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Painting as an investment tool aka the XXI. century's top investment
Art and money have always been a pair and investing in paintings is not a new thing, but only in the last 15-20 years has this area come to the fore financially. This is when art stock market indices, charts, analyzes, modern auction theory strategies, painting investment funds were born, and modern contemporary art became the world's latest luxury brand.
The fact that the rate of investment in paintings is growing at such a rate was one of the main reasons for the shock caused by the global economic crises of 2008 and the lessons learned from it, which is translated into the language of smarter people as: “It is forbidden to invest in a stock market! If the world crisis of 2008 failed to understand the need for savings with the majority of people, then this pandemic is already forcing people to rethink their saving and investment habits urgently. The most important lesson for the future in this lightning-stricken pandemic and its still incalculable economic consequences is the creation of reserves. This must be done not only by individuals and families, but also by small and medium-sized companies. We would have 2 tips on this:
- the creation of sufficient emergency reserves in cash for a minimum of 6-12 months to compensate for future lost income, and
- to purchase one or more high-quality paintings and works of art from official, professional art dealers and galleries at least quarterly, exclusively on account; be it just graphics or reproduced graphics, the point is to make it a part of their lives to collect and buy beautiful and original handicrafts, i.e. to consciously invest their money in works of art.
It is also a mistake in today’s world to just "park" our money and choose a form of investment in which we earn almost no extra money. The older generation, especially those who “know the price of everything but the value of nothing”, still cling to e.g. bank deposits with their teeth and nails for years as a form of investment; and that's everything just not a good investment! There they have no chance of multiplying their invested money even in a short period of time like in the case of purchasing paintings, as it is not uncommon for artworks bought for a few hundred thousand to be sold at auctions for 10 and 100 million - making their owner rich for life!
Due to the unrest and unpredictability of the financial markets, world politics and very low bank interest rates, there has been a growing interest in artworks, especially paintings, both internationally and domestically. In the turbulent periods of the last 100 years, painting, like gold, has proven to be one of the most stable investment tools, which is expected to be justified by the recessionary period caused by the current pandemic!
Cash reserves, no matter how much, they may run out once and then there are not many opportunities, if it was not our financial habit to stand on several legs, we can run for a loan to the bank or to family members or friends, which can be very humiliating, especially if we don’t get it. Or there is another, more pleasant solution, of course if we thought ahead of time and invested some of our savings in consciously mobilizable investments, namely to quickly monetize e.g. our gold investments or we sell a quality piece from our collection of paintings, or other works of art that we own. Whatever the crisis is in the world, there will always be an investor who will have the money to buy them quickly from us and solve our financial problem! So it is no coincidence that even before the crises, taking the advice of the world's best-known economic and financial expert, the world's demand for gold and art treasures (especially paintings) increases drastically.
Every age has its own, modern business and investment opportunities that need to be noticed in time. It is important to hear the word of time in this fast-paced, globalized world and of course, when something is no longer working and needs to be repaired or shut down. If you haven’t noticed yet, we are telling you in time that one of the top category business of this age will be none other than the painting investment itself! Invest in yourself, don't procrastinate, because it's still relatively cheap to buy paintings from us, but it won't be like that for too long; the prices will increase and you will regret not entering in time! Openness to new things is important because, believe me, it is not at all certain that what the others do or wants to do, and what we don't have enough information about yet can only be bad, and it can't be a walkable path for us!
Really rich people and families have been securing a significant part of their income and savings by buying works of art, especially paintings, and they do all this in such a way that the purchased artworks also become the decoration of their homes!
You can only make a lot of money with common sense! With tiring, exhausting work, you won’t be able to earn as much money in years or decades as you can even benefit from a quality painting purchased in a successful transaction. And what do you think can happen to you if you make painting shopping a regular routine, a habit for the rest of your life? More comfortably, easily, safely, almost playing, you can't make that much money with something else!
