look for pieces that tell a story, primarily about us, our people. We almost exclusively collect art by Black artists. The subject matter is things that we really connect to, people, places, colors – if it’s an abstract piece. We think that it’s not only important to be able to pass something on to them, but surrounding them in positive images of Blackness, it very subtly changes the way they view the world. If they can see being in this house as a refuge, somewhere where Blackness is appreciated and exalted, it increases their overall self-esteem and how they feel about being Black children here in the U.S.”