Update: Aussie Suit

The Sydney Morning Herald is reporting on the current lawsuit between a collector, a dealer, an art consultant and Christie's auction house over an alleged fake Albert Tucker painting.

Click HERE to read the first AW post on this topic.
The arrangements between auction houses and art consultants who advise wealthy clients on their art purchases are being laid bare in a Supreme Court case involving an alleged fake Albert Tucker which was sold by Christies in 1999.

Barrister Louise McBride is suing auction house Christies, her art consultant Vivienne Sharpe and another art dealer, Alex Holland, over her acquisition of the Tucker. No party is contending it is genuine.

Ms Sharpe, whom Ms McBride once regarded as a close friend, is also being sued over what Ms McBride says were secret commissions and bad advice given to her in 2009 and 2010 as she sought to dispose of her art collection during a financial crisis after her separation from advertising executive Greg Daniel.

Under cross examination, Ms McBride agreed that at a tearful meeting at Ms Sharpe's house on Scotland Island she was desperate and ''close to breaking point'' and asked Ms Sharpe for a way of selling the art quickly to placate the banks.

Ms McBride has alleged Ms Sharpe and her son Andrew advised her to sell a Jeffrey Smart painting through Menzies auction house using an agreement for a guaranteed sale price.

Instead of the usual commission being paid to the auction house, Menzies proposed to guarantee $300,000 for the sale of the work and to pay Ms McBride 40 per cent of the upside.

The remaining 60 per cent would, Ms McBride believed, go to Menzies.

Menzies had offered Ms Sharpe a 50/50 split of its 60 per cent upside. Ms Sharpe received $42,000.

Under cross examination, Ms McBride told the court she had believed Ms Sharpe was acting for free because she was a friend who was helping her with her serious financial predicament in 2010.

Her counsel, Francis Douglas, QC, has accused Ms Sharpe of having a conflict of interest because her undisclosed interest in the upside meant she had a motive to advise Ms McBride to take a lower guaranteed price.

Ms Sharpe, through her counsel, is strongly contesting she ever agreed to act for free and that she did significant work on the sale.

At about the same time, an expert at Sotheby's advised Ms McBride and Ms Sharpe there were serious doubts about the authenticity of the Tucker work.

Ms McBride also accuses Ms Sharpe of selling a Bronwyn Oliver sculpture too cheaply. The court heard how the sculpture had to be helicoptered in and out of Ms McBride's premises and how it was eventually sold for $300,000.

It was bought by Transfield director Luca Belgiorno-Nettis. Ms McBride says he offered to sell it back for $800,000, via Robyn Oxley. Ms Sharpe's lawyer disputed this account.
Source: Sydney Morning Herald


Battling Appraisals for DIA

The NY Times is reporting on a new Detroit Institute of Arts appraisal by Victor Wiener Associates, requested by a Detroit city creditor. The new appraisal places a value as high as $8.5 billion for the collection.  From what we know, this is now the third appraisal disclused, the first by Christie's, the second by Artvest Partners (click HERE to download the Artvest report) and now the third by Victor Wiener Associates out of New York. The creditor who commissioned the new appraisal, Financial Guaranty Insurance Company may lose $100 of millions in the bankruptcy proceedings and wishes to see the collection sold to pay off debt.  Artvest, felt the collection may not even bring a net of $1 billion due to complications in ownership and lawsuits which could hinder the sale and clear transfer of title.

So we now have competing appraisals with a Christie's valuation of $452 million to $866 million for partial contents, Artvest Partners valuation at $2.7 billion to $4.6 billion with a net sale of possibly $850 million due to market complications, and the Victor Wiener Associates valuation, said to be $8.5 billion.

The NY Times reports
A new assessment of the potential value of the collection of the Detroit Institute of Arts – commissioned by a Detroit creditor that would like to see pieces from the collection sold to settle debts in the city’s federal bankruptcy case – determined that the artworks could be worth as much as $8.5 billion dollars.

