Salon | Art Market Talk | 10 Things You Should Know Abo… — Transcript

Good evening. My name is Josh Baer, and I am a recovering former dollar risk turned art advisor turned art market journalist who publishes something called The Baer Facts. When I speak to an audience before I get started with what I have to say, I like to get a sense of who's in the room so I can try to adjust my issues to you. How many people in this room are artists? Okay. By the way, there are more artists in America than lawyers. It's an interesting census statistic. How many are dealers? Okay. How many are collectors? Okay. How many people here are art advisors? For Tiger Woods? No? Okay. So that wasn't everybody raising their hand, but it gives me a sense of this. So each year, I tend to do a David Letterman type approach of 10 things about something. So this year, it's 10 things about buying art. And the first thing that some of you might notice is that a really traditional talk like this would probably say 10 things about collecting art, and I want to have a little sense that that's a little bit of a different take that I'm taking because everybody sort of is conceiving themselves as maybe collecting. So keep in mind I'm talking about buying art. And those of you who have heard me speak before know that I like to make a point right off the bat that we tend to think about or talk or be asked about the art market as if it was one thing, and there is no such thing as the art market. There are many art markets. There's probably one art market for each artist. There's certainly an art market you might generalize about Chinese contemporary art, but does that have anything to do with the market for WPA art? So when people ask about the art market, I think what they really are skinning saying is, what about the things I'm interested in? What about if I'm an artist? What about the market for my work from a gallerist? How am I doing? If I'm a collector, what about the things that are comparable to what I'm doing? So I really like to shy away in some ways from these what could be overgeneralizations because it's really specifics that matter completely in either looking at a work of art or which artist or which magazine or which museum to deal with. So that's a point I always like to start with. And mind you, at the end of my 10 or 11 things, I'm going to open the floor for questions, so hopefully there will be some. Issue number two is that not all artworks have the same value. You might have an exhibition that has ten works that are the same size, the same year, but obviously by the same artist, and the galleries are offering X dollars for each one. So the assumption is that they all have the same financial value, but they don't because as soon as the show is over, some of them are probably or may be worth more, and some of them may be worth less. The gallery always has to price them exactly the same, so they're never making a distinction that, well, all the four-footers, this one is more in a primary exhibition because it's better. So keep that in mind when you're looking at a show and you're looking at the price. That one of the key elements is sort of hasn't happened yet as to what something might be worth. Now, another thing that I like to think about is that it's probably a dealer that most of you have heard about named Larry Gagosian, and he told me something interesting once because I was talking and said something about, oh, this client of yours. He said, I don't have clients, I have customers. And I thought that was an interesting comment that I don't think any other dealer down in this fair or any of the fairs would be willing to use that term, and yet he's thinking in that way, and I think I know it just resonated quite a bit to me. Galleries tend to also overuse and advisers and say, so and so is my client. It's like they own them. And now in some narrow circumstances, there are relationships where a collector works only with one person, but what you need to know in this rule things about buying art is that you have the ability and should be able to shop or buy anywhere. You're not tied down now to any one region, one dealer. Certainly, there are advantages for becoming a better customer at the same store. It's like going to the same restaurant over and over. You'll get a better table, you'll get better service if you tip well, you do well. And then the art game is played that way, but you're a customer, and you should be able to shop wherever you want. Now, the flip side of that is there are some rules, and my colleague who spoke before said when asked about selling art, there are some rules about how you should sell art that are a little different than how you should buy art, notably that it's considered good form, too, if you're trying to sell something, to offer it back to the person who sold it to you in the first place. But as a buyer, you should be able to buy from London or New York or anybody, and you should make use of that. Now, another point I'd like to make about buying art is we have two markets that are described as the primary market, which is an artist who's generally a living artist who is represented by a gallery. It comes from the studio or it comes directly from that artist who's being paid. That being the primary market. And the secondary market meaning a work that's already been sold at least once and it's back for sale for its second, third, fiftieth time. And art markets are not that efficient, so the primary market and the secondary market value of things are rarely, if ever, the same. So in a climate like we had through September 2008, for successful artists, the secondary market price was generally higher than the primary market price. Galleries were still pretending that they were doing a good job keeping the price down to only three hundred thousand or only thirty thousand or only three million, and the secondary market existed for people who couldn't get those works, and they'd be willing to pay more at auction, at other private dealers, from people who bought it. So there was, they weren't equal. Now we have a recession, which maybe is winding down a little bit, but now the secondary market can often be less expensive than the primary market. The galleries are still insisting on holding to their price points because either they think it's bad form to lower their prices, which I disagree, or the artists are insisting that because they're so much a better artist that their work should be more expensive. So that gives an opportunity for people to buy works for less money elsewhere. So those things are always in flux, and there's never a stasis except maybe in the print market where you have every object, it's always the same. So if you have a hundred Warhol prints, they will be the same price everywhere because everybody knows that you can go check things out elsewhere. But so I would say the print and sometimes photography market is an exception, but there's not a balance there, and balance sort of flipped in the last year and a half. Now, how do we know these things? Well, on the one hand, information is sort of not just in argument and everywhere. It's this killer thing that we think we know things because we read about it on the internet. So first of all, if it's on the internet, it must be true, which may or may not be the case. And the other thing is I like to always say that we're over-informed but we're undereducated. So the information that you might be getting about, and now we're talking about buying art or comparable prices for things, so people use databases to look at artworks, and it doesn't take into account quality differentials, condition, condition of artworks being different. So saying that the last Frank Stella sold for X makes you understand the price of this Frank Stella is a little bit misleading. And people who have made their living analyzing data tend to overuse the statistics a little bit. So that extra information, I think, is actually not—it gets in the way quite a bit of people convincing themselves that they know more than they might, which makes me think you kn—

