The stories most of us hear about art investments come in headlines about the eye-popping prices of fine art at auction houses. In 2015, the most expensive Picasso ever sold, “Les Femmes d’Alger (Version ‘O’)” went for $179 million at Christie’s Auction House.
In 2019, a “lost” Leonardo da Vinci was sold to the Prince of Saudi Arabia for $450 million, although experts disagreed about its provenance.
Despite these prices, the ROIs are quite mundane. In the 2015 article, “Does it Pay to Invest in Art? A Selection-Corrected Returns Perspective,” a group of finance professors from top universities examined the returns on 32,928 paintings sold repeatedly at art auction houses from 1960 to 2013. They found returns (adjusted for selection bias) to be 6.3% annually. They conclude that art is just not a good investment compared to stocks and other assets. They also computed returns on other assets and compared them to the investment returns for fine art, or what we might call investment art. For most of us, we will almost assuredly not even get what we paid for a piece of art when we sell it. When we buy art, we are paying the retail price which is typically double what the gallery paid for it. If we are going to sell it to a gallery, we will receive a wholesale price from the gallery. If we sell it on eBay, it depends on the fads of the day. So, if you want to buy art to hang on your wall, buy something because you love it, not because you expect to make money from it.