Cici's Teaching Notes📒 Art Investment as an Alternative for Accredited Investors

Invest With Cici wrote a column · Mar 7, 2023 18:21

Cici's Teaching Notes📒 Art Investment as an Alternative for Accredited Investors

Guys, this is a brand new column for premium learn“Cici’s Teaching Notes”🥳.

In this column, Cici shares a database that is conducive for comprehension and retrieval during the teaching process. The focus is on
1. Topics that are widely discussed and contain valuable insights.
2. Knowledge shared aims to bridge the gaps in understanding and connect individuals.

The column will be updated from time to time, welcome to follow ~

Today's Topic: Art Investment - An Alternative Investment Avenue, which was raised by member @Cui Nyonya Kueh in our learn group.

While art investment🖼️ is not yet a part of moomoo's business, it remains a topic of great interest for many. Art investment not only provides a potential for profit, but also offers an opportunity to enhance one's life by collecting and enjoying art, cultivating one's spiritual wellbeing. It's like killing two birds with one stone!

However, as our Learn member @Xiaoxi_penguinXiaoxi pointed out:

I love drawings but I can’t see the value of an art, which causes me not being able to see the intrinsic value from the start and would be too late when everyone knows it’s value.

Today we will start talking about the investment logic of artwork, and also share the insights of our premium group members on artwork investment🧡💬.

The Benefits of Art Investing

The essence of investing is to benefit from asset appreciation. Art is a unique asset that possesses qualities of scarcity and non-renewability, making it a valuable investment with a strong ability to preserve and appreciate its value. Unlike other assets, investors need not worry about sudden market changes, making art a relatively safe investment option.

In most assets, risk and return are positively correlated, but art investment offers high returns with low risk - an excellent opportunity for investors💪!

Sotheby's Mei Moses Indices, an authoritative indicator of art market conditions, provides objective analysis of art market trends by recording and tracking over 80,000 repeated auctions of the same artworks.

The graph below shows the Sotheby’s Mei Moses Index for the broader art market from 1950 to 2021. The index benchmarks at 1 in 1950 and shows the trajectory in demand for the overall market, a compound annual growth rate of 8.5%.

Source:www.sothebys.com

Risks and Challenges of Art Investing

However, according to the magic triangle of financial investments( liquidity, yield and security), when returns are high and risks are low, liquidity must be poor. So investment in art is relatively difficult to quickly liquidate, and this is a small amount of capital investors must consider!

There is a more important reason “the threshold of entry”. The investor's ability to identify art is the most important reason for blocking most people from investing. “Never invest in a business you cannot understand” used in any area of investment🤔.

Just like @doctorpot1Doctorpot's saying:

The funny history was that Mona Lisa was never considered great art, it was just an art piece hanged beside the toilet... it only became the great master after it was stolen (and no one noticed it was stolen for a days) Adam Ruins Everything - The Real Reason the Mona Lisa is Famous | truTV

So most art investors are not short of cash flow and have a certain ability to identify art.

Conclusion

Art investing can be a lucrative and fulfilling way to diversify your investment portfolio. But professionalism will deter some people, while if there is a sufficient amount of money, there are many categories in which you can invest in addition to the stock market. As @ZnWCZnWC's viewpoint:

Personally I think you need to have the holding power (lot of cash) to invest in fine art. If I have extra cash, I prefer investing in property - hold and still can earn passive income through rental.

To be continued

What would you invest in, other than the stock market? Feel free to leave your opinion in the comments section🫡.

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