For the love of art

This doctor not only knows what he likes, he knows art. It takes more than that to make money. Rothko's up, Warhol's down, Cezanne's even

By Theo Sands

What makes the art market move? Just because a painter is good, even great, doesn't mean one of his or her works is a good buy. True, over the long term, it's hard to miss with a Cezanne, Warhol or Picasso. On the other hand, you could lose your shirt over Chagall. The painter churned out so much - some say mediocre - work in his final decades that collectors aren't much interested in anything after the 1920s. As a result, the prices for his work have fallen by an average of 50% in the last 15 years. Perhaps Chagall's later work really is poor. But to know for sure you need an art appraiser, not a market watcher. There are a lot of factors more important than quality that can affect the value of a piece of art. Here are some of the things you should know if you're attempting to evaluate the future worth of a work of art: Retrospectives that get good reviews hike prices considerably. When auction houses such as Christie's and Sotheby's move an artists work from day sales to evening events, know that the work's going to sell for more. Watch what the big players are buying. If a George Weston type is buying a Group of Seven or, in the US, if someone like Bill Gates has a passion for work by the New York School, watch out. Prices are going to soar. Keep an eye on which artists are being pushed by auction houses or galleries. A push today often pulls prices up tomorrow. Usually, but not always, the art market rises and falls with the general economy, though with some lag. The idea is that once the big spenders at the top accumulate enough surplus money, they go out and buy art. When the funds dry up, the market falls precipitously, as it did in the late 90s. One time this didn't happen was when inflation ran out of control in the 1971-72 recession. As the market tanked, investors shifted money into real estate and collectibles, art being one of the favourite refuges. Guess what? Prices went up. The Canadian art collecting scene Though the pointers in the article above were developed from looking at the international market, they apply equally well to Canadian work. The market here is a lot smaller, but it's not negligible. Nearly $500 million went to the buying of art in Canada last year. Art galleries and auctions accounted for about a third of that, with the balance being sold through other outlets, including about $30 million in purchases by corporations, $20 million by galleries, and about the same by all levels of government. The paltry sum corporations and government spend on art annually is a national disgrace. Bill Gates has spent more on a single painting - not to mention the beneficence of someone like John Paul Getty.

A Montreal psychiatrist who graduated in 1972, had the good fortune one night to meet Armand Vaillancourt, a local sculptor of considerable reputation. The artist had just returned from San Francisco where he'd won a competition to build a fountain in that city's Ghirardelli Square (as it turned out, the project was later mired in controversy and the fountain built by someone else!).

Vaillancourt was well-known around town for tree sculptures he had carved in the 60s and also for a fracas he'd got into with the city of Toronto over a piece entitled "Je me souviens." He was young, in his prime, and looked as though he was going places. The doctor scraped together $1,000 and bought one of Vaillancourt's "styrofoam" sculptures. He'd made a series of them a few years earlier by pouring bronze into a block of the plastic, which then melted and made for some interesting looking chunks of metal. The piece the doctor bought, about the size of a loaf of bread, was nicely mounted on a block of wood faced with heavy chrome and signed. The doctor liked the piece and proudly displayed it in his modest digs. More than that, he thought he'd made a perceptive investment.

The cliché in the art market is to buy what you like and if it goes up in value, so much the better. In one sense, the doctor's early foray into the art market has paid off. "I got the collecting bug and I've continued to buy art. It's made a real contribution to my life. The collection pays a pleasure dividend almost everyday." But what about hard currency dividends? The physician hesitates. "Let me explain, " he begins. "I've got two rules: I have to know the artist and I have to like what I buy. If I do that, I find I'm happy regardless of whether the piece appreciates or not. You have to understand I buy more than I sell." As it turns out, he recently did think of selling the Vaillancourt. "I took it into the Montreal Museum of Fine Arts on one of those collector days when an appraiser will give you an estimate. The appraiser came from Toronto and was very interested in the piece. She went away and discussed it with a colleague and looked through a few art books. Then she took a deep breath and told me that, in her opinion, it would fetch about $600 at auction, perhaps a little more from a Vaillancourt collector. I was disappointed, needless to say. Armand is now in his 70s and he's still working, and still controversial. I run into him every now and then but I haven't had the nerve to tell him. He'd probably get a big laugh out of it. Art, eh. What can you say?"

