Michael Moses reminded us last week that we hadn’t published his overview for 2010. The headline is that the Mei Moses All Art Index had an annual return of 16.6% in 2010 against the S&P 500’s 15.06% in total return. In addition, Mei Moses shows that art has outperformed stocks on a CAGR basis over the past five years.
Admittedly, those have been some extraordinary years and Mei Moses sees the growth in art during 2010 as a function of the recovery from the financial crisis. This happened much faster this cycle than after the previous art boom of the late 1980s.
The 2009 decrease in the return of the Mei Moses® All Art index of approximately 23.5 percent was the largest decline in the all art index since the 1991 decline of 38.7 percent. The latter decline occurred after the bursting of the art bubble of 1985-1990. The 23.5% was the second largest decline since the great depression. The declines of 2008 and 2009 occurred after five years of positive annual growth averaging almost 20 percent. The 2010 results, an increase of 16.6%, has stopped this slide and may be the start of a new base building period for the auction art market. These results have allowed the all art index to slightly outperform the results for the of the S&P 500 total return index (where dividends are reinvested tax free) of 15.06%. In addition the most recent ten and five year compound annual returns (CAR) for art, 4.86% and 3.59%, exceed the S&P returns of , 1.35% and 2.28% respectively. Stocks outperformed art over the last twenty five years with a CAR of 9.91 percent compared to 6.43 percent for art. However, for the last fifty years the returns were very close with art achieving a CAR of 9.23% compared to the 9.73% for equities.
Our research has shown that art is like most other assets it has its periods of excesses, 1985-1990 when our index grew at a compound annual rate of over 30%, and failures, 1991-1995 when it lost 65% of its value. Whether the future will be like the last 10, 25 or 50 years is impossible to predict. We do however believe that if the change in the equity markets from negative to positive returns over the last two years continues causing a rebuilding of the stock of world financial wealth, it should mitigate the extent of any further correction and continue the current base building of the art market. It should also be pointed out that it took the all art index until 2004 to completely achieve its 1990 glory days.