I have to say I like to get a sense of who's in the room so I can try to adjust my issues to you how many people in this room are artists okay by the way they're more artists in America than lawyers

it's an interesting census statistic how many are dealers okay how many are collectors okay how many people are here is the art advisor for Tiger Woods no okay so they and that wasn't everybody raising their hand but it gives me a

sense of this so each year I tend to do a David Letterman type approach of 10 things about something so this year it's 10 things about buying art and the first thing that some of you might notice is

that a really traditional talk like this would probably say 10 things about collecting art and I want to have a little sense that that's a little bit of a different take that I'm taking because everybody sort of is conceiving

themselves as maybe collecting so keep in mind I'm talking about buying art and those of you have heard me speak before know that I like to make a point right off the bat that we tend to think about

or talk or be asked about the art market as if it was one thing and there is no such thing as the art market there are many art markets there's probably one art market for each artist there's certainly an art market you might

generalize about Chinese contemporary art but does that have anything to do with the market for WPA art so when people ask about the art market I think what they really are Skinner saying is what about the things I'm interested in what about if I'm an

artist what about the market for my work from a gallerist how am i doing if I'm a collector what about the things that are comparable to what I'm doing so I really like to shy away in some ways from these

what could be over generalizations because it's really specifics that matter completely in either looking at a work of art or which artist or which magazine or which museum to deal with so that's a point I always like to start

with and mind you at the end of my 10 or 11 things I'm going to open the floor for questions so hopefully there will be some issue number two is that not all artworks have the same value you might

have an exhibition that has ten works that are the same size the same year but obviously by the same artist and they have and the galleries are offering X dollars for each one so the assumption is that they're all have the same

financial value but but they don't because as soon as the show is over some of them are probably or may be worth more and some of them may be worth less the gallery always has to price them exactly the same so they never making a

distinction that well all the four-footers this one is more in a primary exhibition because it's better so keep that in mind when you're looking at a show and you're like looking at the price that one of the key elements is

sort of hasn't happened yet as to what something might be worth now another thing that I like to think about is that's it's probably a dealer that most of you have heard about named Larry Gagosian and he told me something

interesting once because I was talking and said something about oh this client of yours he said I don't have clients I have customers and I thought that was an interesting comment that I don't think any other dealer down

in this fair or any of the fairs would be willing to use that term and yet he's thinking in that way and I think I know it just resonated quite a bit to me galleries tend to also overuse and

advisers and say so and so is my client it's like they own them and now in summing some narrow circumstances there are relationships where a collector works only with one person but what you need to know in this rule things about

buying art is that you have the ability and should be able to shop or buy anywhere that you're not tied down now to any one region one dealer certainly there are advantages for being coming a better customer at the same store it's

