Priced For Picture Perfection
Is there a correlation between art and the financial market? You betcha. Beauty, it's a beast.
I used to feel so bad
I got so sick of having sleepless nights
I went and told my dad
He said, "Son now here's some little something"
And stuck them on my wall
And now my nights ain't quite so lonely
In fact I, I don't feel bad at all
Pictures of Lily made my life so wonderful
Pictures of Lily helped me sleep at night
Pictures of Lily solved my childhood problems
Pictures of Lily helped me feel alright
Pictures of Lily
Lily, Oh Lily
Lily, Oh Lily
Pictures of Lily
And then one day things weren't quite so fine
I fell in love with Lily
I asked my dad where Lily I could find
He said, "Son, now don't be silly"
"She's been dead since 1929"
Oh, how I cried that night
If only I'd been born in Lily's time
It would have been alright
-The Who (Pictures of Lily)
In 1987, a painting by Vincent Van Gogh was sold for $49 million dollars – a world record for a work of art at that time.
The painting, called Irises, depicts the garden of the mental asylum in France where Van Gogh was a patient. It was painted in 1889, a few months before Van Gogh committed suicide.
Not one of Van Gogh's works sold during his lifetime, despite the fact that his brother was an art dealer. As Hemingway might have said – "Home is where the heart is, home is where the art is."
There's no accounting for popular perceptions. Value certainly lies in the eye of the beholder. The pupil of popular delusions lies in the madness of crowds. Value is a lady.
She is a fickle mistress.
1987 was an interesting year, besides a newfound appreciation for art; it was a year LBO's were ablaze; every rumored takeover bolted. Insider scandals slithered off the charts. A new Fed chief was at the helm. It was a year that flipped its lid, blowing off to the upside before crashing to earth.
Twenty years later, some are asking, "Is it real, or Memorex?" The only difference is that Greenspan doesn't have a beard, and yeah, the stock market hasn't crashed.
This week Sotheby's auctioned off a Mark Rothko painting, White Center, for over $72 million dollars for David Rockefeller. The painting, purchased by Mr. Rockefeller in 1960 for $8,500 dollars, was expected to fetch around $40 million.
This week Christie's auctioned an Andy Warhol painting, Green Car Crash, for $71 million dollars, quadruple what it was expected to fetch.
1987/2007. Old masterpieces/new masterpieces/masters of the universe. Young artwork and noveau rich. The upshot of it is a billion dollars spent on art in a couple of weeks. In a few quick strokes the art market struck gold with newly minted moguls and hedgies. Experts tell us the art market is stronger than it has ever been. What is the buying telling us? What is the new pool of buyers jumping into the deep end telling us? How about, cash is trash?
The rich are feeling richer, and falling all over each other to get rid of paper and buy tangibles, all tangibles except real estate that is. This includes buying the means to production and taking companies private. I'm curious to know the cost of the diptych by Greenspan and Bernanke titled, Law Of Unintended Consequences. I am certain this is something we all find out eventually, but it won't be at Sotheby's or Christie's, but at another auction house – the U.S. equity market.
Approximately 365 years ago the Dutch, who were the masters of trade at the time, had a white hot fascination for tulips, which often sold for as much as the price of a house. In 1987 it wasn't flowers, it was pictures of flowers that were white hot. Now, it's just the white center that is hot.
Currently the S&P has traced out a fractal of pictures – ascending triangles on the weekly chart, the hourly chart and the ten minute chart. (See the charts below.)
Weekly Chart from 2003
Green Car Crash – is that as in moolah accident in the White hot Center of speculation? Last night the universe called and said, "I'll take it from here."
Sometimes a picture is worth a thousand words. Sometimes life does imitate art. Do I think there is a correlation between art and the financial market? You betcha. Beauty, it's a beast.
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