Investing in art: Art market categories
Blue chip artist Jean-Michel Basquiat (1960 - 1988), In This Case, 1983. Acrylic and oil stick on canvas. 77 7/8 x 73 3/4 in. (197.8 x 187.3 cm.)
Sold for $93,105,000 on May 11, 2021 at Christie’s in New York.
In this edition, I use stock market analogies to explain the categorization of artists and opportunities for investors at the various career stages.
Loosely speaking, there are three categories the art market refers to when describing artists’ careers — emerging, mid-career, and blue chip.
1. Emerging artists
Market profile: Undeveloped
Auction history: Little or none
Annual sales: Unknown
Average price: $50,000 to $200,000
Lots sold: 50 or less / Unknown
Price record: Not applicable
Emerging artists correspond roughly to penny stocks. Penny stocks are low priced stocks that are often linked to newer companies, usually with little operating history. Similarly, emerging artists are early in their careers. They may not have been picked-up or identified by a respected commercial gallery and have yet to gain significant recognition.
There is a greater risk of price volatility or fluctuations in this category. However, just because something is inexpensive doesn’t mean it isn’t worth considering. If the artist gains recognition, the returns can be very strong.
2. Mid-career artists
Market profile: Developing
Auction history: Five years or more
Annual sales: $10 million or more
Average price: $250,000 or more
Lots sold: 50 or more
Price record: $2 million or more
Mid-cap stocks are in-between categories one and three. In the art market, mid-career artists are those who have established a solid career and have been working for many years. These artists have a profile that includes being collected by state and regional galleries, and most have been published in the arts press. Many have started to appear in the auction rooms but their investment credentials are usually based around primary market sales and curatorial achievements.
Mid-career artists have established a recognizable style or genre for which they have become well known. Major examples of these works can be an outstanding investment as, ultimately, if the artist makes the next step, these artworks become significant within the artist’s oeuvre.
(Oeuvre is art-speak for the lifework of an artist, writer, or composer.)
3. Blue chip artists
Market profile: Developed
Auction history: 20 years or more
Annual sales: $100 million or more
Average price: $1 million or more
Lots sold: 500 or more
Price record: $20 million or more
Blue chip stocks are the most valuable. They have a long operating history, steady earnings, and a good reputation. Blue chips are considered the safest of the three categories, especially if the market is falling.
Blue chip artists have a long secondary market history underpinning their prices. You can track the trading history of individual works over many years. These artists hold both national and international significance and are in all major collections.
Many artists in this category are no longer alive. While many of their works will be valued in the hundreds of thousands, or millions of dollars, it is important to realize that not all their works may be significant.
Quality, condition, and provenance are essential. Often, a well-documented small edition of an iconic image will be worth more than a substandard painting or study by the same artist.
Blue chip artists have strong liquidity or tradability. However, the returns, while high, are not necessarily going to be as spectacular in percentage terms, as other categories of artists.
Blue chip artist Jean-Michel Basquiat (1960 - 1988), Untitled, c. 1982. Oil stick on paper. 18 1/4 x 15 in. (46.4 x 38.1 cm.)
Bought: $4,840
Holding period: 29 years
Sold: $1,230,000 on May 14, 2021 at Christie’s in New York
Total return: 254.13x
Compound annual return: 21.04%
$100 invested in this artwork grew to $25,406.
The progression from one group to the next requires certain achievements and milestones, which, in some cases, can take decades.
The amount you pay for an artist’s work, the risk exposure, and potential capital gain vary considerably across the groups. A work by an emerging artist is the most affordable and has greater potential to more than double in price than a masterpiece by an established, blue chip artist. However, there’s a lot more risk that an emerging artist’s work will lose value over time.
This post is excerpted, edited, and sourced from Art Price and Christie’s. The content is for general informational and entertainment purposes only and should not be construed as financial advice.