like going to the same restaurant over and over you'll get a better table you'll get better service if you tip well you do well and then the art art game is played that way but you're a customer and you should be able to shop

wherever you want now the flip side of that is there there are some rules and my colleague who spoke before said when asked about selling art there are some rules about how you should sell art that a little different than how you should

buy art notably that it's considered good form tool if you're trying to sell something is to offer it back to the person who sold it to you in the first place but as a buyer you should be able to buy

from London or not Oh or anybody and you should make use of that now another point I'd like to make about buying art is we have two markets that are described as the primary market which is an artist who's generally a living

artist who is represented by a gallery it comes from the studio or it comes directly from that artist who's being paid that being the primary market in the secondary market meaning a work that's already been sold at least once

and it's back for sale for its and third fiftieth time and art markets are not that efficient so the primary market and the secondary market value of things are rarely if ever the same so in a climate like we had through September

2008 for successful artists the secondary market price was generally higher than the primary market price galleries were still pretending that they were doing a good job keeping the price down to only three hundred thousand or only thirty thousand or only

three million and and the secondary market existed for people who couldn't get those works and they'd be willing to pay more at auction at from other private dealers from people who bought it so there was they weren't equal now we

have a recession which maybe in winding it down a little bit but now the secondary market can often be less expensive than the primary market the galleries are still insisting on holding to their price points because either they're they think it's bad form to

lower their prices which I disagree or the artists are insisting that because they're so much a better artist that their work should be more expensive so that gives an opportunity for people to buy works for less money elsewhere so

those things are always in flux and there's never a stasis except maybe in the print market where you have every object it's always the same so if you have a hundred Warhol prints they will be the same price everywhere because

everybody knows that you can go check things out elsewhere but so I would say the print and sometimes photography market is an exception but there's not a balance there and balance sort of flipped in the last year and a half now

how do we know these things well on the one hand information is sort of not just in argument and everywhere is this killer thing that we think we know things because we read about it on the Internet so first of all if it's on the internet

it must be true which is may or may not be the case and the other thing is I like to always say that we're over informed but we're undereducated so the information that you might be getting about and now we're talking about buying

art or comparable prices for things so people use databases to look at artworks and it doesn't take into account quality differentials condition condition of artworks being different so saying that the last Frank Stella sold for X makes you understand the price of this Frank

Stella is a little bit misleading and people who have made their living analyzing data tend to overuse the statistics a little bit so that extra information I think is actually not it gets in the way quite a bit of people

convincing themselves that they know more than they might which makes me think you know we we've often talked about people how they buy art and then we made the point and I was made earlier that a lot of people seem to buy art

with their with their ears I think what's happened is that people started buy art with their brains and they were there into analyzing things in people financial people made their careers on being able to take information research it study it and they have an

intellectual relationship to objects but they they sometimes missing the aesthetic or the visual or the emotional relationship so it's not as bad as buying something with your ears where you're just listening to who's the hot thing or what it should be but if you're

only buying with your brain first that's another kind of new thing that you you just have to be pay attention to your own buying and how you're functioning and you need to sort of learn what process you go through for looking at

work of art me personally I look at the historical value of an object then I look at the market value then I would get the aesthetic Val that's how I experience art everybody has a different process my wife looks at

the beauty and then she looks at the form and then she probably does a few other things and it's a different process and we each have our own process and if you really thought about it you could probably identify how you go

through this because you have 30 seconds you're looking at an object making a decision whether to look at the next object particularly at an Art Fair where there's you know if you spent one minute in every booth you'd be here for almost

six hours so if you're coming for one day I can experience so many objects so you have to figure out how you're getting information and how you're analyzing it in terms of intellectual versus I could almost say academic

things now back to some market things and by the way again I want a number of hands of dealers in the room okay so there four of you four of you are gonna like this statement and art advisers one

okay five of you are gonna like it and the rest of you may not like it the next point I make is a kind of like just shut up listen to the people who know what they're talking about a lot of

collectors and art buyers want to talk when they're interacting with looking at objects and that talking is interfering with actually learning something from people who know more than you do and you're much better off spending that time either listening or looking so you

