Transcript of "Davis & Richmond, Antiques as Investments"
For Love or Money: Antiques as Investments
By Hollie Davis and Andrew Richmond
Over the past few years we have been hearing more and more about buying
antiques as investments. Online, in the trade press, at auctions and shows, we hear advice
such as, "Buy antiques, and they'll appreciate in value" or "Consider investing in antiques
to diversify your portfolio." We have even encountered rules for successful investing in
antiques, including a group offering thirty-one steps to making millions in the
All this talk has left us asking ourselves if antiques really are an effective
investment vehicle, so we decided to consult the definitive source—Google. Seriously,
enter the terms "investing" and "antiques" in Google, and you will come up with a
staggering 1.9 million pages that include those terms.1 Clearly “antiques as investments”
is a topic that has generated a tremendous amount of buzz, but this does not answer our
question about the wisdom of the idea.
We should state right now that we are not financial experts. We have no training
in finance or economics. We do not intend to dispense investing or financial advice here;
what follows are our observations based on years of experience as antiques professionals
and on asking some of the obvious questions. If you want investment advice, you need to
consult a professional.
We should further state that we definitely do not want to discourage anybody
from buying antiques. As people who earn their livelihoods in the trade, we do not care
why you buy or sell antiques, as long as you keep doing it. Your personal motivations
are, frankly, none of our business. However, when it comes to talking with clients about
the dollars and cents of collecting, especially when trying to attract young collectors into
the marketplace, we both feel pretty strongly that touting antiques as good investments is
not appropriate. In fact, after years of explaining to disappointed collectors why they will
not recover every cent they spent on their antiques, we will even go out on a limb and say
that it is irresponsible.
If you go back to those Google results and start browsing around, you will see all
sorts of "experts" telling you that all you need is to buy good quality antiques, and you
will make money - not “might,” but “will.” Many of these self-proclaimed gurus are
pitching "investment-grade" antiques—the big-dollar, top-of-the-line objects, the upper
5% to 10% of the market, which are apparently sure to increase in value. One author goes
so far as to say that by buying investment-grade antiques, you should "expect" a 100%
return in seven years, a 300% to 500% return in twelve years, and - get this - if you hold
an investment-grade antique for more than twenty years, you will achieve a return of
more than 1000%!2 Such expectations make us wonder if we should dump our 401(k)
and just buy more antiques.
If you swap "antiques" with "art," the picture gets even more complicated. You
will find in-depth analyses of the art market over the past decades, many of which declare
that the art market has outpaced the stock market. As a result, dozens of art investment
funds are springing up, taking in millions and millions of dollars of investors' money and
promising big returns. Currently, most of these funds focus their energies and thus their
investors’ money on modern and contemporary art, which certainly has attracted the
brightest media spotlight, especially in light of the sky-high prices being paid at auction.
(Sale totals of contemporary art tend to be discussed in terms of hundreds of millions of
dollars, which is enough to elicit the attention of virtually every major news outlet).
However, there are funds that allow investors to own stakes in other sub-types or
specialized areas of art, from French Impressionists to Old Masters to Russian enamels.
This high-level hard-core investment chatter has, thus far, largely kept itself to the
extreme upper end of the fine art market. Nevertheless, there are a growing number of
folks out there in the blogosphere telling anyone who will listen to invest in antique
furniture, silver, and the like, and we are hearing the same from more and more dealers,
auctioneers, and even our fellow collectors. This concerns us.
We do know plenty of older collectors who, upon the sale of their collections,
realized a pretty good return on the dollars they spent on antiques thirty and forty years
ago, although it is worth pointing out that typically, it is the result of a small handful of
items appreciating considerably and pulling up the average of the whole. In truth, we
could probably debate the investment potential of antiques and never come to a real
consensus, if for no other reason than the fact that every antique is essentially unique and
that even two nearly identical objects sold on different days can fetch radically different
prices. Our concerns are about whether it is responsible to suggest antiques as an
investment vehicle to younger collectors and whether such suggestions promote or
undermine the antiques marketplace.