The appraisal is one of several that have been made in recent months, with widely disparate estimates, as the collection has found itself in a political tug-of-war over the city’s assets. The new appraisal, conducted by Victor Wiener Associates, a New York firm, was commissioned by the Financial Guaranty Insurance Company, a bond insurer that stands to lose hundred of millions of dollars in the bankruptcy. The insurer has called for the masterpieces from the museum to be sold or monetized in some other way, such as being used as collateral for a loan.

An appraisal released earlier this year by the city and the museum itself found that the works could be worth $2.7 billion to $4.6 billion. But that appraisal, conducted by Artvest Partners, also based in New York, added that such a price tag would never be attained at sale, for reasons including donor lawsuits, weakness in the market for some kinds of paintings, and lower sale prices because of the sheer bulk that would flood into the market at once. The appraiser said that because of these factors and the notoriety of such a forced sale from a venerable public institution, the bulk of the museum’s collection might raise as little as $850 million.

The new appraisal, which was reported by The Detroit Free Press and The Detroit News, was conducted over a two-week period. The dueling appraisals will undoubtedly be fought over fiercely at the city’s bankruptcy trial, which begins next month. A realistic market value for the collection has become significant especially because of a public-private deal that has been worked out that could shield the art from sale if it wins approval in court. Known as the grand bargain, the deal has pooled pledges of more than $800 million thus far from foundations and the state of Michigan to help the city to shore up pension funds in exchange for keeping the collection intact.
Source: The NY Times



Somehow I missed this excellent article in the Wall Street Journal about downsizing and the difficulty is selling certain types of furniture and collectibles.  This is similar to the article I posted back in June on the falling values of some sectors, and family members being shocked when they hear the low values of items they thought may be priceless (click HERE to read the earlier post).

As I have mentioned in past posts, these types of articles are excellent resources when discussing value expectations with clients.  It is important as appraisers that we keep our clients informed, and prepared for values which in certain instances may be much lower that expected.

The article points at something similar to what I tell estate representative and downsizing clients, sometimes it is important to get rid of the content, rather than trying to maximize value.  This is especially the case when there is valuable real estate to be marketed and sold. This WSJ article has excellent examples of the difficulty some collectors have had in downsizing and liquidating property.

The Wall Street Journal reports
After his son went off to college in August, Craig Norberg-Bohm was ready to downsize. In less than two weeks, he sold his five-bedroom home and bought a three-bedroom. But almost a year later, he is still trying to get rid of his extra furniture.

Friends have been through to cherry-pick the contents of the 62-year-old's Arlington, Mass., home. He put shelves, a childhood dresser and other furniture in storage. Now, with his moving date approaching fast, he is still looking for a home for four bookshelves, two bedroom sets, two desks and a dining room set.

"Nobody wants a pingpong table," says Mr. Norberg-Bohm, a community educator for a Boston nonprofit.

Whether moving to a smaller abode or simply cleaning out, many people are making an unwelcome discovery: Their prized family heirlooms have turned into junk. Upholstered sofas, formal dining tables and hutches, Victorian-style mahogany and oak furniture, entertainment units, bulky television sets, pianos—all have become almost impossible to sell or, in some cases, give away.

The furnishings industry has a name for the big, dated wood-finished and upholstered pieces that no one wants anymore—"brown furniture." Stockpiles of "brown leather and brown Ultrasuede couches have nowhere to go," says Jeffrey Brooks, a Long Valley, N.J., interior designer.

What happened to the market for secondhand furniture? Those consumers are shopping at Ikea, Wal-Mart and Target, says Jerry Epperson, a partner at Mann, Armistead and Epperson, a Richmond, Va., investment bank specializing in the home-furnishings sector. The cost of furniture, in constant dollars, has fallen on average about 50% over the past 30 years, he says, the result of the availability of cheaper imports.

