Michael Moses sent around a “flash report” this morning analyzing the compound annual returns on art sold in the recent New York auctions where previous auction prices exist.
Here is Moses on aggregate works he can track (bolds and parentheses mine)
- Combined Evening Contemporary sales had and average CAR of 15.7% (with a standard deviation of 8.3%)
- Combined Evening Impressionist & Modern sales had an average CAR of 9.4% (with a standard deviation of 5.8%)
For some reason, Moses negates the Brody Picasso from his calculations even though the work was bought in 1951 for $19,800 and sold 59 years later for $106 million which works out to 15.5% CAR (compound annual return.) His reason: the price was not achieved at auction.
That hardly makes sense. If the price is known, the return is calculable. How the work was bought is irrelevant to the return. Warren Buffet doesn’t ignore the return he gets on warrants and private placement deals just because the price wasn’t set by open outcry, does he?