What is it about the art market that brings out such nonsense from persons who are meant to be level-headed and business-minded? A case in point is this Financial Times column from Merryn Somerset Webb, editor of Money Week and a self-described former stockbroker. Webb spends much of his columns real estate spinning a cautionary tale of the art market as rigged system where nefarious plutocrats manipulate the values of their collections.

In most art market bubbles, the holders of the most expensive pieces are rarely just art collectors. Instead, they are often tycoons who are heavily leveraged to other businesses and who, in many cases, have secured various borrowings against their Picassos and Hirsts. This means that, in troubled times, they have a very strong incentive to keep art prices both high and rising – something they do by overbidding for other art works at auction.

Very clever these nabobs. Dangerously levered up on all sides, they plunge ahead until all fails. Much like the myth of the predatory hedgie who disrupts the market for true connoisseurs, Webb’s art market is hopelessly rigged and a poor investment to boot. Fair enough. There are good reasons for sensible folk to be wary of the art market. But then Webb does a double-reverse to crow about his own independent-minded collecting:

the indices that track auction prices suggest that art has moved more or less in line with the S&P 500 for decades, but most art never gains enough value to get a place at the kind of auction that index compilers track. There’s no index tracking that sweet painting of fishing boats that you paid £500 for in a little gallery in St Ives a decade ago – and no index tracking what happens to the prices of paintings by the average “emerging artist” over a career.

If there were, I suspect we’d find that “art” as a whole has always underperformed every other possible investment there is.

With these thoughts in mind, I have just bought a painting by Emily Gregory-Smith (see www.newbloodart.com). I can’t imagine I would be able to sell it for what I paid for it (most original paintings are, in this sense, a bit like new cars) and, over time, its value will be entirely dependent on the extent to which other people might agree with me that Gregory-Smith is a fine painter.

There it is. At bottom even the biggest skeptic holds out hope that his eye will be validated by future generations and his incomparable discernment celebrated. Why Mr. Webb presumes those tycoons are only motivated by cupidity while he is a true aesthete is a question for his psychiatrist, but his article proves once again that financial sense is no cure of the desire to own art.

Enjoy Art for Art’s Sake(Financial Times)