how to make money investing in art

The usual advice about art and investing is “don’t bother.” Buy it because you love it, but don’t expect a decent return. Well, that’s not exactly true. There are at least two ways to consistently make money from art, but neither is easy:

• The Vogel Strategy: Named after the Vogels, who spent their lives collecting art on a postman’s salary, the idea is simple – immerse yourself in art and buy up lots of cheap stuff. But you can’t buy any old art. You go to the cultural center, hang out with impoverished artists, and buy cheap.
• The fussy value buyer: As discussed in a recent Art Market Monitor article, art investment funds do actually manage a decent rate of return. The way they do it is to avoid the fancy auctions and look for somewhat undervalued works by artists that are already on track to having good historical reputations. For example, if Bacon is already famous, go for his lesser known buddy Frank Auerbach. Good work, but probably under-appreciated.

The tricky part with the Vogel strategy is that you need to invest in a lot of stuff, much of it goofy. Most people don’t have the patience or taste needed to spot how today’s bizarre avant-garde might be featured in tommorrow’s history book. The trick with the Moneyball strategy is that you go for people who are relatively cheap, but still expensive in absolute terms. You need a lot of capital to even contemplate this strategy. Also, you need to be confident and ignore the hype that often surrounds “hot artists.” That is hard to do for many investors.

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