“It’s a jungle out there,” warns art expert Joseph Jacobs when asked how to choose an art advisor. “Some advisors are plugged into fashionable galleries whose inventories tend to be pretty good, so you almost can’t go wrong. There are people who just learn about Warhol, Pollock, Basquiat and Koons and that’s what they buy for their clients.
“Here in New York you also have a handful of people recommending young artists – and then the financial people, all of whom are young, start buying those artists and the prices shoot up. This is for work that was barely worth the starting price in the first place. A lot of people will say their advisor made them a lot of money in this way, but that’s flipping, which is not a game I play.”
He points out that if you thumb through a contemporary art auction and find that much of the work on sale is only a couple of years old, this can suggest it is being sold on quickly – or flipped – because the market for those particular artists is currently hot. Whether such an artist will stay hot is less certain.
“You could say any advisor who is telling people to do this is a good advisor, but they’re not operating like a curator with knowledge, putting together a meaningful collection – they’re not doing anything different from what somebody does when buying and selling stocks. And as with stocks, the bubble can burst.”
Jacobs is an independent, New York-based art historian and private dealer who runs Jacobs & Morawska Fine Art Consulting. For 35 years he was an award-winning museum curator and director, and he has written widely on art: credits include a large portion of Janson’s History of Art, The Western Tradition.
In the course of his career he has seen art collecting take off, partly because of the rise of celebrity artists.
“I worked at both the Museum of Modern Art and the Metropolitan Museum of Art in the 1960s and early 1970s and back then you could roll a bowling ball down the galleries and not hit anyone. Today you can queue for two hours to get into the Louvre.
“Now you’ve got so many celebrity artists – Damien Hirst, David Hockney, Tracey Emin – the list goes on and on. You get spreads in the fashion magazines on artists. I think that has a lot to do with it – as does all the hype surrounding contemporary auctions.”
Against this backdrop, he warns that the biggest mistake a collector can make is buying poor quality art just because it’s by a desirable name.
“When the art market is roaring hot, people will pay anything to have a Renoir the size of a sheet of paper but when the market is not strong, nobody wants the second rate examples by a major artist. If the market’s not strong you’ll never see your money again.”
Meanwhile, as the prices paid for work by many highly collectable artists continue to rise, a significant portion of Jacobs’ clients are starting to hunt for bargain pieces by artists who are currently undervalued.
“I have a lot of very wealthy people who could easily afford a de Kooning for $15m who become interested in other artists who are less well known at present.”
However, while it is wise to avoid buying work that has become over-valued, there are times when it’s still wise to pay a premium.
“I recommend on occasion that somebody pays too much to get something that isn’t easy to get. Sometimes you get an incredible opportunity, and you know that five years from now nobody is going to be able to get this work at this price. In those situations, it’s actually wise to pay too much and have everyone laugh at you, because you know it will go up in value.”
When it comes to spotting these worthy deals, a good advisor is worth his or her weight in gold. But as Jacobs has said, it pays to be wary.
“Investing in art is dangerous: unlike the money market, there is no oversight of any kind. In the money market, the agents have an obligation to their clients but in art they have no obligation except to make money from you. Beware that they may want to turn your account because that’s where they make their commissions.”