know keep keep quiet there's plenty of time to talk later or do your gossip or whatever but the dealers aren't really probably learning much from you you're trying to maybe validate who you are by showing that you know that you know this

thing relates to that thing but it's really not very interesting or important and you can have that internal dialogue but you know like I said most of you may not like this but just shut up okay now if all of you haven't left the room

by this point I'd like to say this if if somebody comes along to you I don't know how many times this happens to you but happens to me when I walk around with my clients that it seems like every booth I

go into has a masterpiece it's kind of unbelievable that there are so many hundreds of masterpieces in one building and every gallery sort of has a great deal this is such a great deal it's only there's much and I want to think well if

it's such a great deal why didn't you buy it yourself why are you giving that opportunity to me and particularly if you're not one of the top 10 20 ex collectors in the world if somebody is telling you particularly a more marginal

person who that this is the greatest opportunity and they should do this it's like my first thought is well why don't they buy it themselves it's like if I just met you and I said you know you're a collector there's this great thing

it's $10,000 it's going to be a masterpiece it's gonna be worth millions trust me why would I be giving it to you I just met you at cocktails at the ritz-carlton yesterday I'm gonna be thinking it self-interested probably gee

maybe I'll keep that one so I'd be very dubious for things people are really trying to push it with this idea of the this great deal I would also I find it remarkable when I hear about how something now this is a you know a

gallery let's say googling gallery or whatever it's only 1.3 million dollars when the gallery director is telling me that and I'm thinking I wonder how much money you have in the bank it's like I think you should use that's

a four that's like four times my salary or that one's 0.3 or that one's a 10 because other than the gallery owners none of these people can afford the art that they're telling you is so cheap so I'm a little bit flabbergasted when I

hear those expressions so you know you have to be thinking most people that you're buying art with after-tax dollars that you had to earn and that's a lot of money and it's a lot easier than then somebody's telling you it so it's only

fifty thousand dollars but you know that's still a lot of money and you should use the same rigorous principle for buying I think any work of our at any value the same discipline of going in well let me pull that back you can

you can do that I'll talk about ours as an investment in a in a second but it's good to use the same rigor to make every decision whether it's four five thousand dollars or five million dollars unless you're an addicted shopper which some

people collect art are now I would postulate that art is usually it's a bad investment now we read about these great stories but most people don't keep score very accurately so they tell you about some work that they bought for ten

thousand that's worth two hundred thousand dollars now but they don't tell you about the other 19 that they bought for ten thousand dollars that's sitting in the closet so they don't like to tell about their failures so scorekeeping in

collector world is not usually very good and even if you were to do a pure financial analysis of how you spend money it usually doesn't come out that well even in the greatest tits it's not quite as good as buying

Microsoft the first day or buying berkshire hathaway stock the first day and it's it tends to be a worse investment than people think now it depends if you're that Brinks in mind whether you're buying art or collecting art or investing in art if you buy it

because you love it and you can afford it and you're happy to have it forever that's a pretty good standard that you can't get goodbye that's you know I like that theory and in certain points it's like you know if no one likes it and I still

like it I'm happy how can it go wrong now there comes a point for everybody where there's a sum of money where that equation changes for some people it's ten thousand dollars for some people it's 1 million dollars for some people

it's a hundred million dollars where they say well what about the worst case you know you know I could never conceive of the Dow Jones going down to 6,000 from 13,000 but if it did what would I be able to do could I sell this object

for some cost so there is a point there where for each of you there might be an issue what it what if and that's a valid question to just feel like you're comfortable because if you answer if you keep that in mind that can

help you make some decisions about whether or not to buy something as to sort of the worst case scenario because we don't we all know we like to judge things by the best case scenario now within that I would say that art is

enormous ly easier to buy than it is to sell and it seems like you know the last few years it wasn't the case and that was a a simple time when everybody was a genius so everybody who bought art it

was worth more kind of like all the geniuses who bought condos in Miami in Miami Beach so when one was worth more 10 had to be better maybe even whole buildings because after all I am a genius and and buying it is was easy

selling it is really a very difficult thing and that's why dealers get such a high percentage of what what they get whether from the artist of 40 or 50 percent or 5 or 10% or 20% from private clients their auction houses get 25

