The art market finally crashed, dropping 35% in the first quarter. Peak to trough, it’s still outperforming the S&P.
FT: The Mei Moses index, set for release on Tuesday, shows art prices fell 35 per cent in the first quarter, having held up during earlier months of the financial crisis.
The overall index fell 4.8 per cent last year.
The decline accelerated as people who lost money in the financial crisis, including victims of the Madoff fraud, put up works for sale, often at a loss, several art world insiders said.
The selling has particularly hit works by postwar and contemporary artists, they said. The Wall Street elite had favoured such works during a seven-year boom in art prices. The best performing postwar artist, Andy Warhol, saw a decline in the value of his work. A Warhol portrait of Mick Jagger sold for $1.1m in the quarter. The seller bought it in 2006 for $1.5m.
ART TURNS DOWN IN 2008 BY ALMOST 4.5% BUT DRAMATICALLY OUTPERFORMS THE DECLINE IN EQUITIES
We publish new values of the Mei Moses® All Art repeat sale index during early January of each year. The 2008 decrease in the return of the all art index of almost 4.5 per cent is the first time our all art index has declined after five years of positive annual growth averaging almost 20 per cent. This result dramatically out-paced the 37 per cent decrease in the S&P 500 total return index (where dividends are reinvested tax free) for 2008. The most recent five and 10 year compound annual returns (CAR) for art, 11.7% and 9.5%, also exceed the returns of stocks, -2.2% and -1.4% respectively. However, both art and equities were outperformed by bonds, bills and gold in 2008. Art also outperformed bonds and bills during the five and 10 year periods but all were outperformed by gold. Stocks outperformed art over the last 20 five years by a CAR of 1 per cent but equities dismal performance in 2008 has caused the prior substantial outperformance of equities over this time period to shrink from a CAR of 5% to its current level. However, for the first time since the early 1990’s art outperforms stocks over the last 50 years, with a CAR of 9.8% vs. 9.2% respectively.
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