NOT A QUICK BUCK
That doesn't mean that you can never make a dime. For example, the Montreal psychiatrist owns several paintings by Richard Roblin. He used to live in Montreal and now he's in Stratford, Ontario. "I've been buying his stuff for 20 years. He exhibits regularly in galleries big and small in Canada and the US. In the early 90s there was a lot of interest in him in New York and the prices skyrocketed. Had I sold then I might have got eight or 10 times what I paid. But I liked the work. I wasn't interested in letting it go. Like everything else, timing is the key if you want to make money."

"The last 12 years, until very recently," the doctor continues, "have been a disaster for the art market. All painters paid the price. It's very tough on them; the marketing of art is brutal. It's a rollercoaster. Even if your work is first rate and you're good at promoting your stuff -- and believe me it's hard work and something many artists, not all, but many are very bad at -- there are no guarantees."

"I own pieces from six, actually, seven Canadian artists. All of them except two are still working. They've devoted their lives to art. They're usually in trouble financially but they just keep going. It's one of the things that makes knowing artists so wonderful. It's great. They're not on earth for the money, not at all. They've got a different way of looking at the world and that's very rewarding."

WILD GYRATIONS
Should you need any confirmation of what the doctor says, you need not look farther than to the Wall Street Journal, that bastion of financial know-how. The paper recently took a look at the trend in prices for the art world's heaviest hitters.

Here's what they did. First they charted the price ups and downs of the works of the 100 artists whose names showed up most often in Christie's and Sotheby's art auctions. They then looked at prices in 1988 when the art market began to take off; in 1993, when it dipped; in 1998 at the height of the dot.com boom; and then again at the end of last year. Next, they shortlisted the 50 biggest winners and losers. The exercise made it possible to compare how stocks listed in the Dow Jones index did against artwork over the last 10 years. Bad news for art lovers: average art prices grew 102% or about doubled, compared to a 179% increase for the Dow Jones -- albeit after the substantial gains in the last six months of last year.

That's not to say there weren't any big winners in the art world. Far from it. The most spectacular gain between 1988 and the present -- 372% -- was not made by a painter or a sculptor but, surprisingly, by Cindy Sherman, a photographer whose work consists largely of self-portraits. In 1993, a Sherman fetched an average price of $14,218 at auction; last year that had risen to $67,167.

Ms Sherman's boost was helped along by several things. For one, the auction houses moved her work from the photograph section into painting auctions; for another, in 1995, the Museum of Modern Art acquired all of her black and white works; for a third, she dated actor and major art collector Steve Martin. Also see What makes the art market move? at www.nationalreviewofmedicine.com

The 50-year-old's stratospheric rise illustrates the vagaries that drive the market. These forces work on the way up and on the way down. Household name Andy Warhol on a print or painting doesn't mean what it once did (or likely will again). The average price of his work has fallen by 28% in the last five years though it is up 39% since 1988. Demand for his work slowed after a selling rush followed the $17.3 million his "Orange Marilyn" brought in five years ago. Roy Lichtenstein, another famous American pop artist whose work features huge images from the comics, is up 181% in the last 15 years. His contemporary, Jeff Koons, who does those bright sheets of paint often depicting highly stylized female nudes, has also made a killing. He's seen his work go from an average of just over $500,000 15 years, ago to a comfortable $5.6 million last year. The colourful work of yet another New York painter, Mark Rothko, is up an average of 451%, boosted considerably by a $16.5 million sale last year.

CANVAS TO GOLD
Spectacular rises, of course, are more likely when the artist was little known a decade and a half ago and has since become famous. The tried and true works of earlier artists tend to plod along. Rises for the works of the French impressionists, for example, have been steady if not spectacular. Despite recent selling prices as high as $60 million, Paul Cezanne's work has appreciated on average only 20% since 1988. A Renoir, on average, goes for a scant 30% more than it did 10 years ago. Paul Gauguin's paintings are up 110% but the average is greatly influenced by premiums being paid for his South Sea work. There's a major Gauguin show opening in Boston in February, which is certain to boost auction prices. There are too few Van Goghs on the market to make a judgment, but Edgar Degas is down 12%; with Toulouse-Lautrec off 89%. Picasso's work gained only 26% but his later work is beginning to move up in price.

The conclusion: Even in the biggest of the big leagues, the cliché remains intact: Buy what you love and want to live with. Consider any profits just gilding on the frame.