Art is a Risky Investment

Here are a few pointers for aspiring collectors who want to take the plunge.

We might fantasize that art is the perfect investment — buy something you love by an emerging artist, live with it for years and then sell it to make a small fortune on your foresight.

“One of my clients acquired two Helen Frankenthaler paintings in 1966, large paintings, and he bought them for $2,500 each,” says Culver City art dealer Edward Cella. “We helped him sell one for $700,000 and the other for more than that. The collector knew what he was looking for – Frankenthaler was already well known by then; she was an important emerging woman artist.” Indeed, by 1964 she had already been included in Clement Greenberg’s landmark LACMA show, Post-Painterly Abstraction, and she continued to work and exhibit; today she’s recognized as a major contributor in the history of postwar American art.

But, like most dealers, Cella cautions against expecting an art purchase to yield such a big return on your money — there are too many variables, including the artist’s career and reputation and the unpredictable art market in general.

For most people, buying art is a luxury. It’s true, you may be able to buy work for a few hundred dollars from small galleries or weekend art fairs, and anyone familiar with Antiques Roadshow on PBS has seen the lucky few who made lucrative finds in their grand-aunt’s attic or at a flea market. If you watch the show enough, however, you also know that some objects just aren’t worth as much as people expect, or they’re only worth a fraction of the going value, due to their poor condition or questionable provenance.

The art dealers interviewed for this story suggest that investment-grade art will probably cost in the thousands, and the buyer must be prepared not to get the money back when it comes time to sell. Although Citibank and some private dealers see art as an “asset class” like stocks and bonds, many question this idea. Most agree that investing in art is risky business.

One can buy wisely, however, writes Alan Bamberger, a San Francisco–based art consultant and author of The Art of Buying Art (Gordon’s Art Reference; 2002), on his website, “Anyone can buy and collect art intelligently … All you need is a love and appreciation of fine art, a desire to collect and a willingness to familiarize yourself with a few simple techniques that will allow you to assess and evaluate any work of art dating from any time period by any artist of any nationality.”

Bamberger proposes a set of questions for the potential buyer to consider, namely:

“Who is the artist?

“How significant is the art?

“What is the art’s provenance, history and documentation (or more simply, where has the art been and who’s owned it)?

“Is the asking price fair?”

This overlaps with advice the Los Angeles gallerists offered aspiring buyers: Begin with research, research and more research — going to museums, galleries and art fairs, and reading up on artists whose work you like. “The best thing an individual can do is to establish an aesthetic and an awareness of what exists,” says Jack Rutberg, who has been running his La Brea gallery for over 35 years and specializes in some blue-chip artists. “Spend time in museums. It really is important to look at the Old Masters, all the way through to the modern and contemporary artists. The Norton Simon Museum is probably the greatest tutor one could have — you could start with the South and Southeast Asian art, then the Old Masters such as Cranach, Memling, just look at the remarkable hand.”

Blue-chip artists are stars whose works can command six-figures-plus (think Richard Serra, Ed Ruscha, Agnes Martin, David Hockney). Like blue-chip stocks, they are pricy, but in a category that makes higher returns more likely when you are ready to sell them after a decade or more. “If a high priority is that the artwork retains value,” says Elizabeth East, a director at the prestigious L.A. Louver Gallery in Venice, “I suggest focusing on well-established artists with solid track records, like David Hockney. But there is never any guarantee.”

Of course, few of us can afford to buy those artists. So is it possible to put together a modestly priced art collection and expect its value to eventually increase?

Two areas often recommended for beginning collectors are prints and photographs. Since these works are produced in multiples, they are less expensive than one-of-a-kind art. Some of the same evaluation criteria hold, however, such as the condition of specific works by artists of reputation (those reviewed or featured in major publications, collected by museums, shown at biennials, etc.). With prints and photographs, it is recommended that you look for signed works in small, limited editions. Works produced in the thousands, for example, will generally be worth less than works by the same artist produced in an edition of 100 or fewer.

“In my exhibition, Surreal/Unreal [through Feb. 18], I have over 100 works, and every one would be worthy of a museum collection,” says Rutberg. “They range from $350 to over a million.” He points out that there are many things in the show under $2,000, including works by Giorgio de Chirico and Roberto Matta, one of the last to join the Surrealists. Cella suggested looking at the photographs of Pedro Guerrero, a principal photographer for Frank Lloyd Wright. Guerrero was the subject of a PBS American Masters documentary in 2015, and Cella’s current show, Guerrero: Calder & Nevelson, In Their Studios (through March 4), features photographs he took in the studios of artists Alexander Calder and Louise Nevelson.

It is important to determine the condition of the work and its provenance (origin or previous ownership). A reputable dealer can provide information about the artist’s background and track record and can vouch for the authenticity and source of the work. Sometimes artists do sell their own work, and the Photo Independent Art Fair was established in L.A. in 2014 to provide a venue for that. This year the fair takes place April 21 through 23 at The Reef in downtown L.A. Photographers have also sold their own work at another local fair, Photo L.A., which falls in January, although most exhibitors are galleries. Answering Bamberger’s question No. 4 — is the asking price fair? — can be particularly challenging. After gathering information about an artist you’re considering, you’ll want to look at comparable sales for that person’s work. You can do this online, and study databases on auction houses’ websites, or on, and Some sites require a subscription — for example, the Blouin Art Sales Index charges $39 a month or $199 for a year of access. On you can search without a subscription for works currently for sale, although you often will see the note “price on request.”

Those with very large amounts to invest might want to look into services offered by specialized fund managers, such as Citibank’s Private Bank Art Advisory & Finance group. Its website says, “Our art advisors can guide you through the art world, providing personalized acquisition and selling strategies, as well as collection management services.” But even Citi, in the smaller print, offers the disclaimer, “Alternative assets such as art are speculative, may not be suitable for all clients and are intended for those who are willing to bear high economic risks.”

In the end, collectors and dealers share this mantra: Buy what you love. Then, whether or not the work appreciates in monetary value, you will still have it gracing your wall, enhancing your quality of life. “Perhaps the best return you can achieve from art,” says East, “is the enjoyment it gives you over time.”