Collecting art can be one of the most enjoyable ways to spend your money. A beautiful work can provide its owner with years of viewing pleasure and it may also give monetary joys as well. It is possible to not only collect, but also invest in art. As in any other field research must be done before the investment is made. Profits can be made through the purchase and sale of art, but it is also easy to lose money doing so. The trick of course is predicting which works of art will increase in value. The problem with this is that there are so many artists in the world and finding the one that will become the next Rembrandt or Picasso can be next to impossible. However, this does not mean that you cannot find works that will increase in value; they are out there. Below you will find some general guidelines that should help you with your investment strategy.
The best work by artists--great and not-so-great--appreciates in value more than mediocre work by the same artist. The same is true for antiques and collectibles, too. Even in a down market, prices hold-up better for the top examples of any type of object .
A good provenance hikes the value and adds to the resaleability of an object. Two reasons: it testifies that the piece is authentic & it tells a story. People love a story.
The signature doesn't show when you exhibit the item? Nobody sees the signature on a Cartier brooch. For resale value, it's got to be there.
Everybody knows stories about the huge price spread between mint-in-box toys versus ones that kids actually used. Sure, you can have a piece restored, but it will never be as desirable as something that was never damaged.
Simple attrition is one of the basic reasons antiques have value. Over time, fewer items survive and those that have survived usually deterioriate. Your investment goes up because you take care of it.
On a dollars/square inch basis, small items trade higher than big ones. This has to do with display logistics : People prefer Amish crib quilts versus full size ones, because you get the idea, and it takes half the space to show it.
Sure, you could buy a Jackson Pollock drawing showing a representational depiction of a reclining nude. When your friends walk in the door, they say: "nice nude". For resale, buy a Pollock dripped painting. Friends' response: "awesome Pollock!"
(Resale market: nice nude=$X0,000; awesome Pollock=$X,000,000)
Tempting it may be, but whatever is terminally cool and on everyone's tongue this week is probably not a viable long-term investment. (That's not to say you can't flip it.) If an object, period or artist you own is all over the mass media, it's time to think about unloading.
Global political and economic shifts are a great clue in trendspotting: In the early 80's as OPEC's oil-pricing power declined, prices of oriental rugs took a hit. In the late 80's the price of Korean antiques skyrocketed as that Tiger economy grew. In the 90's, the fracturing of the USSR generated good interest in Stalinist memorabilia & other tchotchkas since they marked the Cold War--an era now relegated to the history books. Pick your political or economic scenario and build a portfolio of tangible investments around it.