Recently, the investment market in Hungary is also undergoing a transformation, and we hope that this pandemic will finally open the eyes of many people, not least because we are lagging behind America, but even Western Europe. Fortunately, more and more people are thinking globally and internationally, including painting as an investment opportunity. Unsurprisingly, these young people in their 20-30s, who grew up and saw the world on the Internet, are the successful art collectors and art dealers of the future, who are already seeing good business in painting purchases today with serious profits in 5 or 10 years. Which is certainly not unfounded, but it is important to know that we invest in paintings and compile our investment portfolio in such a way that we will not have to sell the acquired works of art out of compulsion! In a portfolio, investing in works of art will be the least liquid, i.e. it can be sold quickly at a high price (of course, this does not apply to the works of star artists, because they can be resold at any time at a good price and quickly, no matter what the crisis is in the world). Globally, the explosive development of the art market in the coming years can also be enveloped by the current pandemic, as more and more people will find quality hobbies, emotional commitment and a safe return on safe investment in painting collecting. For this reason, the supply market will become a demand market in Hungary as well, in the case of classics and older ones, but also in the case of 30-40-50-year-old quality works, and then we will have to reach very deep into our pockets to have a quality work of art, not to mention a 100 year-old work!
Just think more about the fact that you have a unique work from a great artist who is no longer alive, and even though there are slowly 9 billion people on earth, this work is owned by you alone, no one else has it, no matter how rich he is. Only one exists and that is only yours! A luxury car, yacht, jet, no matter how expensive, can be exactly the same for dozens of even more rich people, but the painting that the deceased artist painted with his own hands on the canvas, no one else can own it, there can't be made another original one.That’s why it’s a valuable work, and that’s exactly the secret, which is why rich people now pay up to hundreds of millions of dollars for an original work (see Sotheby’s, Christie’s, Virág Judit Gallery, Kieselbach Gallery auctions, etc.).
Noticeably, art collecting, including the purchase of paintings, has once again become a status symbol in Hungary, and maybe today we are finally getting to the point of the average people, but the middle class puts real works of art and handicrafts on the walls in their homes and offices instead of ordinary, worthless dozens of prints. Most people forget that our environment, which surrounds us, gives a picture of us! It shows that which economic class we belong to, what interests us from the world, how demanding we are, how we relate to arts, what financial knowledge culture we have, etc. Before World War II. in Hungary it was completely natural for families or individuals who had some class, to have quality paintings hanging on the walls. In the old days, a quality painting was obligatory for a civilian interior, not to mention the bourgeois interior!
The purchase of paintings can be motivated a bit by snobbery, but also by the growing demand for luxury furnishings, but the most important aspect is still the investment aspect. If we talk about the art treasure market and works of art, for many people paintings come in their mind at first, and it is no coincidence that the auction turnover's min. 80% are from painting sales!
The world of art treasures is an interesting, exclusive world where talent and passion for collecting meet investor thinking. The collection of paintings and other works of art was and will be the privilege of the middle class and the rich as long as the world is the world, but this does not rule out that individuals who are not yet rich today could not get involved in this. In the case of paintings that can be called an art collector, who no longer has more space for paintings on their wall, and stores artworks in their warehouse. By the way, in addition to self-interest, art collection is also a very useful social role, which is saving values. Works of art can be purchased to please ourselves, to make our home, office more beautiful, exclusive or only as an investment tool, but if we are buying for investment purposes, it is really worth thinking for a minimum of 5 or 10 years because this way will it make the most profit for us! Art treasures behave like old wine, meaning the older it is, the more valuable it is! So if we can do it, let's buy as many works of art as possible, but let's keep our eyes on contemporaries, because with caution it can also bring serious profits to the kitchen! Remember, once upon a time every artist, even Picasso was a contemporary artist and every painting was a contemporary painting!
What does it take in addition to money to be successful in the painting market?