percent it's a very hard thing to do so I would say if you're a private collector and you're thinking about becoming dealers and mind you many of the best dealers were collectors at one point or are also collectors you know be

careful because you run the risk of no longer enjoying what may be one of the greatest pleasures you have which is buying and living with art if you turn it into a business there's a very good chance that you may become a little bit

jaded or be a little less interested in what you're doing now one other thing about buying art that I like to think of buying art is kind of like buying a new car you know when you buy new car and it's great and

you drive it like 20 feet off the lot you've lost what about seventeen twenty percent in the first ten feet it's not a very good use money in that way is it you know I would tell you to buy a

slightly used car but buying arts the same thing as soon as you bought it you're down ten or twenty percent as soon as the check has gone out of your hands or the wire transfer has gone through you're in a negative equity

situation you're underwater with your artwork because there's a transactional cost that you would have to go through to get your money back so you know I always thought it'd be great to have an Art Fair in Las Vegas because you could

sell a work of art to somebody for say $100,000 they go to the casino that night it was a bunch of money they come back the next day you give them 80 then they take their 80 they go back the

casino they win some money back then they come back they give you 100 then can go back and forth so I thought it'd be a great opportunity Vegas to for dealers to play that game because what I think the economic term is the

elasticity of art is there's these transaction costs so that's also why you have to be a little bit careful I'm gonna make one more point which is sort of number 11 before I take questions is that buying art I think is an act of

faith when you buy a refrigerator it's pretty clear what's something yge is versus Sears vs. Maytag there's really an act of faith as wisest were 18,000 why not 17 why not 19 why not 20 and the dealers were always tell you all 19 would be too

much and 17 would be too low and 18 that's the right price but there is no right price it's completely an act of faith of going and buying art because there's no really intrinsic value it's just there's supply and demand but there

is no intrinsic value so you're operating from from truly faith and I think that's a wonderful thing about buying artists that you're injecting faith into a cultural endeavor so those are my 10 or 11 points so I open it up

to questions if there are any in the very beginning you listed some steps in the process that you go through mentally when you evaluate a piece of artwork and you said first comes its historic value what you perceive as its

historic value then next was market value and then its static value can you differentiate historic value from the aesthetic value can you elaborate on that for me when something was made matters so personally I'm not interested in any abstract art by somebody who

started making app shock art after 1975 because I think all the historical have OnGuard of what's been achieved in abstract art has had already happened until somebody comes up with something that proves me wrong that happened so I think it may be

aesthetic and it may be nice for me it has nothing to do with the history of art it's not going to be in the books I'm not so inclined that's that's my way of looking at things hi it's just a simple screen because I

want to hear something about the human side of the collector I am very involved with the art world but I want to go farther than that this point so when you say that your wife when you choice a

piece of art look for the view read the form describe me please the moment that you buy on our piece and then emotionally more than the typical considerations how it is when you have time where you are no hungry for example

you have when you are in your mood well I'm the only one probably in this building who basically doesn't collect art or wanna collect art I was raised by artists so may art was made and it left I'm interested in supporting our time

sometimes I buy art as my job as private art dealer occasionally or to make money so I don't choose to live that to live that way I think where it would intersect is when history market beauty intersects Beauty history market

and they all come up plus plus plus for my wife and me that would be a win if we were buying things together we just hang things that she happens to to own or like but I have no interest in it myself

I'm a huge fan of your newsletter but I had have you ever had any I guess issues with the privacy considerations of the things that you publish and also how do you validate or how do you validate some

of that information well because I'm also an art advisor I choose my art advisory in relationships with my suppliers and contacts first so I'm gonna tell you for your $200 a year for 55 issues I'm choosing that side in

my business first over something that I might or might not put in my newsletter I'm so I'm gonna be upfront with that then I mean going to think about my relationships and I'll know that people particularly private people want their

privacy respected so sometimes I'll consider that I'll consider how much I like the person I'm just telling you the truth and how I make this decision I make the decision based on whether I'm the first to write about something then

