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  • Martin Sosnoff

Tangibles Vs. Intangibles: Winners, Losers and Inbetweens

Grandma used to elbow me when the stock market was doing a fade-away. “I never promised you a rose garden,” she cackled. Meantime, contemporary art prices, mid-fifties onward zipped to the moon without grandma.

Mid-fifties,  you coulda bought a Jackson Pollock canvas for a thousand bucks, along with Basquiat's and Mark Rothko’s dreamy abstractions. Basquiat had just come up from the subway tracks where he was chalking up subway cars.

Today such work goes for 9 figures, on par with Old Masters and Picasso canvases. I remember buying Picasso's catalog raisonné in several volumes. Everyone was very prolific like Rembrandt and Modigliani.  

But I rejected half-a-dozen Basquiat canvases at $2,000 apiece. Later, Russian collectors would shout out $100 million bids at Sotheby’s and Christie's night auctions. 

I keep mumbling to myself, you wouldn’t ever again need to peruse boring annual reports and legalese proxy statements.

For decades, the thirst for contemporary art kept building and building. Many dealers became close friends. Sam Kootz showed Pierre Soulages’ work and sold me several pieces at $30,000 apiece. I couldn’t pay up front for such treasures, but Sam carried me on his books. “Just pay me when you can, kid,” he said. 

There was Aladar Marberger, who showed Alex Katz. He sold us his personal pieces at cost, $7,500. “I’ve got AIDS and about two months left for survival,” he told Toni and me.

Back in the 70s, I learned that money was pure crap if you didn’t use it. I had just bought a bright apartment in The Dakota for $75,000. Everyone on Wall Street told me I was crazy. We were in the middle of a deep real estate recession across the country. 

Co-op owners walked away from their apartments because maintenance expense was punitive. 

Meanwhile, John Lennon and Yoko Ono were asking permission to buy up half of the Dakota. John told me he had a specific usage in mind for each abode, including a rehearsal studio for his son, Sean, a feisty drummer.

I once asked an aggressive Chinese bidder how he operated. “Look,” he said, “ I know very little about art prices so I don’t buy from dealers. When I see my friends bidding on pieces offered at auction, I join the crowd. This way a dealer can’t take me for a ride.” Art scholars and economists who follow art prices don’t get such craziness. 

Table below, probably the work of an economist, doesn’t do justice to the volatility and rate of change for several asset categories. I’ve owned a few, such as housing, stocks, and Treasury bills. Old Masters were for Robber Barons in the early 19 hundreds. Collectors had to be told what to do by Bernard Berenson and other critics and dealers

In an environment of steadily declining interest rates, disparity between economic value and market value does close. Then the market can reverse trend. The top 10 money making sectors for years were concentrated in consumer related businesses like beverages, food, and media. If you can’t raise prices assets do decline. This is seen in the table above. It’s probably the work of an economist or other academics who know nothing about the art world's workings. Art prices forever surprise, generation to generation. 

What’s so puzzling here is how volatility in stock valuation soared in the sixties, but then collapsed next 15 years in terms of price-earnings ratio valuation.

Today, our market believes in rising earnings and easing interest rates. Too tough a call for me to make. I’m sticking underinvested. Art rests on our walls untouched, vibrant and pricey, too.  

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