Everyone has two options: one, if someone trains themselves and becomes an expert in the market; another, if you seek the advice of professionals or ask for personalized help to invest in paintings (we mention that even the good eye and luck can play a role here). Today, more and more Hungarian gallerists are also engaged in art investment consulting! Both solutions work and if someone does so, they can be sure that they will be rewarded with an above average return. And how this is so here is a study: According to a survey by the Stern School of Business at New York University in the U.S., the yield on artwork (painting) investment over the past 50 years has been much higher than what stock markets have provided. Nevertheless, there is a lot of controversial news in the Hungarian media about painting investments, as well as about so many others, namely how good a painting purchase is. Those who started investing in paintings after the change of regime in 1989 are now among the richest people in the country. They started to buy paintings with little money and many loans, and with persistent work, resignations, consistency, diligence and learning, they have struggled to become real authorities in addition to success. Reading these lines will surely lead to more negative people who put it this way, “Of course it was still easy for them, they were in the right place at the right time.”. This negative thought can only be answered with one positive thought, namely: the best time to plant a tree was 20 years ago, but the second is today!
And just so you know, this period of panic over the current pandemic will be the best possible entry point for you into this business, believe it or not, and maybe even better than it was during the 89 regime change period. Since you no longer have to start and build your business from scratch without help, you will already be helped by the auction market built by its predecessors, international galleries, regular exhibitions with international players, webshops, art books, catalogues, the fast internet of the global world with the limitless possibilities of ecommerce, etc. You don’t even know how much easier it is to do than for those who built their empire completely green-eared at the 89 regime change and not only without help but in the midst of constant obstacles, and if they succeeded, we guarantee you will too! And there’s one more thing that makes your job easier, it’s nothing more than that of these predecessors like e.g. Judit Virág, Tamás Kieselbach, Kálmán Makláry, Eleni Korani, Gergely Barki, Péter Molnos, etc. with their sacrificial work, they put Hungary back on the international stage of the trade of works of art and the trade of paintings!
Those infected with the virus of collecting
In addition to the multitude of average people, many wealthy people and celebrities also fell victim to this passion, and in addition to galleries, they became regular visitors and buyers of antique markets and flea markets. You can or could meet collectors, star lawyers, doctors, politicians, well-off entrepreneurs, but also elite athletes, former Olympians, famous TV show presenters, actors and future gallerists. You could consume your deserved flames, steaks, beer, coffee, etc. in a ring of celebrities searching for art treasures. On the other hand, who thinks that you can or could meet with Hungarians only is mistaken, as a crowd of world-famous people constantly visit Hungarian antique markets, galleries and painting exhibitions. It was possible to meet in person e.g. in the Ecseri market in the 1990s with one of the greatest divas of the age, Sophia Loren; or it was that Tony Curtis bought there; but the vendors told that the famous 007 agent, James Bond, aka Sir Roger Moore bought a painting from them; other times the famous Red Cop, film director Arnold Schwarzenegger and Andy Vajna; or former Beatles member John Lennon’s widow, Yoko Ono also turned up in those places! And even today, e.g. world-famous musicians performing at the Sziget festivals or competitors and celebrities coming to Hungary for Formula 1, also prefer to visit our antique markets and galleries, and even Facebook head Mark Zuckerberg, one of the richest people in the world visited this place during his secret holiday in Budapest a few years ago, not to mention others!
Should I buy a contemporary or a classic painting?
The number of financially available works of the classics is finite, so turning to contemporaries is becoming more and more common in Hungary as well. On the other hand, it doesn't hurt to know that investing in contemporary works of art inexperienced carries the greatest risk, but also with the greatest yield opportunity! It is not yet possible to know who the Picasso of the future will be and which young contemporary artist's prices will go really high, or which artist disappears into the sinker ahead of time. Unfortunately, 50% of young contemporary artists are forced to leave this career before the age of 35 due to funding and livelihood problems in Hungary. This is because real talent is still difficult to recognize here and many of them are left without sponsors and supporters and disappear before the market can get to know them. Unfortunately, there are also times when due to certain interests and relationships, they try to run up not really talented contemporary artists, which goes on for hours, but time is of the essence and sooner or later it will fix things in the market anyway. If you can, buy works by contemporary artists too! Every forint for which someone takes a contemporary artwork is a generous support that will help ensure that the talents of the future are not wasted! In Hungary the prices of most contemporary artists’ paintings are cheap, so we don’t even have to rob a bank to own real works and force ourselves to hang not only a horrible, kitschy dozen prints available in shopping malls on the walls of our homes, but a real work of art!
