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GLOBAL INVESTOR 1.15 — 56 AMRD 2003 = 1000 12,000 10,000 Market overview Indexes compare each sector’s growth over a ten-year period, using the central 80% of data and a 14-month moving average (14MMA). Chinese Contemporary Art AMRD Contemporary 100 Jewelry Classic Cars Watches 8,000 6,000 4,000 2,000 05 06 07 08 09 10 11 12 13 14 In passion we trust The idea of objects of desire as investments of passion took off in the UK in the late 1970s with the publication of “Alternative Investment.” As an investment analyst in the City of London, the late Robin Duthy noticed that, while conventional investments were intensely studied for past performance and future potential, no systematic analysis of the markets for art, antiques and collectibles had been undertaken. Working with the late Sir Roy Allen at the London School of Economics, he devised a sophisticated methodology of trimming and smoothing mechanisms, which eliminated seasonal and other distortions. It is important to remember that when the media reports eye-catching prices for collectibles sold at auction, the prices paid by the buyer will be substantially higher than the cash received by the seller; transaction costs in these markets (e. g. auctioneers’ or agents’ commissions) can be sobering, reflecting the price paid to overcome the illiquidity inherent in trading high-value idiosyncratic items. AUTHOR ART MARKET RESEARCH & DEVELOPMENT (AMRD) Photo: malerapaso / Getty Images Sources: Art Market Research & Development (AMRD)
GLOBAL INVESTOR 1.15 — 57 “All successful buying must be based on confidence, whether in a dealer or in oneself, and the only basis for confidence in oneself is knowledge.” Robin Duthy “Alternative Investment” – Founder of Art Market Research Drawing attention: The rise of Chinese contemporary art In 2007, art collector Howard Farber sold Wang Guangyi’s “Great Criticism: Coca-Cola (1993)” for USD 1.59 million at Philips, having claimed to have paid just USD 25,000 ten years earlier. The painting was sold in late 2007 as the market neared its peak for 63 times the reported acquisition cost. After 2005, the auction market for Chinese contemporary art entered a phase of rapid development. Two years later, Charles Saatchi was noted for selling off some of his younger German artists collection in order to fund his interest in Chinese contemporary art. The painting “1998.8.30” by Lijun sold at Sotheby’s Hong Kong in 2010 for over USD 1.2 million. Last year, his “Publication 2 No. 4” sold for over USD 7.6 million. AMRD’s methodology enables comparison with other art sectors, for example, as represented by the AMRD Contemporary 100, a leading benchmark. Set against an overview of sales of contemporary artists across the globe, the index reveals that sales of top Chinese contemporary artists have been outperforming the competition for the last five years. Chinese Contemporary Art versus Contemporary 100 The index, calculated on a 14MMA basis, shows that the Chinese contemporary sector has grown 29% in the last 14 months and is back to where it was in early 2007. 12,000 10,000 8,000 6,000 4,000 2,000 01.05 01.08 01.11 01.14 Chinese Contemporary Art top 25% AMRD Contemporary 100 top 25% Chinese Contemporary Art bottom 25% AMRD Contemporary 100 bottom 25% Investment vehicles: Italian classics in pole position Most of us past a certain age are likely to have owned and subsequently lost a prized possession that has gone on to become a valued collectible. It seems that a combination of rekindling one’s youth and the empty nester’s disposable income enables enthusiasts to purchase rare items, and this is nowhere more obvious than in the classic car market. Prices for some classic cars are going through the roof, and it is the Italians that continue to lead the market. Ferrari’s 1959–1982 models have seen a 1,350% increase in the last ten years. Maseratis produced between 1958 and 1982 have also seen some action in the last six months, having increased in value by over 23%. The 1946–1977 era British Triumphs have almost flatlined in comparison, but have continued to rise slowly, with a compound growth rate of 3.9% over the last ten years. Classic Cars Ten years of market growth on a 14MMA basis shows Ferrari outperforming Maserati by 55% and Triumph by 84%. The Classic Car Index was rebalanced to 1000 in 2003. 17,000 15,000 13,000 11,000 9,000 7,000 5,000 3,000 1,000 01.04 01.06 01.08 01.10 01.12 01.14 Ferrari 1959–1982 Maserati 1958–1982 Triumph 1946–1977 Watches Growth by brand from January 2004 to December 2014 using the central 80% of data from the AMRD Watch Index, calculated on a 14MMA basis. The index was rebalanced to 1000 in 2003. 2,000 1,800 1,600 1,400 1,200 1,000 800 01.04 01.06 01.08 01.10 01.12 Patek Philippe Cartier Rolex 01.14 Some watches ticking upward Luxury items tend to be one of the first things to suffer during tough economic times. The last financial crisis was no exception, with the highend watch market taking a steep plunge. The Swiss watch market is especially sensitive to economic depressions, regularly having to target new money. High-end wrist watches are generally a poor economic investment. People buy them for their beauty, but not because they think the watches will hold or increase their value. Yet Patek Philippe, Rolex and some Cartier watches can be exceptions, as they have shown solid value retention. A person buying a new Rolex or Patek Philippe watch today has a reasonable chance of losing little or no money on selling it in a few years. There is a healthy auction market for vintage Rolex and Patek Philippe watches, and a few rare models do fetch very high prices at auction, such as the sale of a Patek Philippe 1933 “Henry Graves Jr. Supercomplication” pocket watch, which sold in 2014 at Sotheby’s in Geneva for CHF 23.2 million (USD 24 million). This set a new record for any timepiece ever sold at auction. Pearls are a girl’s best friend Jewelry has performed extremely well in recent years, with the emphasis being on signed pieces, colored gemstones, and pearls in particular. Names like Cartier, Van Cleef & Arpels or Boucheron are sought after as such a source usually ensures good quality design and manufacture, as well as having a signature and normally a unique number. This emphasis on signed pieces is a reaction to the large quantity of unsigned and recently made pieces on the market imitating vintage European pieces. Pearls have increased in value more than any other gemstones. Historically, the world’s best pearls were collected along the Persian Gulf especially around what is now Bahrain by breath-hold divers until oil exploration in the 1930s disrupted the oyster beds. The fact that no more natural pearls are being harvested, combined with strong interest from the Gulf States, which value the acquisition of heritage objects, has forced pearl jewelry prices up to unprecedented levels – increasing by 405% in the last ten years. With world records being set every year, the finest jewels and gemstones continue to be objects of desire, having the advantages of displaying wealth, wearability, portability and scarcity value. Jewelry AMRD Pearl Jewelry Index vs AMRD General Jewelry Index on a 14MMA basis over ten years. The index was rebalanced to 1000 in 2003. 5,000 4,000 3,000 2,000 1,000 01.04 01.06 01.08 01.10 01.12 01.14 Jewelry (general) Pearls
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