Every investor/economic commentator will have their own pet theories of when or if a market is going to hit the wall and the economy slow down. You would have to have been living in the upper reaches of the Amazon not to have realised that the global economic situation is looking dicier than for many months, at least as far as the West is concerned (emerging markets like India are a different story). Well, I wonder whether this story, about a disappointing art auction, is a harbinger. In the late 1980s, art fetched incredible prices: Van Goghs and Monets went for previously unheard of prices. But in the early 1990s the market sank before recovering as the dotcom boom took hold.
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Van Gogh and the current economic malaiseNovember 8th, 2007 |
 23 comments to Van Gogh and the current economic malaise |
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Oh dear!
Not a good time to sell then?
I was thinking of getting rid of the rather ugly Picasso in the Loo to refurbish the yacht.
It’ll have to wait for a Bull market, I guess.
Thanks Johnathan.
I believe in the gold standard rather than the Van Gogh standard. How’s gold doing ?
It’s up Jacob, up!
But not for us in the UK since Gurning Gordon sold half our stocks at the bottom of the Market, for a fistful of Euros…
I swear if this dour dim moron wins the next election, I am out of here!
Could be the canary in the coalmine, I had never thought about the art market being one of those, but now I think about it, it seems a good candidate. A relatively frivolous way of displaying your wealth, but one of the first things to cut back on if conditions tighten.
There is one thing I have long wondered about the art market and it goes like this
Mr Megabucks buys a Van Gogh for £100 mill. Unluckily for him an expert pops up and declares it to be by Darren Gough, and it is in fact worth £100. The thing I really don’t understand is that the painting is still the same in every way and just as beautiful, so why is it suddenly worth a million times less? Can anyone give me a serious answer, because I just don’t get it.
I daresay there are plenty of people who’d pay more than a ton for a genuine Darren Gough, especially if it was signed.
Seriously, it is strange though. I suppose it’s to do with the fact that these are artifacts of art history. The cricketer could paint something that looked like the artist’s work (theoretically; I don’t know how handy he is with a brush), but it wouldn’t be as important to the way the world perceives the art of painting. Its authenticity adds value in the same way the pen used to sign the Japanese surrender in 1945 would be worth more than any old 1940s Parker (or whatever it was). Even then, it is an odd aspect of human psychology that this should matter to anyone when, as you say, they’re otherwise identical, but it does.
An old Les Dawson joke for you.
I was rummaging in the attic the other day
and found a genuine Stradiverius and a Picasso.
Unfortunatly Picasso was lousy at making violins
and Strad couldn’t paint to save his life.
This doesn’t seem to happen with writers, just visual artists. Writers have good and bad books. Those critically acclaimed and not. But once a painter dies his whole ouvre is worth just the same. Crap bad hangover Friday or not. Awful dawb or brilliant realisation.
Yep weird. The Painted word by Tom Wolfe will help though.
As you know J.P. – if there is a big increase in credit-money the new money has to go somewhere.
It may go into the stock market, it may go into real estate, it may go inot the art market, it may go into …… or it may go into several different things.
The malinvestments vary – but they remain malivestments.
And the bubbles never end well.
Of course, strictly speaking, the modern financial system is closer to being a bubble, rather than just having bubbles (but thinking about the modern financial system too much leads to suicide or insanity).
I have contraditory info:
November 8, 2007
Art auctions brush aside fears over credit crunch with $34 million Henri Matisse
http://entertainment.timesonline.co.uk/tol/arts_and_entertainment/visual_arts/article2827154.ece
But isn’t that what people do in times of financial uncertainty? Hide their money in the matisse?
Notice Christies had a similar auction *the same day*. Could be the buyers were at the other house? But where would the fear come from without economic doomsayers.
Paul, not a single bid was made for the painting; nice try to dismiss the significance, but this would not have happened a year ago.
Vintage guitar prices are still moving up with all apparent confidence. Example: most people consider the 1952/early-’53 Les Pauls unplayable because of how they’re set up (they’re not unplayable really), but they have almost doubled in price in about three years.
I’ve been watching for evidence of recession in this market, but I’m not seeing it yet.
Billy Beck,
I’ve noticed that too. I think it is the Japanese collectors driving the market. Next to China they have the largest available surplus and need to find investments. That, and they’re big on classic American rock and roll. It’s a natural fit. Unlike speculators, I think they plan to keep them.
