If you were lucky enough to own the Mona Lisa, could you part with it? Some investments can cross into our personal space and stand for more than their monetary value. Is that the best of both worlds or a very bad idea?
When it comes to investing, judging the right moment to sell can make all the difference between profit and loss. If, however, your investment has adorned your walls, your dining table or your person, assessing that moment can undoubtedly become clouded.
Collectables can go out of fashion
“We see it all the time,” says leading antiques dealer Julia Pruskin, co-owner of the Pruskin Gallery in London’s Kensington Church Street. “We’ll view an auction and find an entire collection that’s gone out of fashion.” Not so long ago, there was a sharp divide between collectors and investors. Collecting was a hobby, in which the enthusiast bought what they liked and didn’t worry overly about the long term. More recently, as the value of fine art and antiques has soared, careful calculation has become the norm.
‘As the value of fine art and antiques has soared, careful calculation has become the norm’
But buying for future gain in a world created for immediate pleasure comes with its downside, and those who’ve developed too great a fondness for their ‘brown furniture’ or Victorian watercolours have been made to realise that what goes up can most definitely also come down.
“It’s like the stock market,” says Julia. “If you hang on too long, you either have to sell at a loss or wait until the market comes round again.”
Art treasure or just treasured art?
As in any other financial milieu, however, the right support can help ease the pain of parting. Philip Hoffman, founder and CEO of the Fine Art Fund Group, has £500 million worth of art under management in 23 countries. His approach is kind but firm. “We see our clients annually and talk them through their collections, dividing the work into ‘sentimental value’, ‘important to hold’, ‘not sure, dispose of’.”
Philip, who spent 12 years working for Christie’s, is thoroughly schooled in the art of keeping his finger on the pulse. “The art market tends to shift every six months, and we may say to a reluctant seller: ‘You’re holding onto this picture, but it’s going down in value. Why not buy something more beautiful and watch it go up?’”
A strong emotional attachment to a ‘treasured possession’ undoubtedly affects an owner’s perspective. “We work with one couple,” says Philip, “who were given a Modigliani as a wedding present. At the time it cost $100,000, now it’s worth about $25 million. They wouldn’t dream of selling it, but the next generation will view it differently.”
Philip finds, too, that sentiment can sometimes ease his task. “We often discover the most valuable work is the one the clients never particularly liked. On one occasion, we found a Titian hidden behind the telly. On another, someone had cleared out their mother’s attic and was just about to send a Chinese picture off to a charity shop. We had it valued – at £250,000.”
Fine wine investments – drink or trade?
Investing in wine is another pursuit-of-pleasure activity, which, in recent years, has moved from personal indulgence to high finance. Where gentlemen collectors once laid down five cases of claret, to eventually drink two and sell the rest, today’s purchasers are as likely to be impartial speculators as connoisseurs.
Wine lover and collector Bruce Palling, author of the gourmet blog Gastroenphile, is of the old school and has bought fine wine for both personal use and minor profit for several decades.
“Much of the finest wine traded today is kept in bonded warehouses to stop it passing through customs. Investors won’t really be tempted to drink it. Personally, I love Burgundy, and though some of the wine I’ve sold has helped pay the school fees, I still keep wine for drinking. I limit myself, however, to a magnum worth up to £100; I’d never drink one worth £20,000.”
When to sell a beloved treasure
Antique dealers, too, are generally antique lovers and, like Palling, Julia Pruskin is a disciplined collector, prepared to move on when the time is right. “I’ve learnt to realise it can be more fun to stay au courant.”
But, even those who state most firmly, “Oh, I could never sell that”, can be tempted to re-evaluate if the facts are put sufficiently clearly before them. “People do change their minds,” says Philip. “One man, for example, decided to sell a picture he loved when he realised he could buy his daughter a house in London with the proceeds.”
A sorrowful parting, perhaps, but with a significant sweetener.
How to let go
Keep up to date with the market by reading specialist magazines. Ensure you have investments in other asset classes; it will lessen the risk and pressure.
Be honest with yourself. If you’re doubtful about a work of art but can’t bring yourself to part with it, put it in storage for six months. Then, think again. Often, you’ll find you’ve forgotten you ever owned it. If you don’t manage to hit the market at the right moment, don’t fret.
“Nobody wants to think something is worth less than they paid for it,” says Julia, “but remember, you’ve had the enjoyment of owning it; that is a valuable asset in itself.”
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