Even the Salvation Army, known for making furniture pickups, has become pickier in recent years, says Major Greg Davis, a general secretary at the nonprofit. Delivery-truck drivers began carrying Internet-enabled tablets about two years ago. When in doubt, they take a quick photo of a piece and send it ahead to the local store to make sure it will be accepted. Many shelving units are turned away, he says, as are pianos and badly torn or stained upholstered furniture. Still, the volume of furniture delivered at Salvation Army centers is growing by about 4% a year, Major Davis says.

When locating from full-size suburban houses to townhomes, many people realize too late that their old furniture will be an awkward fit, says Mr. Brooks, the interior designer. Design elements in new construction, including kitchen islands, built-in shelves and the lack of formal dining rooms help make older furniture feel dated. The sizes are all wrong, he says. "Everything had been scaled for bigger spaces."

Many homeowners moving to smaller abodes with new dimensions and built-in features find they have no use for prized pieces—including, clockwise from upper left, home-workout equipment, dining room sets, armoires, pianos, media and home-entertainment units and wood-finished dressers—and neither does anyone else.
For homeowners in a rush, Kate Grondin, who owns Home Transition Resource, of Andover, Mass., has a procedure. First, she advises homeowners to use email and social media to put out the word to friends and family that they have stuff they want to sell or give away. Then, she invites in antiques dealers to pick through the most valuable items. Next she brings in local consignment-store owners to assess other salable items, such as mid-century and industrial-style furniture, Oriental rugs, informal kitchen tables, art, side tables and yard equipment.

After that, she tries to donate items to local nonprofits. Finally, she posts pieces on Craigslist, offering them at no charge—as long as the taker comes to get them.

While clients may get anywhere from several hundred to several thousand dollars for their belongings, the cash isn't the most important thing, she says. "Just having it gone is worth a lot," says Ms. Grondin who charges hourly and often gets $3,000 to $4,000 for the average home. She often warns clients to expect their children to have little-to-no interest in the stuff.

Janet Sharp Kershaw, 55, has spent two years downsizing in hopes of moving from her three-bedroom Winchester, Mass., home to an apartment in Boston or New York this year. "It was very tedious," she says. At one point, she dialed a junk-removal service, and two delivery men helped her fill a dumpster with unwanted items. They charged $800.

Looking back, she says she regrets throwing away several decorative doors and three rugs. "It made me feel terrible," she says. "I should have been able to give them away to someone who needs them." Since then, she has learned about Freecycle.org, where users unload unwanted things to others at no charge.

Three months ago, Ms. Grondin helped Ms. Sharp Kershaw contact specialty dealers to pare down her collections of china and silver, antique furniture, artwork and outdoor accessories. She sold an antique dining hutch purchased 15 years ago for $5,000 to an antiques dealer for $3,500. A local secondhand furniture shop gave her $500 for a bulky horizontal dresser she bought 10 years ago for $2,500. After two months of trying to sell an antique sleigh bed she bought five years ago for $3,000, she gave it away to a nonprofit.

Maureen Spriggs cleared out a 20-year stockpile of furniture from her Wilmette, Ill., home. It saved time to hire a third party for the sorting. Otherwise, she says, the tendency would have been to "build a three-act play" around each item. The company she hired was an "eco-cleanout" specialist, meaning they sell or recycle but don't throw things away.

Ms. Spriggs agreed to donate holiday decorations to a nonprofit. "You can't imagine how wonderful it is that I don't have 87 pieces of Christmas decorations stuffing up my garage," she says. She gave a rarely used sage-green sleeper sofa, Prairie-style end tables, an ottoman and two lamps to her administrative assistant at the real-estate office where she works. The co-worker sent her a photo of her new living-room setup and a handwritten thank-you note.