I’m not at all sure of that, Mid. I’ve been to Japan many times and I’m familiar with their American infatuations. The thing is, the action that I’m seeing is not centered in the high-end collectibles. I’m the one who used the the word “vintage”, and it could use qualification. Let me put it this way: guitars from the notorious Norlin era of Gibson history are doing astonishingly well. (I’m coming to terms with the fact that my ’77 Les Paul Custom — which I bought for $450 in 1984 — is in considerable demand. It’s now denominated with a number about five times higher.) Of course, I think that most of that dynamic is a consequence of the fact that the 50’s and 60’s-pre-Norlin instruments are now pricing almost totally out of reach of garage-class youngsters who figure “old” for “vintage”. The fact remains, however, that these numbers are in action throughout the whole catalog and across all kinds of generational lines.
In short, what I’m seeing is, I think, far too big to be tagged to the Japanese alone.
How much for a Rickthoffen turboprop,
Wa wa and effects, marshall amp and Leslie Speakers.
Or was I sold a sopworth pup?
Billy Beck,
Perhaps I’m mistaken to try to attribute the climbing (guitar) prices to anything in particular.
What do you think is driving values? Is it players or collectors? It seems to me that there must be a fairly strong collector/investor element. I have a Guild Bluesbird of about that same vintage as your Les Paul, purchased used around 1980 also for around $450 w/new Guild case. While very similar to the Les Paul (and I think a good guitar), it’s not rising so much. I have no intention of selling it, but if the ’67 through early ’80s Guilds begin to move, I’ll have to raise my insurance. The last time I adjusted it was about 2 years ago.
My point in comparing the Guild and Gibson guitars is that one is going through the roof and the other is just tracking inflation. I think their quality is comparable. Perhaps Guilds have started moving but I missed it. I bought them in the first place because they were the best guitar that I could afford. I thought they didn’t have a name brand premium effecting the price. (I’m not real keen on the Fender buyout, but …)
(D-25, G-312, S300D, Bluesbird, ’67 Starfire II Bass)
“Is it players or collectors?”
I think it’s all of ’em. It looks to me like nearly everybody who can lay hands on cash is paying really remarkable numbers for a wide variety but within a pretty narrow range: I’m only watching Gibsons. And, see, there’s a lot of fashion in this. It’s like Harley-Davidson almost.
The high end collectibles are just crazy, I think, but I don’t get to play anywhere near that league so it’s easy for me to say that. But a lot of the more mundane stuff is doing remarkably well; the sort of thing that might fill out a corner in a serious collection, but getting collectors’ numbers from players, too. And I just wonder what’s going on. I sometimes think the top end of the market is pulling the rest of it along. There are lots of new/new-ish mass production runs at popular prices, but more distinctive items are trading in more than playability, and nearly everything like that seems to be doing pretty well.
Sometimes, I’m surprised. I thought The Holy Shit Guitar would do well at sixty-five hundred but it didn’t get a single bite. But, see, that’s a pretty niche item. Not everybody dreams about the 74/75 Deluxe in Blue Sparkle, or even knows what it is — which, I guess, might be part of the point, except that I thought it was cool the very first time I ever saw it. Well, it turns out, it’s gotten fairly damned cool after the turn of the century. Not sixty-five hundred dollars’ worth, evidently, although I maintain that if the right person saw that thing, that number wouldn’t seem completely out of hand. (That’s a universal economic principle, innit?)
The thing is, those years are widely regarded among the worst in Gibson history, and people able to handle earlier guitars are often surprised to see the prices that even more regular Deluxes, say, are getting. I think new Gibsons are very expensive, and that’s gotta be pressing the used market, too. It’s just that the way some stuff has been floating lately makes me wonder what some people are thinking.
“I thought they didn’t have a name brand premium effecting the price.”
Yup. That’s right.
I looked at the guitar you linked. Two things I noticed, first, I had no idea they could date the pots. But second, I think the way he listed it, with a starting price instead of a hidden reserve, didn’t allow people to build up confidence in the price. From decades of attending all kinds of (mostly farm) auctions, I’ve watched how a good auctioneer uses momentum. It’s the old thing about “well, if someone thought it was worth ‘X’, then ‘X’ + $50 can’t be too big of a mistake.” If that’s a factor in guitar prices, that suggests that there is not a hard price line.
Maybe to a large extent it is people hiding from the dollar. Then it becomes a matter of what somebody thinks will retain value and what won’t. I love the feel of a well crafted guitar, but I don’t think I would count on them holding their value if people get cold and hungry. I also don’t think I’ll be buying a late ’50s ES-335 anytime soon. You weren’t just kidding. Some of the askings are obscene. I want some of what this guy is smoking. If he gets it ?!? …
“…momentum.”
