ABSTRACT
I recall many of the art-investment conferences and lectures that I have attended over the last ten years or so. In bank hospitality tents, at art fairs, business-school auditoriums and hotel ballrooms leased for the week by multinational companies, a platoon of familiar speakers have pitched their technical innovation or art fund to a large financially literate audience. I am reminded of the prophets sequence in the Monty Python film, The Life of Brian. Amidst a chattering of soothsayers, the central character, Brian, literally displaces an incumbent prognosticator when he plunges from a wicker balcony to the applause of the small audience that had gathered around his unfortunate victim. His first hesitant steps towards formulating a creed are voiced in his opening line: ‘Don’t pass judgement on other people or you might get judged yourself.’ So, I will wait and see and refrain from casting the first stone. But I will sound a cautionary note at the outset. The results for the performance of art as an asset are driven by very low levels of often corrupted or partial data, and as such should be treated with caution and even scepticism. The construction of an art index is hampered by a number of unique factors: art only sells occasionally, no two works of art are identical, there is only a small number of bidders per work, and art includes a private value component (Goetzmann and Spiegel 1995). Further, a huge volume of art, some of it extremely highly valued, is ignored – private treaty sales, for instance, remain unrecorded. The art index needs an appropriate and equivalent benchmark, or benchmarks, in order to make sense of the performance of its millions of heterogeneous commodities.