An efficient secondhand-furniture market would actually help new-furniture sales, some retailers say. Doug Wolf, co-owner of Wolf Furniture in Altoona, Penn., started Allegheny Consignment, a consignment-shop chain where shoppers are encouraged to consign old pieces after purchasing new ones at Wolf. "We get two sales from the same customer," says Mr. Wolf. He has two Allegheny stores open and plans for a third in fall. Allegheny gets 50% of the secondhand sales. Consignors earn an average of $200 per sale, he says.
Source: The Wall Street Journal


Lawful Ivory Protection Act

The Hill is reporting Sen Lamar Alexander is proposing new legislation which would allow the sale of ivory in collectibles such as guns, musical instruments and antiques which included ivory prior to 1976.  The House has also introduced a similar bill.  Maybe there is hope of getting some common sense ivory legislation passed.

The Hill reports
Sen. Lamar Alexander (R-Tenn.) is sounding the alarm about a new rule from the Obama administration that he warns could "take away our guns."

Alexander is concerned about the Fish and Wildlife Service's (FWS) controversial ivory ban, which aims to stop African elephant poaching. He says the rule could have the unintended consequence of restricting the trade of antique guns that contain small amounts of ivory.

"For those of us who are concerned that this administration is trying to take away our guns, this regulation could actually do that," Alexander said Wednesday, speaking on the Senate floor about his bill that would roll back the ivory ban.

"If this regulation is approved, when you decide to sell a gun, a guitar or anything else across state lines that contains African elephant ivory, the government would actually take them away — even if you inherited them or bought them at a time when the sale of ivory was not illegal," he added.

Alexander introduced the Lawful Ivory Protection Act earlier this month in the Senate, accompanied by a sister bill from House Republicans. The bills would reverse the ivory rule and allow gun owners to sell antique firearms that contain ivory collected before the 1976 ban. But it would not allow gun manufacturers to make firearms with newly acquired ivory.

Gun owners say stopping them from selling antique firearms that contain ivory which was collected decades ago does nothing to protect African elephants that are living today.

Their concerns are shared by musicians, who are not only upset they won't be allowed to sell their antique instruments — such as guitars and violins — but have also complained that the rules would restrict them from traveling internationally to perform in orchestras and symphonies.

“I support stopping poachers, and I support stopping the trade of illegal ivory," Alexander said. "What I don’t support is treating ... musicians, antique shops, and firearms sellers like illegal ivory smugglers. … This legislation will stop the administration from taking away our legal guns, guitars, and other items that contain legal ivory if we try to sell them across state lines.”
Source: The Hill


Berry-Hill Galleries Update

Artnet reports on an arbitration approved by a NY State Supreme Court judge in ruling Berry-Hill Galleries  owes 624 Art Holdings (a private investment firm) $3 million for various art transactions. Take a few minutes and read about some of the rather convoluted and unethical dealings Berry-Hill had with its clients and investors.

artnet reports
It’s been nearly a decade since the once prestigious American art dealer Berry-Hill Galleries filed for Chapter 11 bankruptcy, but the gallery’s financial woes continue even today. A recent ruling in a complicated dispute with a private investment company, signed by New York State Supreme Court judge Shirley Kornreich late last month, shines additional light onto the murky, unethical business practices the gallery used to attract financing and facilitate deals.

An arbitrator ruled that James Hill and Berry-Hill Galleries must pay roughly $3 million to 624 Art Holdings, the name under which a private investment firm in midtown Manhattan pursued claims against Hill and the gallery for various unfulfilled art deals. According to a 30-page arbitration decision, obtained by artnet News, the convoluted schemes and ensuing disputes played out over the course of the last seven or eight years, and were happening even as the gallery was on the hook for tens of millions of dollars in connection with its bankruptcy filing.

Shady Business on a Charles Sheeler Painting

According to the legal documents, 624 came to Berry-Hill looking for help with an art investment. Instead, the gallery acted to channel funds to its own needs.

On January 18, 2006 Berry-Hill purchased a painting titled Meta-Mold by Charles Sheeler on 624′s behalf for $550,000. Two years later, the gallery sold the Sheeler, though they failed to realize much of a profit for their client: the deal was worth $475,000 in cash “and in-kind exchange of another artwork” titled Skating Scene by Regis Gignoux (a French painter who, quite frankly, we have never heard of before), worth $75,000.