In considering the concept of antiques as investments, one of our first questions
was if this notion existed twenty or thirty years ago. We did an informal survey of
collectors we know who fall into the "veteran collector" category, people at all levels of
collecting with a range of interests. All have been collecting - and sometimes dealing for at least twenty-five years. We asked them if, when they started collecting, antiques
were pushed as investments, if the investment or money-making aspect was promoted to
them, and they all responded, rather adamantly, "no." Apparently, before we young
collectors were out of elementary school, collectors were simply encouraged, if a larger
buying policy was even discussed, to buy what they loved and to buy the best they could
Certainly there were dealers and auctioneers in the 1970s who preached the
investment value of antiques, and we also know that many dealers and auctioneers today
preach those same two tenets: buy what you love and buy the best you can afford. We
are, however, quite confident that the commoditization3 of antiques was then nowhere
near what it is today. People collected these things because they wanted to own historical
objects, tangible connections to our shared past. People collected these things because
they had beauty and character, and the objects gave them a warm, fuzzy feeling to live
with every day. People, as far as we can tell, did not spend weekends camped out on
uncomfortable chairs in drafty auction venues in order to build investment portfolios. If
you need further evidence, consider that these same people, the collectors of decades
past, formed collector clubs, not antique investment clubs.
So where did the idea of investing in antiques come from? Certainly the
Information Age has played a key role, with 24-7 access to information about every hop,
skip, and jump that the market makes, and anyone can create a website, blog or even selfpublish a book. The Antiques Roadshow has inspired thousands of treasure hunters to
begin their search in their own attics and basements, not thinking of turning up some
family heirloom that will offer insight into their own history, but rather in hopes of
finding something they can sell. (The televised commoditization of antiques is also alive
and well in England, where they have had Antiques Roadshow for 30 years, and more
recently, a similar show titled, more blatantly, Cash in the Attic.) Then there is eBay,
where thousands of antiques can be bought and sold every day, and with little effort and,
sometimes, little knowledge. With so much information and so many opportunities out
there, it is no wonder antiques have become less historical and more fiscal.
But what about truly investing in antiques? The vast majority of those who buy
and sell antiques, including dealers, are not really investing; they are speculating. We no
longer seem to differentiate between “investing” and “speculating,” which may explain a
great deal about the current state of the global financial system, but pinning down clear
and comparative definitions of the two terms can be difficult without looking back a few
years. Graham and Dodd’s Security Analysis, a textbook classic from 1934, states it
fairly succinctly, reading, "An investment operation is one which, upon thorough analysis
promises safety of principal and an adequate return. Operations not meeting these
requirements are speculative."4 (Graham and Dodd also mention that a failure to
differentiate between investing and speculating played a large role in the “market
excesses of 1928-1929 and the calamities that ensued.”5) Investing suggests a longerterm commitment with limited risk; investing is not buying a painted blanket chest on
Friday and “flipping” it on Sunday for a quick $400 profit. In fact, in what world would
an antique blanket chest really offer “safety of principal”? By conflating the words
“investing” and “speculating” we may be misleading ourselves about the security of our
financial decisions. When one considers how much buying, selling, and swapping occurs
during the set-up of a typical antique show, which may really be best compared to day
trading, it makes a person wonder if anyone really invests in antiques at all. Is not what
we see happening speculation by definition rather than investment?
Furthermore, antiques are trendy - prices paid are often reflections of an irrational
collector who is concerned more about the status of ownership than a positive exit
strategy - another aspect that pushes them more toward high-risk speculation, as opposed
to creating steady and predictable returns like investing in plastics or communications
technologies. For instance, thirty years ago "country primitives" were popular, as were
hand-painted china, Victorian marble-top dressers and hearth implements, but today,
Andrew often feels he has spent his entire day disappointing people with these objects
who keep exclaiming, "But when I bought it twenty years ago..." Today's market is all
about folk art, weathervanes, and anything "in original surface,” and, based on the history
of the marketplace, in thirty years, many of these people may be disappointed as well.
