The International Herald Tribune adds a few details to those earlier reports of a Dutch finance professor’s new study using a broader database of prices than the Mei Moses Index, that questions the financial prospects of art on a historical basis:

In terms of inflation-adjusted value, art traded from 1951 to 2007 appreciated just a little more than 4 percent annually, much less than the Standard & Poor’s 500 average of 8.90 percent over the same period. The figure is also significantly less than figures from previous studies that pegged art’s annual returns at 8 percent or even 13 percent.

“Our results thus suggest that art is not as good an investment as is often assumed or hoped for,” Mr. Renneboog writes. Potential investors “should buy art primarily for nonfinancial reasons,” because hoping to somehow strike it rich “is wishful thinking.”[…]

Mr. Renneboog’s analysis showed, for example, that self-portraits and urban scenes appreciate more than works depicting nudes, animals or natural landscapes and that having been shown at the prestigious Documenta exhibition in Germany has a significant effect on the value of minimalist and contemporary art.

Likewise, currency fluctuations over the decades have meant that art traded in U.S. dollars has done better than art traded in British pounds, which appreciated just 2.77 percent annually. The highest prices were fetched at Sotheby’s and Christie’s, usually in the spring and late autumn.

Despite Grabbing Headlines, Art Prices Don’t Appreciate Well (International Herald Tribune)