The way Berry-Hill maneuvered, however, it gained and 624 lost out big time. According to the report, 624 Art Holdings got the Gignoux. But the nearly half-million dollars in cash proceeds from the Sheeler sale went instead to pay off one of Berry-Hill’s creditors, American Capital Strategies.

A Three-Way Fight Over a Bellows

Another even more spectacular dispute with 624 involves Jersey Woods by George Bellows, and shows how one bad deal led to another.

According to the court papers, way back  in 2003—well before the 2005 Berry-Hill bankruptcy filing—collectors John and Toni Bloomberg had filed a complaint in New York Supreme Court against Berry-Hill alleging fraud in the purchase of the Bellows painting. They had bought the work from the gallery for $750,000 and only later learned it was “in damaged, unsellable condition.” Sotheby’s attempted and failed to sell the painting at auction “due to its extensive damage,” the decision states. In September 2004, the Bloombergs and Berry-Hill reached a settlement agreement over the lemon Bellows: The gallery agreed to repurchase one-half interest in the painting for $300,000.

However, the opportunity to make peace with the Bloombergs was at the same time an opportunity to engage in further questionable dealings with 624: According to the ruling, Berry-Hill actually fulfilled their obligation by getting 624 to put up the money, essentially selling the investment group a half share in a painting they already knew was damaged—and had already been sued for.

The arbitrator’s statement in his finding is damning: He says that Berry-Hill “failed to disclose to 624 that 1) the Bellows was damaged and unsellable 2) the painting is the subject of a legal dispute and encumbered by the Bloomberg settlement and 3) that [Berry-Hill] used 624′s funds in order to partially extinguish legal claims.” An executive of 624 Art Holdings is quoted in the decision to the effect that he would not have put up the money if the background had been known: “I am not in the business of financing other people’s litigation settlements.”

A Storm of Other Complaints

The decision also includes a dispute over a George Inness painting, Approaching Storm, which may have been a fake, as well as a variety of other complex-sounding schemes. All told, the damages total roughly $3 million.

In a call with artnet News, Samuel P. Israel, the attorney for 624 Art Holdings, summed up his client’s take on the matter:

“[James] Hill apparently converted our client’s property in part to pay off debt that he personally guaranteed. The case had to do with independent acts by which Hill exploited an agency relationship to convert funds and artwork with which he was entrusted. The specifics of the misconduct are ornate and the character at the center of the story—Hill—is a cross between Falstaff and Mrs. Macbeth. He tells fairy tales about the intrinsic beauty of the works even as he purloins and liquidates them to pay off his own debt.”
Source: Artnet News


New Estate Tax Legislation???

Investment News ran an article on a US House of Representatives bill which now has 221 co-sponsors to end inheritance taxes. Additionally the legislation also makes permanent the 35% gift tax rate with a $5 million lifetime exclusion. The Republican controlled House expects the bill to come to a vote this fall given the number of co-sponsors.

Where the bill would run into difficulties is in the Democratic controlled Senate, where is it not expected to come to a vote this year, and would then need to be re-introduced in 2015. The article alludes to political concerns rather than true concerns over updating and extending current estate tax laws.

Currently there are no sunset provisions in the existing estate tax laws, although they can be changed by Congress. Even with the large number of house members co-sponsoring the new bill, it will probably not pass both houses and become law. Currently the 2014 estate tax exemption is $5,340,000 (up from $5,250,000 for gifts made and estates of decedents dying in 2013), with a 40% tax on amounts above the exemption.

The Investment News reports on the legislation
Backers of a bill that would eliminate the estate tax are pushing for a vote in September now that they have achieved enough supporters to exceed a House majority.

