I was given my first story to check. I vaguely remember that it was something about new mutual fund products, and it was written by a freelancer. It sounded good — that is, until I started checking it. In essence, the entire thing was wrong. Up until that point, words on the page, in their unambiguous black and white, had always conveyed such authority that I didn’t question them. I never read that way again. An editor once said to me that good writers were really dangerous because you could be so seduced by their writing that you simply drank in their unsupported leaps of logic.
Carlo, a student at the University of Kent, sent me some questions for the thesis he’s writing. He said I could blog my answers, so:
1)Has contemporary art become just a commodity? Do buyers see art purchases mainly as an investment?
No; no. At the very highest end (think Warhol, or Richter) contemporary art can sometimes approach the status of a commodity. But the overwhelming majority of contemporary art is not a commodity, nor is it seen as such. And while some buyers see some art (again, we’re talking mainly about the richest buyers here, and the most expensive art) as an investment, most buyers do not look at it that way. Despite the fact that many dealers and auction houses are encouraging them to do so.
That said, if you’re spending hundreds of thousands of dollars on an art work, you’re generally going to want some kind of assurance that it has a decent chance of keeping its value, or even perhaps rising in value. Dealers in large part compete on the degree to which they can convincingly answer that question in the affirmative.
2) About the current health of the market. In 2013 auction sales were down in China (10%) and the UK (over 5%), but in America increased of 14%. In the beginning of 2014 auction sales picked up again, it seems. Christie’s evening auction in London, for instance, did 40 millions more than the previous year. Is this a sign the market is doing well? And what about the middle market that is never mentioned in the news? And private sales?
The market is very healthy right now — healthy to the point of feverish, you might say. But most of the market, as always, at least in dollar terms, is at the very top end. You don’t hear about the “middle market” because it’s never much of a market to begin with. Private sales are the same way: there is a small number of dealers doing very well by selling a small number of extremely expensive artworks. Art isn’t a middle-class thing any more, and if you’re trying to make money by selling to the middle classes, you’re struggling.
3) In an article on your blog “Is the end of the art-market bubble?” you state there is an ongoing bubble. What are the signs which make you think there is one? And is this bubble becoming/will become eventually a speculative one?
Flipping, mainly; it’s a bearish, toppish sign. Where there are flippers, there are speculators. And art dealers, of course, have always been speculators. The question is whether the flippers and the speculative dealers have become the marginal price setters. They probably have in Oscar Murillo, but have they in general? I’d say not yet.
4) What role auction houses play in creating this bubble? Are they to blame or other actors of the market for creating it? And does the practice of leverage or “on-credit” purchases help to inflate the prices?
Auction houses love bubbles: that’s where they make the big bucks. So they try very hard to get the biggest baubles to sell, and to get the most avaricious buyers to bid up to and beyond their means. If it were entirely up to the auction houses, of course, there would always be bubbles in every asset class. So they can’t do it on their own. But they can add fuel to the fire.
5) Do big prices influence the cultural value given to an artwork?
Yes, especially in contemporary art. There are exceptions, but in general if you find an artist getting big prices, that artist is going to have a lot of cultural cachet.
Tom Keene: What is the direct evidence you have that this gentleman changed the technology world with this cryptocurrency?
Leah Goodman: I connected all these dots through. Through forensic research. And forensic research isn’t about supporting what you think is true. It’s about eliminating what you think a candidate may or may not represent. All you’re doing — I want to make this really clear right now — you’re eliminating candidates. We cannot eliminate this man at all. And in my confrontation with him, he confirmed his involvement. End of story.
Tom Keene: Is that journalism? Where you’re working on a Type 2 construct, where you’re pulling away, to “we’ve eliminated these other people”? But, there could be other people out there that you could do the same action with, right?
Leah Goodman: You could go off on the other way, and say “let’s find reasons to support a person”. But the best way to do forensic research is to eliminate people, not the other way around. You don’t say “I have a conjecture, let me find every way to support it”. No.
The Nest thermostat is a great product. But there are two software updates it could really do with.
I think for a number of decades, there was this very odd recruiting climate where Wall Street and consulting firms became the default option for students at good schools who didn’t know what they wanted to do after graduation. If you knew you were going to be a doctor, but you didn’t feel sure about your options, Wall Street was an incredibly enticing option. It created a generation of accidental bankers, and some of them did the wrong thing. I think now what you’re seeing with the competitiveness is the people who became bankers, they really want to be bankers. And I think that’s a good thing because it’s better for the banks and the rest of the economy to have people who are talented.
I think Kevin Roose is exactly wrong here. Maybe The Epicurean Dealmaker can explain why?