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 20 years, of over
30,000 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 MosesR world 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. For many of these time periods art also has equivalent volatility however it has much
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, unbiased and based on same object transactions. We thus base all our findings on a
proprietary database of objects that have sold more than once on a world wide basis at public auction.
This database now comprises over 30,000 repeat sale pairs. We currently build our database from the
analysis of seven individual collecting categories: old master and 19th century, impressionist and
modern, American before 1950, post war and contemporary, Latin American, British painting after 1950
and traditional Chinese works of art. This information allows for the creation of annual indexes for
each of these collecting categories as well as the world 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 indexes 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 introduced a new feature that will allow for
the generation of graphs that plot true return versus purchase date for all the pairs in our database
for the most 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 of 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.