Should You Include Fine Art in Your Investment Portfolio?

“Thanks to art, instead of seeing one world, our own, we see it multiplied, and as many original artists as there are, so many worlds are at our disposal.” – Marcel Proust (“Remembrance of Things Past”)

When you hear the word “investment,” it usually refers to common stocks, bonds, real estate, gold, and money-market funds. With the exception of real estate, all have highly liquid markets and relatively low transaction costs. Even some segments of the real-estate market (real-estate investment trusts, for example) are very liquid, because shares representing the underlying real-estate assets trade on the New York Stock Exchange.

But fine art has not been nearly as liquid, even though it is estimated to be a $23 billion annual market in the United States — and even though, historically, it has been at least as good an investment as the stock market. For example, a list of artwork by the Hudson River School painters that traded hands more than once over the past 15 years not only matched the returns of the S&P 500 for that same period of time but also handily beat the returns of the most recent five- and 10-year periods.

There is one aspect of fine art that asset classes such as stocks, bonds, and real estate would envy: the limited supply of works created by any given artist. For example, Norman Rockwell’s rich characterizations of American life bring high prices at auction. And because he is no longer with us, there will never be more of his paintings on the market. The supply of Rockwells is fixed, so their value can only go up. With stocks, bonds, and real estate, that is not the case. Supply can always increase. But unlike shares of Microsoft and Wal-Mart that trade in the millions each day, a desirable Rockwell, Remington, or Rothko may change hands infrequently. Purchases occur not on an exchange but usually at auctions like those conducted by Christie’s and Sotheby’s or through the efforts of a network of galleries around the country. This art infrastructure may serve the sophisticated collector of fine art but can be intimidating to the average investor.

This is starting to change, however, as the Internet makes it almost as easy to research, buy, and sell paintings as it is to research, buy, and sell mutual funds. Recently, for example, a visitor to our website told us that he had bought a John Marshall Gamble (1863-1957) painting for $500 in the 1970s. Wondering what it was currently worth, he reviewed our online records for Gamble and learned not only that there is an active market for his work (and who is selling it) but also that recent prices have been much, much higher than his original acquisition cost. Armed with this information, he put the painting up for sale — and within 48 hours, he received offers of over $60,000!

Will fine art ever become an accepted asset class? I’m betting “yes.” It will never approximate the liquidity and efficiency of the leading stock exchanges. However, the easier it is for people to access information about art and artists, prices and dealers (and, with the Internet, it’s getting easier all the time), the more likely it is that the market will continue to expand.

(Ed. Note: Lonnie Dunbier is research director for, an online service that provides auction prices and images dating back 15 years on leading American artists and their works. The site provides extensive information on more than 30,000 artists whose work spans the 18th century to the present — information that includes biographies, museum listings, and active dealers (market makers).

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