Yes: I think how he listed it got in his own way.
“I love the feel of a well crafted guitar, but I don’t think I would count on them holding their value if people get cold and hungry.”
That’s right, and that’s my general question lurking at the bottom of this market.
The 335 you linked at $36.6k: that’s actually a not bad deal for a ’59. The reason for that is the Bigsby vibrato rig. They are not preferred. (This is the “fashion” angle.) The thing is, I just don’t see playability in some of these numbers. There simply is not — certainly to my ear or touch — over thirty thousand dollars in difference of playability between that ’59 and a brand new Custom Shop example of the same guitar. That means there is a hell of a lot of something else going on here, and I don’t know what it is.
Okay, not to beat this thread out-of-shape any more than I already have:
Mid, take a look at this, just found on my nightly rounds. 1969 Les Paul Custom: second year of the original reissue. (The single-cutaway body design was out of production between ’61 and ’68.) It’s a lovely axe.
…looking for a twenty-one thousand dollar Buy-It-Now.
There is no way in life I could ever rationalize paying $21k for a ’69 Les Paul — the only possible exception being a hyper-inflation — and I never ever would have imagined that anyone would even suggest such a thing.
I’m tellin’ ya: the whole thing feels weirder and weirder all the time.
I’ve been thinking on this and trying to decide what it feels like. I’m thinking about the tulip mania in the Netherlands. I don’t know what the economic environment at that time was like, maybe I can talk Paul Marks into posting an article on the economic situation surrounding tulip mania. I think one reason this whole works of art market is so confused is because it is in transition from a luxury market to an inflation hedge with a lot of crossover.
My sister says her husband sold his Gibson acoustic and used the money to buy a Martin. Hhmmm… She liked the Gibson better and sounded a little disappointed.
ES-335 is one of my most “I want one of those” guitars. I’ve got the incredible (but worn and buckle rashed*) Starfire II bass, but would love to have a six string version. But when I look at the difference in values between the 6 string Starfires and ES-335s, it’s too big. That’s why I went Guild in the first place. For that matter, if I was to choose today between the ’67 SFII with the Hagstroms or a late model FenderGuild SFII refitted with Darkstars, it’s possible the late model is actually the better guitar purely from a player’s viewpoint. But that’s not how they are valued. And the DeArmond SFs were gathering dust and spider webs on dealer racks yet players who buy them usually like them a lot better than the unmodified F/G SFs even though the f&f is not so good. (Better pickups.)
This huge subjective element focusing on the early and classic rock era is why I thought it was Japanese collectors/investors. Subjective values. Like tulips?
The other thing is that word “hyperinflation”. I’ve been telling my friends for two years now, “don’t hold currency”. Maybe it’s people trying to not hold currency and have some fun at the same time.
*I didn’t do it. I bought it that way.
“Tulip mania”: that occurred to me years ago, already, about the time that the top-end Les Pauls hit about three hundred grand. My bottom-line wonder is how far this’ll go before it all blows up.
“I think one reason this whole works of art market is so confused is because it is in transition from a luxury market to an inflation hedge with a lot of crossover.”
Emphatically agreed. This is a very complex scene, and the inflation angle cannot be ignored.
“This huge subjective element focusing on the early and classic rock era is why I thought it was Japanese collectors/investors. Subjective values. Like tulips?”
Well, sure. I mean, I was raised on Gibsons from an early age, and I like ’em. It’s pretty simple: “Everybody gets to go to hell in their own go-cart.” And here’s how that’ll play in a market like this: people with that kind of preference and enough money will simply knuckle-down and pay the freight, even if the whole market is jumping like a frog on a hot skillet. Now, there are deals out there for guys like me. A couple of years ago, I knocked down a great SG Special, a 1995, for $550 on eBay, but that’s just about being a player, without any sort of investment angle, etc. The thing is, that “crossover” thing you’re talking about starts working on a lot more recent instruments than, I think, ever before.
I’ve never played a Starfire, and I wonder how it would compare in an A/B swap with a 335.
As I said in my “Axebites” column this evening, I’ll be watching this 1963 ES-355. It’s looking for a BIN of almost $14k, which is about what I’ve roughly figured for my ‘62 355 (inherited from my Dad: he bought it in ’66 for $395) with features more highly-valued for a long time now. For instance: the pickups in mine alone account for a difference about about five thousand dollars.
My father never hesitated to go gig that axe, and I don’t, either. I’m wondering when I might decide that it’s simply too valuable to take out of the house.