A view of the art market: post pandemic trends
Originally published in Western Home Journal
Sales of art and collectibles are significantly influenced by the wealth effect created by bullish stock markets. Insert ISSUU slider player below here:
ART and the CAPITAL MARKETS
High net worth and ultra-wealthy fine art collectors have been undeterred from investing in art during the ongoing global health crisis. One year ago, the rearview mirror reflected a dismal reality of steep declines in art sales followed by closures and industry downsizing. Yet 2021 has solidly repositioned a market recovery in our line of sight.
On March 23, 2020, the S&P 500 Stock Index plummeted to 2,237, a drop of 51% from the market’s all-time high just one month prior. It then went on to breach 4,700 in 2021. When stock valuations are rising, consumers increasingly feel financially secure and confident. The resulting wealth effect creates a change in consumers’ perceived wealth and accompanies a shift in spending. Credit Suisse, the global investment banking and financial services firm, reports that the world’s wealthy remain largely insulated from the pandemic’s economic upheaval, citing an additional 5.2 million people who joined the ranks of the world’s 56.1 million millionaires for the first time in 2020.
“If my portfolio is up 30%, it’s reasonable to splurge on a piece of art,” says Doug Woodham, managing partner of Art Fiduciary Advisors and a former Christie’s president.
In September, renowned cultural economist and founder of Arts Economics Dr. Clare McAndrew completed her annual research and published Resilience in the Dealer Sector. This year’s key findings in McAndrew’s study show that more than half of art dealers reported an increase in sales and collectors remained engaged. And with millennials leading the way, female spending rose at the same time female artists became more prominent, digital acceleration continued, and sustainability is top-of-mind with collectors.
To appreciate some of the shifted perspectives, in the pages that follow, we’ll offer a glimpse of the art market’s generational divide, define the increasing presence of non-fungible tokens, and consider the changing roles of industry intermediaries.
DISCLOSURE: A View of the Art Market; 2021, 2022 Suzanne Hazlett, MBA, CIMA®, CFP®, is a Certified Investment Management Analyst® and CERTIFIED FINANCIAL PLANNERTM professional. Certified Financial Planner Board of Standards, Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, and CFP® (with plaque design) in the United States, which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements. Nonfinancial assets, such as fine art, are complex and involve risks, including total loss of value. Special risk considerations include natural events, complex tax considerations, and lack of liquidity. Nonfinancial assets are not in the best interest of all investors. Any opinions are those of the author and not necessarily those of Raymond James. This material is being provided for information purposes only and is not a complete description of the securities, markets, or developments referred to, nor is it a recommendation. Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional. Raymond James is not affiliated with any of the above-mentioned individuals or organizations. Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website's users and/or members. HAZLETT WEALTH MANAGEMENT, LLC is independent of Raymond James and is not a registered broker/dealer. Investment advisory services are offered through Raymond James Financial Services Advisors, Inc. Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. 675 Sun Valley Road, Suite J1 + J2, Ketchum, Idaho, 83340 208.726.0605 HazlettWealthManagement.com
