In December 2004, French-American artist Marcel Duchamp’s piece, “Fountain”, was voted the most influential artwork of the 20th century by 500 selected British art world professionals. Second place went to Picasso's Les Demoiselles d’Avignon, and third to Andy Warhol's Marilyn Diptych.
Fountain, a piece created by Duchamp in 1917, was described by photographer Alfred Stieglitz, the man credited with making photography an accepted art form, as “A wonder—Everyone who has seen it thinks it beautiful—And it's true—it is. It has an oriental look about it—a cross between a Buddha and a Veiled Woman."
So how was the 20th centuries most influential work of art created?
Marcel Duchamp purchased a standard urinal from the J. L. Mott Iron Works on Fifth Avenue in New York. He brought the urinal to his studio and “reoriented it 90 degrees.”
Duchamp bought a toilet and pushed it on its side. And that is exactly what the piece looks like.
Replicas of Fountain have sold for as high as $1,762,500 at Sotheby’s Auction in New York.
Human beings are absolutely nuts and I love it.
Fascination with art bleeds beyond peoples sensibilities, reaffirmed by the existence of a healthy, billion dollar black market for art that remains hidden from view - show pieces, that can never be shown.
Theft in the case of cash, gold and bitcoin are rationalized as the stolen goods can be laundered back into the world and exchanged for par value. The Mona Lisa, however, is valuable only in its original state - recognizable.
None the less, art heists are as sensational as the pieces being stolen, and the thieves border on fiction.
The most infamous art heist of my generation occurred in 2010, when a Matisse, a Picasso, a Braque, a Léger, and a Modigliani were taken from the Musée d’Art Moderne in Paris. The pieces were collectively valued at over $100 million.
The thief, Vjeran Tomic, known by his moniker, “Spider-Man”, was notorious for his high wall scaling burglaries. His rap sheet began 30 years earlier, when at age ten he climbed through a library window and left with several 100 year old books.
In 2010, under the cover of night, Tomic scaled the Musée d’Art Moderne carrying a black cloth to disguise himself as a window curtain. He spent six nights preparing his entry point before breaking into the building.
Although he served eight years for the theft, the $100 Million in masterpieces have never been recovered.
Adding to the romantic allure, photographs of stolen art often surface to tease the world that the paintings are being enjoyed by someone, somewhere. Last year Dutch art detective Arthur Brand received two photographs of Van Gogh’s 1884 masterpiece, The Parsonage Garden at Nuenen in Spring, after it was stolen from the Singer Laren Museum in the Netherlands.
Gold and bitcoin investors are often credited as the sensational ones, but they’ve got nothing on the art industry.
Art is arguably the least correlated asset class - not affected by interest rates, market crashes, depressions and even war. No matter what chaos hits the world, art prices do their own thing.
During the outbreak of World War Two from 1937-1940, the All Shares Index of London stock prices lost 50% of its value. In the United States, from 1937 to 1938, the S&P 500 declined 50%, falling further to a wartime low in 1942.
In contrast, between 1937-1939, the Mei/Moses Art Index increased by 88%, and between 1937 and 1946, 130% .
You will find similar performances during all major combat events of the 20th century.
From 1995 to 2001, contemporary art prices outpaced the S&P 500 total return by 164%.
From 2000-2018, the Artprice100 index - a weighting of the 100 top performing artists as determined by their 5-year auction performance outpaced to S&P by 180%.
Despite this being a tried and tested protection of wealth, I lack the skillset to value art effectively.
Art is not valued by weight, utility, carrots or quality. Art is valued based on Provenance - that is to say:
Where has it been exhibited?
Who has it been owned by?
A famous name will always carry a premium, like a Monet or Picasso, but beauty is truly in the eye of the beholder - while simultaneously, as made clear by Duchamps “Fountain”, the right beholder determines the beauty.
The street credibility of art is what drives the price - meaning whether or not a piece has appeared in famous exhibitions or is appreciated by reputable collectors. It is incredibly discretionary.
That is how a toilet became the most influential art piece of the 20th century. The street loved it.
I don’t care if it’s ridiculous, because here is the thing - without failure, all of the guests on my podcast that fall in the billionaires club have allocated some capital to art - often 5-10% of their net worth.
Over the last year, the most common strategy of my guests has been to de-risk. From Grant Williams to David Rubenstein, everyone seems to be bracing for impact.
Nobody knows whether or not the federal reserve will raise rates as many times as they claim. No-one knows what impact this will have on inflation. No-one knows whether food and fuel prices will increase 50%. No-one knows how bitcoin will perform in a high interest rate environment. No-one knows how the gold price will respond. No-one knows if a real estate super tax is coming. No-one knows whether or not we will enter more Covid lockdowns and mandates. No-one knows if the equity market will hit new all time highs or crash 30%.
When no-one knows the answer it is important to keep your options open.
It is because of scenario’s like this that I passively invest in a diverse set of safe haven asset classes.
Last year I bought two pieces of art by Cree artist named George Littlechild. It seemed like a mature purchase - it gentrified my home while protecting some capital. I expect it to appreciate, but what do I know.
Recently I've begun investigating a company called Masterworks. They are a blockchain enabled fractional investing platform that provides access to “blue-chip art” - tried and tested artists that have passed the sniff-test of a panel of experts.
Masterworks purchases art using a similar formula to the ArtPrice100 index - focusing on artists that are expected to outperform the market.
The advantage is that I can become a minority owner of some of the biggest names in the art world, without shelling out eight-figures for access. In theory, this democratizes access to the worlds most likely to appreciate art pieces, giving you the same access as a billionaire to the upside of a Van Gogh.
Masterworks provides two options for investors. You can purchase a minority ownership in a piece of classic art, and then participate in the capital gain when Masterworks sells the piece - typically a 3-10 year time horizon. Alternatively, you can liquidate your ownership on their secondary market, subject to demand.
My strategy will not be to rely on the secondary market, I intend to experiment with this as a long term hold for a small part of my portfolio.
If you want to check it out you can register an account for free and skip the waitlist here*
*See important Reg A Disclosures - they register their art as a security and are subject to standard securities law.
It is the first blockchain supported fractional investing opportunity I have tried. I am keen to add it to the portfolio. Art is a proven long hold asset that is not correlated to the equities market. Let me know what you think. I’m keen to hear feedback.
More and more of my guests have been touting a de-risking strategy and advocating for more alternative asset classes - hence my recent interest in arable land and art. With inflation at 7.9%, slowing economic growth and nearly every firm from Goldman to BlackRock projecting stock returns under 5% until 2035, it’s getting harder to find value. Thinking outside the box is paramount.
Have a great afternoon,