The WSJ's take on tangible assets; Apollo Magazine wants the art market to "come to its senses;" South Florida's Aventura mall drives interest with art; Kenny Schachter's Art Arbitrageurs.

This commentary by Marion Maneker is available to AMMpro subscribers. (The first month of AMMpro is free and subscribers are welcome to sign up for the first month and cancel before they are billed.)

Tangible Assets Outperformed Financial Markets in 2018

You might have missed this Wall Street Journal article on tangible asset gains in 2018. The story cites a range of sources to contrast returns in tangible assets like art (10.6%), wine (10.2%), and large and colored diamonds (0.4%) with now-cursed public market investments in the S&P 500 (down 5.1% based on total return), cash (1.9%) and gold (down 2.2%.) The story offers a graph of the HAGI index for classic cars that reached a post-crisis high at the end of 2016 and has since pretty much bounced repeatedly off a top. Going the opposite direction, the wine index cited comes off a plateau in 2016 and goes up and to the right aggressively most likely reflecting Chinese money in the wine market.

• “Cars have been the best-performing luxury investment over the past 10 years, gaining 289%, according to a report published by Knight Frank earlier this year. Coins gained around 182%, wine 147% and jewelry 125% over the same period, while antique furniture and Chinese ceramics lost value.”

How seriously should you take this story? The art numbers come from AMR’s Art 100 index. You can’t invest in that index for a number of reasons. There’s a fair bit of statistical manipulation going on to make the index act like an index.

There are very few ways for investors to access the work of the artists who comprise the index in a way that will track the index. In other words, just because Monet prices go up across the index doesn’t mean your Monet got more valuable, as we saw in the November sales. The same can be said of the wine and classic car markets. You have to buy the right bottles, the right cars to benefit from the rise. To date, there is no good mechanism like an ETF or Index fund to buy the asset class for allocation.

Remember too that the art market in 2018 was rebounding from lower sales volume two years running. Accessing those gains would require some phenomenal market timing.