As we learned in Mat’s roundtable, people are spending unbelievable amounts of money on art. In class we spent most of the time discussing art’s liquidity, and the idea that it is only taxed once. The major conclusion we came to was that the rich wanted wealth in something other then money in case anything goes wrong with the monetary system, but I have a different idea. Maybe people actually like art. But only the rich have money to buy the expensive art. Also many people enjoy auctions. The commotion of Auctions, and the thrill of so much money makes the art exciting to buy and overpay for. Though I am sure the liquidity of art is maters to many of the buyers, but my two other points must be major contributors to the overpricing of art as well. -Alex Buckingham
2 comments:
The popularity of buying art among the middle and upper class of society in my opinion is because it can be and expensive hobby of unique poportions. As childeren many of us have had a hobby of collecting things. For me it was collecting sports cards. The thrill would come when I obtained something rare, a card that people value maybe moreso then I did. Then by holding on to the cards the value went up and I was able to turn around and sell it for a very nice profit. The same philosophy for art. Fascination, Value, and Profit all play major roles in convincing someone why art is a good purchase.
I am sure all the hedge fund managers getting $100 million bonuses are heavily investing in art and this is one of the reasons it has become so expensive. I was recently looking at a Sothebys catalogue and the minimum price of art was at least $50,000 and ranged all the way up to $500,000. This is quite an expensive hobby. However, there are certainly benefits, as with real estate, art tends to appreciate and when you are investing that much money the profit is huge. I also beleive there are many people that invest or buy art for reasons of tax evasion or as a tax shelter.
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