In the case of classics (artists born between 1830 and 1930) or older artists we no longer have to expect surprises, these artists no longer carry risks, they have been ranked and priced by the market once and for all. Their works, found in important private collections and museums, are a guarantee that their works have stood the test of time and have not sunk into the darkness of insignificance, uninterestingness and worthlessness!
Art market in Hungary
Entering the art market on time is not only the privilege of a few, not so much that those who buy wisely now can bring together an international-level graphic collection of up to a few million forints in a short time. By comparison, an internationally known, noted artist such as Vilmos Aba-Novák's (1894-1941) signed graphics can still be bought at hungarian auctions for a few hundred thousand forints, while his paintings are already sold for several 10 millions. But the fact is that the price of high-quality Hungarian artworks still lags far behind the international price index, even though their price has multiplied 30 times in the last 30 years. But it is still very cheap for an art collector present on international markets, who buys a beautiful and international Hungarian artwork, as even 5-10 million forints are only small money on the international stage. So it is no coincidence that more and more foreign art collectors are buying Hungarian works these days!
It can be said that the Hungarian art market constantly breaks records at auctions and the works are changing owners for hundreds of millions, which was completely unthinkable even 10-15 years ago! Participation in the auctions has now become a real social event for the middle class and the rich in Hungary as well. The most successful auctions take place with the presence of up to 500-1000 people and a yield of hundreds of millions!
Everything supports the fact that, fortunately, there are still thousands of works of art from famous artists in Hungarian homes, which are believed to be lost or have not yet been found. Don't believe it anymore when you are told that there are no truly serious works in Hungary on an international level, because they do exist and are constantly appearing.
Here is an instructive example: Gyula Pintér, a well-known art collector and entrepreneur's success story. An image hung on the wall of an average home in Pécs for at least 50 years, which all the owners knew about that it was very old and very high quality work. It was sold because the owners really needed 2.5 million HUF. Unfortunately, they had no idea they had a real treasure in their possession. Then, after this painting was later auctioned, it could be guessed that this is not an average painting and even it could be the work of Tiziano Vecellio (1490-1576), one of the greatest painters of the Renaissance. Thus, Mr. Pintér bought the painting for 140 million in 2005, and then an investigation was followed, when it was proved that he owned the work of one of the world's best-known artists, and what he soon passed on to the Hungarian state for 4,5 billion HUF. (You can read the full story here.)
You can believe, seeing the example mentioned above, that treasures can even be in your home! According to experts and following international trends, it can be stated that the new stars of the art market of the future are expected to be eternal stars in Hungary, in addition to the works of classics, contemporary works of the 70-80-90s, as well as graphics and reproduced graphics such as etchings, linoleumcuts, lithographs, etc.
Online sales
The good news is that the art market has not stopped with the appearance of the coronavirus, it is only transforming, as online sales are gaining more and more space. See what is happening today, e.g. at Sotheby’s or Christie’s. Prior to 2020, the majority of collectors and investors thought that just as we do not get married over the internet, we do not buy expensive paintings online. "Only amateurs buy artworks invisibly, like a sackcloth." They said. And what happened in less than half a year? The international market has taken a 360° round and world-famous artworks are changing owners for $10 millions to $100 millions, breaking records in online auction sales. Wealthier peope always bought and will buy artworks, only the sales and purchasing channel will change and the future will lead to an upswing in ecommerce!
If even after the information described here, you still feel green-eared for investing in the art treasure market due to older info and nerves, or to deal with it as an investment advisor, or both, please don't do it! Believe me, this is a walkable path for you too, and if you take what we have described, you can be successful on this track, in this business segment as well!
We wish you much success and wealth!