BWAD presents: The Global Art Market

1. BWAD presents:The Global Art Market Art as an alternative investment vehicle by Serge Tiroche February 21, 1999

2. Contents • Scope • Market Structure • Key Players • Oligopoly ? • Art as an investment • Who should buy Art ? • How to buy Art ? • Recommendations • Conclusion "Investing in Art" by Serge Tiroche

3. Scope • Vast Market • Focus on Market for Impressionist, Modern and Contemporary Paintings and Sculpture (i.e. 1860-1960) • But same reasoning applies to all types of Collectible Art, Furniture, Vintage cars, Carpets, etc... "Investing in Art" by Serge Tiroche

4. The Market - Players & Structure • Artists • Collectors • Gallerists • Dealers • Consultants • Museums / Trusts / Institutions • Auction Houses • Art Fairs • Internet "Investing in Art" by Serge Tiroche

5. Market trends • Growth ($, # of players, new segments) • Concentration (in Auction Houses) • Major trend: Disappearance of retail • Cyclicality and correlation • Consolidation (eg. France) • Sophistication • More players • More products (Art Credit, Packaged deals, Guaranteed Minimum with advances) • Internet (On-line auctions, Prices, Virtual Galleries, Brokers, Access to information) "Investing in Art" by Serge Tiroche

6. Supply Demand Auction Houses Client base Oligopoly or free market ? • Free market develops into oligopoly • Reasons: Supplier Cost, Buyer Price "Investing in Art" by Serge Tiroche

7. Art as an investment • Basic economics apply: Return vs. Risk • But, not a commodity, prices flexible • Less efficient - i.e. opportunity • Less liquid - i.e. time lag • Diversification benefit • Enjoyable investment • Other benefits (e.g. cultural image) "Investing in Art" by Serge Tiroche

8. Who should buy Art? • First and foremost, must enjoy Art • Home owners (decorative purposes) • Patrons (supporting young artists) • Those looking for a new hobby/passion • Status seekers • Private Investors/Collectors • Have a mix of the above profiles • Seek diversification of invested capital • Optimists (every piece is unique) "Investing in Art" by Serge Tiroche

9. How to buy Art ? • By yourself • Requires extensive research • Cheaper but riskier • (Authenticity, Condition, Valuation) • With Professional Advice (for higher value) • Added value ? • (Market knowledge, contacts & experience) • Where to get advice • Banks • Auction Houses • Independent Consultants, Galleries & Dealers "Investing in Art" by Serge Tiroche

10. Recommendations • Start by discovering your tastes (theoretical knowledge helps a lot) • It’s a passion - invest in what you love ! • Take your time, build collection slowly • As tastes evolve, replace old with new • Diversify, buy young and established • Don’t get carried away - extra cash only • Take an advisor you trust "Investing in Art" by Serge Tiroche

11. Conclusion • Art is an alternative investment vehicle • Risks and rewards • Must have strategy & basic knowledge • Avoid short-termism and speculation • Good advice has real added value • Patience builds good collections • Can start today ! • Enjoy, enjoy, enjoy "Investing in Art" by Serge Tiroche