THE INVESTMENT AND ASSET POTENTIAL OF ART©
JIANPING MEI AND MICHAEL MOSES
CO-FOUNDERS OF BEAUTIFUL ASSET ADVISORS®LLC
The Mei Moses® family of fine art indexes is used on this website to study the
historical performance of art as an investment and asset class based on auction
transactions. The indexes have been developed from a proprietary database, collected
over the past 15 years, of over 13,000 purchase and sale price pairs for objects that
have sold at public auction more than once. To measure relative performance these
indexes are compared to equities, government bonds, gold, cash, real estate etc.
In particular return, risk and correlation among the assets over many time periods and
holding periods are analyzed in detail.
The beauty and uniqueness of art as an asset class is that it gives individuals the
opportunity of gaining pleasure and excitement from its ownership in three distinct ways.
The first beauty of art is the obvious one of emotional appeal obtained from the visual
image of the object. The second beauty of art is the enjoyment most individuals obtain from
the process of its acquisition. This includes, but is not limited to, knowledge acquisition,
socialization with like minded collectors and experts, excitement of the chase, meeting its maker, etc.
The third beauty of art is its longevity and financial performance. Over the last three millennia
there has never been a time when art was not important and appreciated. In general arts relative
performance is based on the historical time period under consideration. For example over the last
fifty years the Mei Moses® all art index and the S&P 500 total return stock index have had
approximately equal compound annual returns. The art index has underperformed the equity index
for the last 25 years. Over the last five and ten year periods art has significantly outperformed
equities. However for almost all these time periods art has higher volatility and lower liquidity
than most other financial assets. However art has low correlation with other assets and thus may
play a role in portfolio diversification.
We have created Beautiful Asset Advisors® LLC to concentrate on arts third beauty. We ignore the
first two not since we feel that they are unimportant but that there are others more qualified to address
these issues than ourselves. On this website, artasanasset.com, we will address the topics that might be
of interest to neophytes and sophisticates alike about the financial characteristics of the art asset
class relative to other assets. Thus this site deals only with financial performance and all derivatives
based on these facts rather than individual or summary information on all art auction market transactions.
Since we are comparing arts results to those of financial products we must insure that the
data we use is transparent and based on same object transactions. We thus base all our
findings on a proprietary database of objects that have sold more than once at public auction.
This database now comprises over 13,000 repeat sale pairs. We currently build our database
from the analysis on five individual collecting categories: old master and 19th century,
impressionist and modern, American before 1950, post war and contemporary, and Latin American.
This information allows for the creation of annual indexes for each of these collecting categories
as well as the all art index. The data also allows us to develop insights into the factors that
drive returns for individual or groups of objects. We also use the indices to undertake asset
allocation studies that include art as well as making available an on line "mark to market" art
valuation service. In 2009 we introduce a new feature that will allow for the comparison of
returns across important and highly traded artists.
All this information is provided as a service for individuals and institutions that are
interested in participating in the art market. It should in no way be construed as a
recommendation for art as an investment. Investment decisions should be based on the risk
tolerance and planning horizon of the investor. Please contact your investment adviser for
assistance. Art market participants must understand that past performance is also not a
guarantee or predictor of future results. It should also be understood that since art trades
infrequently and each piece is unique there is no guarantee that individual portfolios of art
objects will yield that same returns as the indexes presented on this website.