Correction? Or intelligence of the collectorate?

There can be little doubt that the incessant whispering about the inevitable decline of the art market will erupt into a roar today as Sotheby’s stock begins its tumble after the venerable house’s Impressionist and Modern Art sale fell nearly $86 million short of its $355.6 million low estimate. Sure Christie’s beat its low estimate just the day before by roughly $46 million, but of course that’s not news. Or is it? Can it be true, as Andrew Fabricant mentions in the New York Times, that “this was not some watershed moment in the market. It’s what happens when the pricing is extremely aggressive and the material less than stellar”?

Quite often we like to dismiss the money that is thrown around at the upper reaches of the market as so much conspicuous consumption, an indication of the Collectorate’s obsession with image rather than substance. But does the asymmetry between the Christie’s and Sotheby’s sales indicate a more discriminating taste at work? Are we witnessing the return of Homo Aestheticus after the reign of Homo Economicus?

4 thoughts on “Correction? Or intelligence of the collectorate?”

  1. It’s incredible that ‘analysts’ are already marking this one down as the de-facto start of a downturn in the market, even though the recent London fairs and auctions seemed to contradict the much-touted impending global art crunch. Surely it should go down as another example of auction house greed riding rough-shod over an obvious lack of quality on offer, coupled with the returning spectre of huge guarantees. Has no one learnt from history?

    The era of Japanese buyers swooping for anything with a Van Gogh tag are long gone and Sothebys lost big by gambling on that one. Collectors are not quite as dumb as everyone makes out. While the winds of fashion surely blow through their eyes and ears, they also realise when to hold firm and not simply shell out based on the increasingly ridiculous demands of the market. This is nothing more than a bit of collector power, a little nod in the direction of correction, rather than a nosedive into crash.

  2. I did not attend the previews or auctions, nor view the catalog. But if Carol Vogel’s assessment in her NYT article is correct — that it was “second-rate paintings by Picasso, Van Gogh and Miró” which failed to sell at Sotheby’s — then we should happily embrace the ascendancy of Emptor Oculous over Emptor Auroculous. Of collectors who buy with their eyes rather than their ears. One of the frequent assertions by art pundits is that a market correction will lead to just this sort of increased discernment among collectors, at least those who remain active, who do not fold their tents and scurry away, fearing the worst.

    The field of currency exchange has Gresham’s Law, which essentially states that bad money will drive good money out of circulation. Can we posit similar laws in the art market? Does bad art drive smart money away? Or do bad times drive good art out of circulation, awaiting a more propitious moment to sell?

    Sotheby’s is down over 30% today, erasing nine months of gains, bringing it back to its February 2007 prices. Its chart is pretty volatile this year, but such a dramatic one day fall off in a major institution cannot help but start people thinking. Will it be seen as one more nail in the coffin of the bull market? or are collectors just getting smarter across the board?

  3. I am with Ossian on this one – a single data point can be extrapolated to reach whatever answer suits the mood of the moment. But this post and its responses put the focus on the impetus for growth at auction houses.

    Would a smaller, better quality auction have disappointed anyone apart from Sotheby’s investors? Or is the idea of a dip in aggregate value realised simply not an option? In which case, are auction houses better off in private ownership, without the demands of quarterly reporting?

  4. I have been spending some time recently looking back at auction history. I recommend to everyone to dust off Peter Watson’s chapter, in his book, Manet to Manhattan, on the sale of Van Gogh’s Portrait of Dr. Gachet — the all-time record-setting painting of its day and the pinnacle art-market event of the 80s boom. All you need to do is read that chapter to realize how erratic and unpredictable the outcome of the sale of a single major painting can be.

    Today, Dr. Gachet’s record price — almost quaint by our standards (though still remarkable, if accounting for inflation) — seems etched in stone. It is but one of a series of data points that have hardened into rock-like objectivity to memorialize what has turned out to be, in the long term, the market’s continued upward march.

    On the actual morning of the sale, however, no one at Christie’s knew if the picture would be sold. Let alone did anyone accurately predict its price. The identity of the would-be buyer was a mystery. What if Dr. Gachet had bombed, as some people had predicted it might? On the other hand, neither did its beathtaking success presage the future. For only a few months later the market was in a tailspin.

    So, Ossian’s point that predictions from single data points are senseless is well taken. Next week’s contemporary sales should, in my opinon, function as a more reliable barometer of where the market is headed. In the meantime, if you’re thinking that big spenders have left New York, yesterday’s papers here reported a potential sale of a single apartment for $150 million.

    One more thought about predicting prices. As reported in this Salon about a year ago, I like to conduct experiments with my students to test James Surowiecki’s thesis about the wisdom of crowds, which advances to notion that the average guess in a larger group will surpass in accuracy the best guess of even a seasoned expert. Last year’s experiment — about the price of the Klimts in the November auctions — was a resounding success. I wish the same could be said about this year. In the first of our experiements, the students anticipated that the hammer price of the Van Gogh would fall between $39 million and $200 million, with the average guess coming in at around $69 million. Needless to say, they were proven wrong.

    Then again, it would not have been a stretch of the imagination, as late as last week, to expect that a Russian tycoon or an American hedge fund guy would buy that Van Gogh for around $70 million. The experts and the journalists who are now suddenly so wise, with the benefit of hindsight, and who are so quick to declare, as tough it had been completely obvious all along, that the work is of middling quality, would, in that case, now be singing a chorus of celebration or wonderment about the seemingly ceaseless strength of this epic art market.

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