$179 million Picasso - anybody investing in art?

Yes. They claim it returns about 10%, and it reality it is closer to 6.5%. Like anything else, there isn't one blanket answer. 90/10 rule applies here.

Edit - I should add the return is predicated on the particular piece of artwork actually being an alternative investment, and returns are also predicated on API. Art has an API, so what does that tell you?

It is like the tulip bulb crash except they fixed it by having a scarce supply

I'm too young to remember and too lazy to look it up whether this happens after every recession - where the richest usually make the largest gains - but it sure seems like after the '08 crash that prices of extremely high end collectibles has just gone insane. I keep up with the classic Ferrari & vintage Patek Philippe/Rolex markets and they've both lost their minds in the past two years. Prices are doubling and tripling from just a few years ago.

Here is a story about a rare Rolex that sold for $505,000 7 years ago and just sold last week for $1.4MM.

This Patek sold at the same auction for just about $5MM:

quote:

---

Except you can plant tulips and they aren't making any more Picasso's...but other than that, they're totally the same

---

If only I didn't mention the issue of scarcity in my previous post

Both are goods that have aesthetic appeal and are/were status symbols which drove up the price.

Neither Tulips nor Picasso paintings have value beyond that yet both were worth an unbelievable amount.

The lessons learned from Tulip Bulb crisis is about scarcity which doesn't apply to Picasso's but the observation of people paying a shite ton of money for aesthetic status symbols is a great anagy

Must be where Louisiana "found" $179 million - they sold their picasso

quote:

---

what makes art valuable in the first place?

---

the market

i.e.

"I want that Picasso, here's $150"

"I want it as well, here's $179M instead of his $150"

quote:

---

Here's a good question: what makes art valuable in the first place? At the time it was painted, this Picasso had a cost basis of about $100 +/- (canvas + paint + a few brushes).

---

I don't know if you're asking for an actual answer or not, but the answer lies within this quote from Tim Burton's Charlie and the Chocolate Factory

There's plenty of money out there. They print more every day. But this ticket, there's only five of them in the whole world, and that's all there's ever going to be. Only a dummy would give this up for something as common as money. Are you a dummy?

So, we can post paintings of boobs on TD?

Can you do a DCF on a Picasso? Can you value it using comparable/multiples? If not, no it can't be a part of anybody's portfolio as an investment, at least not on the efficient frontier of the CML. Like someone said, it is a collectible because there is no way to calculate the expected return or risk of such an asset, if you can call it that.