Whither goest art prices?

An article by Linda Sandler in the Miami Herald questions the sustainability of the current run up in art prices:

Prices of the top 25 percent of the most expensive contemporary pictures sold at auction more than tripled since 1996, according to London index-maker Art Market Research...

Art was bid up in the 1980s by European and Japanese collectors, then collapsed as the effects of the 1987 stock- market crash spread. The top 25 percent of works in Art Market Research's Art 100 Index peaked at 9,040 in 1990, up from 1,658 in 1985. It dived 59 percent to 3,686 by 1992.

The Art 100 index, which tracks prices from 1976, includes artists from Rembrandt van Rijn to Pablo Picasso. The Contemporary index fell harder and longer. Higher-priced works in the Contemporary Art 100 Index peaked at 4,979 in 1990, and fell to 1,915 in 1996.

Contemporary art is by it's nature much more speculative. It isn't old enough to have withstood the test of time. A large block of lard selling for several hundred thousand dollars? Oh, please. (That isn't referred to in this article, but did take place several years ago.)

One key to me:

''Friedman says...``Many of the new collectors do not have a grounding in art history or a fundamental understanding of what they are buying.''

Some percentage of well heeled new collectors seem to think they need to start at the top. Their problem is that they don't yet have the experience, the knowledge required to evaluate for themselves which are the top pieces and which are only decent or even problem pieces by the top artists.

Many don't socialize with more experienced collectors and dealers, so they miss the scuttlebutt, the opinions from deep in the cups. The opinions aren't always correct, and may be self-serving: it can be hard to tell, but nearly impossible to tell if relying on a single source.

Bar none the best book for beginning art collectors which I have ever seen is "Buy Art Smart" by Alan S. Bamberger. It came out 15 years ago, but as I write this there are 5 copies available used at www.abebooks.com. It lays out pretty much everything one ought to know about the process. If you are an art collector you should read this book.

The toughest advice to follow well is to find knowledgeable and honest dealers. I don't know how to do that as a beginner, unless you ask around among a lot of experienced collectors, and first you have to find those. There are plenty of collectors who hook up with dealers who turn out to have an easy conscience, and a problem in seeking advice is the reluctance of many to bad mouth a dealer: it can cause legal repercussions. That's where socializing comes in. There is no substitute for viewing lots of collections, public and private. Period. Reading up on the area you are interested is necessary, but looking at the stuff and talking about it with more knowledgeable people cannot be over-emphasized. Books and articles cannot be a substitute: they all have omissions and errors. You have to talk with people.

http://www.miami.com/mld/miamiherald/10705418.htm