NPR's Uri Berliner is taking $5,000 of his own savings and putting it to work. Though he's no financial whiz or guru, he's exploring different types of investments — alternatives that may fare better than staying in a savings account that's not keeping up with inflation.
If you go onto a site like Artnet or Saatchi Online, you can shop for art by price, style or even size. It's not that different from buying a mutual fund on the Web. This suits Cappy Price just fine. She's a former Wall Street portfolio manager who now consults with clients about art as an alternative asset. She loves art for its beauty, but she also says it's an investable asset — one that wasn't really accessible to ordinary people until recently.
"The Internet is driving the ability of the masses to do their own research, do their own due diligence just as they do with a stock — really enabling individuals to determine and place their own value on individual pieces of art," Price says.
Why invest in art? One reason, Price says, is that fine art has a proven track record as a good choice during hard times. "It outperforms in times of economic turmoil and trouble. It has outperformed during all of the wars of the 20th century. It's outperformed during the last 27 recessions."
Like any other asset, the market for art goes through ups and downs. Over the past 60 years, the total return on art has been very similar to the return on the S&P 500-stock index, says Mike Moses, a retired New York University business school professor who co-created the Mei Moses World All Art Index. The index tracks repeat auction sales of fine art.
"If you use the last 30 years, the S&P substantially outperforms art," Moses says. "If you look at the most recent eight [to] 10 years, art has outperformed the S&P."
For paintings in my price range — we're talking a few hundred dollars — there's no Mei Moses index, no record of auction sales to use as a guide. So I have no idea whether it's a smart move financially for me to buy art. But I do know this: Art is different than other investments. It's there in your house, part of your life.
"You are telling people something about yourself when you hang it," Moses says. "And therefore, I think that emotional investment gives you a certain tie to that work that you don't find in other objects that you buy."
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