The Profitability of Investing in Fine Art: an Analysis of Resale Data From Sothebys, Christies, and Phillips

Abstract: The main goal of the presented study was to determine the profitability of investing in unconventional assets, namely, fine art paintings. To do this, we have gathered and analyzed data on the resales of paintings from Sotheby's, Christie's, and Phillips from 2003 to 2021. We calculated the annual effective rate of return for each painting and divided the data into profitable and unprofitable investments. We also analyzed the impact of various factors, such as the initial sale price, the length of ownership, and the annual effective rate of return, on the resale price of the paintings. We used correlation analysis to debunk some myths about investing in art, namely myths about shelter-investments and the masterpiece effect. We also compared the annual effective rate of return for paintings with that of traditional financial assets like government bonds and gold. The results showed that investing in paintings can be quite profitable and is a good investment strategy.

Keywords: Auctions, Price Index, Fine Paintings, Resale, Speculative Investments

2023 Grant 22-18-00588 articles