The measure, which ends inheritance and generation-skipping transfer taxes, has 221 co-sponsors, or three more than needed for a House majority. The legislation also would make permanent a 35% gift-tax rate with a $5 million lifetime exclusion.

Palmer Schoening, executive director of the Family Business Coalition, said a House floor vote had been scheduled earlier this summer but was postponed after House Majority Leader Eric Cantor, R-Va., lost a primary election in June.

The groups pushing the bill are now urging incoming House Majority Leader Kevin McCarthy, R-Calif., to put the measure on the House's fall agenda.

“We feel really good for a September vote,” Mr. Schoening said.

A spokesman for Mr. McCarthy did not respond to a request for comment.

Momentum for the estate-tax bill comes in part from House members who are running for the Senate in Arkansas, Oklahoma and Colorado, among other states, who want to showcase the vote.

“There are a number of members who are motivated to get this vote for political reasons,” Mr. Schoening said. “It's the most popular bill in the Republican conference right now.”

Its lasting impact is less certain. Even if the Republican-majority House approves the bill, it is not likely to be addressed by the Democratic-led Senate before the end of the congressional term in December. Any bills that fail to get full congressional approval have to be re-introduced in 2015.

But moving the bill through the House now will position estate-tax reform for later debate on broader overhaul.

“It shows that when tax reform gets going in earnest, this is an important issue to a lot of members,” said Marc Gerson, a partner at Miller & Chevalier and a former Republican tax counsel on the House Ways and Means Committee.

It may take another election, one that changes the party in the White House, to end the estate tax. If Republicans take control of the Senate — where an estate-tax bill has 37 co-sponsors — this fall, the party still faces a veto from President Barack Obama over the next two years.

In his fiscal 2015 budget, Mr. Obama proposed a top estate and gift tax rate of 45% with a $3.5 million individual exclusion for estates and a $1 million exclusion for gifts. Currently, estates are taxed at a 40% rate with a $5.3 million individual exclusion that is indexed for inflation.

Many Democrats oppose reducing or eliminating the estate tax because they say it mainly benefits the rich.

“In an environment where there's a concern about income and wealthy inequality, I don't see a strong likelihood of passing an estate-tax bill until 2017 at the earliest, if at all,” said Suzanne Shier, chief tax strategist and wealth planning practice executive at The Northern Trust Co.
Source: Investment News


Investing in Art

Yesterdays post on the Artvest report on the DIA has drawn a lot of attention and many downloads by readers of the AW Blog.  If you have not yet downloaded the report please do so, as I will only keep the report on my cloud server temporarily.  Link to download the report is  https://app.box.com/s/6wmjw6qve42c99tta48c

For today, Bloomberg ran an interesting article on investing in art, and how higher priced pieces seem to fair better over the long run. But again we are talking about the top selling artists which are mostly out of reach for many collectors.

Bloomberg reports
Every time a billionaire collector breaks another sales record at auction, those in the know snicker: Yet another hedge fund prince has publicly overpaid for an asset that's almost guaranteed to fall in value.

The examples are plentiful, like the disastrous Damien Hirst auction the night Lehman Brothers went under. At that auction, £98 million of art was sold, and then promptly lost 30 to 50 percent of its value.

Felix Salmon took on the claim that the top 50 contemporary artists in the world outperform the S&P 500, pointing out that the art price index rose largely by dropping the artists whose prices fell. "The real point here is that contemporary art is always full of here-today-gone-tomorrow art stars, who create art which goes from being white-hot to being pretty much unsellable," he writes. "In 1988, for instance, the C50 included where-are-they-now names like Theodoro Stamos, Pierre Alechinsky, James Havard, Jean Fautrier, and even Saul Steinberg, the New Yorker illustrator, who appeared just above Robert Rauschenberg on the list. Last year, the most expensive Steinberg sold at auction reached just $28,750."