I make the decision about is it good for the community to talk about what's going on and there are a lot of processes but it's really you know pretty pretty direct I wasn't sure if I heard you right

earlier when you said that art is not like the stock market but at the same time you're in a position where urine or advisor as the same as a brokerage firm and therefore especially now if you're behind for an investment it becomes the

same as real estate because you can do a 1031 on it when you're buying for your own aesthetics and for your own self a whole different appointments go into it well how do you react to that step I think

you if you're I think you have to be clear about what your intentions are when you're buying it you know your stockbroker will tell you not to fall in love with shares of stock and as its dropping that you love it maybe time to

get out so if you're buying art as an investment don't confuse it with art that you're buying because you love and if you're buying art because you love it don't get confused with it as an investment so if you're really buying to

invest in it and technically if you're doing 1031 exchanges they want you to be saying that's why you were buying it that no one to base that rule that it was purely as an investment then treat it as such the same way but people get

confused between the two and when you do that you can get in trouble you don't sell it when you should as an investment because now you've decided you've liked it so in fact you're paying a lot more money for it then you would have or you

decide that gee it's good somebody should have it I you know that they haven't offered me enough money I'm not selling just be honest with yourself for which you're doing with that object and but people tend not to

somebody first somebody who hadn't asked that oh come on you mentioned that art databases aren't the best way for people to educate themselves on how to buy a piece of art and the pricing of it but besides listening to dealers and and people who

know about the art world and I mean as you mentioned before how would you suggest people educate themselves on how to buy a piece of art and the price of it why not say I just trying to make the

point it's not the only way people tend to look at as the only way you know I would say you know these these databases are about auctions I would say make sure you go look at the works in the auction

so if you're walking around and you happen to be interested in an artist and you have a catalog make a note that says Wow that has a huge crack right down the middle of it maybe it didn't sell so

well because it had a water stain across a third of it and been folded now or to make subjective views about the quality so it's it's part of the equation but it's not a it's not the entire part I

use it every day so you it's a good tool but it's you know it can replace other research can you say why you order your your priorities in particular wait I just realize that's what I do so I you know was teaching once I I

wondered about how we did and I did as an experiment with my class and I'm I asked everybody write down how they in fact look at an object because when you go look at an object we each have a way

we process it there's this square or something on the wall what is your brain doing and I just happen to think about it and try to identify how I do it and asked other people a little bit and I think you've

got one you just if you thought about it you know what what yours is 95% of the time so you're not suggesting that it's an absolute I'm just way I do it you do it and that's why I say my wife does it

completely oppositely and you know I'm gonna stick to first two new questioners this is a very broad question so answer it any way you'd like what are your thoughts on fares like this fares like this are they're great for information

gathering the great opportunities to ask questions because if you come up to Chelsea all these guys are behind closed doors and they want to take your question and the receptionist is too busy you know shopping online so like

say hello to you so it's a great opportunity to like you know find out something I think if you're you know I have two groups of collectors I work with people are just starting who have nothing and don't know much this is a

great place to try to find things for them at the beginning at whatever price level then they have some clients who have 30 years worth of collecting this is a hard place to find something that's as good as the things they bought over

thirty years of doing it and then I my goal there is just find one thing so it it's works there's something for everybody from newbie to old pro to you know it gives you a sense of what you

might be interested in as information of how to go further I think one last question before I have to catch my plane sure can you speak to the value of prints and for those of us who are just starting out and wanting to collect

some of the more established artists but those are out of reach can you speak to the value or the ignorance in terms of investing in prints a great print is better than a bad drawing and a great drawing is better than a bad painting of

the same artist so I think prints were obviously the entry point that got lost when photography became considered more fine art than pure photography I would pay attention to you know for me for instance Jasper Johns is the

greatest print maker of the last 50 years so I'd rather so--that's keep that in mind it's certainly an easier thing to grow out of s you have more resources to have more distribution to be able to then trade up

or trade out but you know there's also then when you're looking at prints you really need to pay attention to the app I don't really care about a Terran bend in the corner of an painting but if there's a bend in the corner of that

print you have to know it compared to the same print that's in Boston and Frankfurt and London and a hundred other places so it becomes a little bit anal about condition and I'm not me personally that way it's like people who

collect photography and vintage photography that there's one millimeter foxing on there it doesn't matter to me but to a pure photography collector it does and to pure print collector exposed to me I care more about well what's that

I said the historical something yeah that stuff okay thank you very much for coming