I've written about same phenomenon -- one about art flippers, and one about the Frick Collection's collecting symposium. Hoping to quantify the chance of making money in the art market, I requested a report from Artnet that compiled the top 10 living artists in 1993 and 2003 and followed their sales through 2013, expecting to see a story of booms and busts. Surprisingly, almost all the artists at the top of the rankings maintained or expanded their market value.

Let's go back about 10 years. It's impossible to track all the ways that art is sold, but there are databases of auction sales that give us a rough idea of According to Artnet, the top 10 living artists of 2003, ranked by total auction sales, were:

Gerhard Richter: $32,127,829
Cy Twombly: $10,716,969
Jasper Johns: $8,625,096
Frank Stella: $8,392,128
Ed Ruscha: $7,335,674
Agnes Martin: $6,037,900
Tom Wesselmann: $5,880,799
David Hockney: $5,135,596
Zao Wou-Ki: $5,133,200
Damien Hirst: $5,084,114

And here's what their growth looks like:

Total sales for every one of these artists grew. For eight out of 10, the increase was more than 200 percent in a decade. Most had not only seen an increase from 2003 but (with the glaring exception of Damien Hirst) have now exceeded their sales in 2008, the last art market peak.

Maybe 10 years is too short a period to see the bust. How about 20 years back? Here are the sales of the top 10 artists in 1993:

Roy Lichtenstein: $3,898,219
Fernando Botero: $3,624,240
Sam Francis: $3,186,429
Gerhard Richter: $3,041,133
David Hockney: $2,887,245
Willem de Kooning: $2,802,658
Frank Stella: $2,723,597
Cy Twombly: $2,652,662
Karel Appel: $2,567,574
Roberto Matta: $2,102,424

And here's a chart of those artists over 20 years.

Not too shabby. Even if, like Karel Appel or Frank Stella, their prices haven’t gone gangbusters like Gerhard Richter's -- and no living artist has gone gangbusters quite like Gerhard Richter, whose auction sales have exceeded $100 million for six of the last seven years-- everyone’s sales are solid. There's certainly no evidence that their work is unsellable. Sales for four out of 10 went up more than 2,700 percent over that period, an astonishing number for any asset category.

The glaring caveat is that these numbers reflect total sales at auction. The median price for each artwork isn't included, so in theory, one Lichtenstein artwork could have been sold in 1993, and 1,000 could have been sold in 2003. This information, in other words, gives a picture of the artist's market share in broad strokes.

But broad strokes are all we need here: The charts are decent indicators of the market relevance associated with each name. If you bought a Cy Twombly in 1993, there's a very high chance you'll find a buyer for the work now.

A second caveat is that looking at 10- or 20-year periods masks some ups and downs along the way. You can see the full data for the 1993 and 2003 lists here and here. For this post, I've simplified the charts to highlight the long-term trend, but there are years of worse performance along the way. That kind of fluctuation has always characterized the art market. Take the tale of Lawrence Alma-Tadema, a pinnacle of the Victorian-era Academic Style whose painting "The Finding of Moses" sold for $25,000 in 1905. In 1942, his art was so passé that the same painting sold for $682. In 2010 it sold again for $23.5 million.

So what does all this mean? I had expected that tracking the sales of 20 artists would show a few big successes and a lot of cratering disappointments. In fact, sales for almost all of the artists have grown. But that doesn't mean Salmon and the rest of the contemporary art market detractors are wrong. It simply demonstrates that the very pinnacle of the art market follows its own rules.

Instead, the real explanation may be that these artists are bought and sold by a very small group of very, very wealthy individuals who have pockets deep enough to weather the tempestuous swells of world financial markets. It would go a long way toward explaining why prices remain steady even as the lower 40 artists in each year's C50 index underperform or simply disappear.

Whether or not the cream of the crop stays on top forever is uncertain. For now, it seems that buying the artists at the top of the sales rankings may be a successful 10- to 20-year approach. And that means that if you're hoping to get stupendously rich from the art market, the best strategy (ready to write this down?) is to start out rich.
Source: Bloomberg