Trends do not make good investments since it is nearly impossible to predict when a
particular type of antique has peaked and thus “buy” turns to “sell.” Beyond this, who
knows what will be popular and what will be passé in ten, 20, or 30 years? Perhaps
Victorian furniture will experience a resurgence in popularity, and maybe worn, painted
furniture will just be considered shabby and not shabby chic.
The concept of art and antiques as an “asset class” is relatively new to the
marketplace. In the 1970s, a British pension fund invested some of its monies in art and
antiques, but, for the most part, art and antiques were not considered viable investments
by the financial world until the late 1990s and early 2000s. After art boomed among
private collectors in the 1980s and a decade later, dot-com founders had plenty of money
to spend and caché to buy, Wall Street started paying attention. Art investment funds
cropped up all over the place, using headlines about record-breaking art and antiques
sales to attract investors to participate in this new asset class. Now, we even have an
index, the Mei Moses Art Index, which tracks the performance of the art market.
As always, a closer analysis reveals that all is not what it seems. For instance,
according a Business Week article from 2005, the Mei Moses Art Index posted a 50-year
compound annual return of 10.47%, but the same return from Standard & Poor’s was
10.95%. Yet again, we find a small segment may have pushed the total, as the Mei
Moses return from 1999 to 2004 was 7.27% against the S&P rate of 2.4%.6 As for that
British pension fund, their initial investment was $100 million (2.5% of the total
portfolio), which was put into over 2,400 works of art. When they liquidated throughout
the late 1980s and 1990s, they earned 11.3% as a compound annual return on those
investments, but again, that may be a case of a small segment boosting the average –
much of the investment return came from the sale of 25 Impressionist paintings, roughly
1% of the original number of objects purchased.7
Antiques are also a bit different because they are not as easily liquidated if you
choose to go it alone and reject the idea of art funds. Today, many people can buy and
sell stocks nearly instantaneously, liquidating those holdings if they need funds while
paying nominal fees, but with physical objects, liquidating presents challenges. First of
all, if one owns stock in General Electric, that stock can be sold in a moment with money
appearing in a bank account as quickly as lightning-fast electronic transfers will allow.
Not so with objects, which often require far more specialized handling, and selling
outright can be difficult, especially at the upper end of the marketplace. Thus, sellers
often must use a dealer or an auction firm to take advantage of larger marketing
capabilities. For small, modest, utilitarian objects, you might find a local auctioneer who
can squeeze objects into his sale in a week or two and will pay in another week or two,
but larger auction houses willing to highlight an object in a printed catalogue may require
several months to put a catalogue together and hold a sale and will need another month or
so to issue checks. In the end, it may take weeks or months to get the original investment
back, especially if one is committed to recovering as much as possible, as one would be
expected to with an investment.
The liquidation lag time also makes it difficult to take advantage of sudden trends.
If a portrait by a particular folk artist achieved a record-breaking price last month, within
the next few months, auction houses will likely receive calls from a number of people
who want to sell their portraits by that artist. Everyone will be working hard to get them
to market quickly, and within six or twelve months, the market may be flooded, buyers
could realize they have plenty to choose from, and buying would slow down as collectors
begin to be more selective. Ultimately, the first buyer’s new “investment” may quickly
sink in value, making it difficult for him to recover his initial outlay, let alone a profit.
For a real-world example, let us recall that in 2004, likely based on an Antiques
Roadshow episode from the previous year, a sand bottle by Andrew Clemens appeared at
auction.8 Unlike anything folk art collectors had seen before, this first bottle brought just
over $12,000 in May of 2004. No one knew how many existed, but over the next
eighteen months, eight more appeared, and since then at least another thirteen have been
offered at auction. Between spring of 2004 and spring of 2009, only two eclipsed the tenthousand-dollar mark and only one exceeded the sale price of the first,9 with some selling
for as little as $3,000 to $4,000. A sudden, unexpected and unexplained spate of interest
drove a June 2009 offering to more than $15,000, and prices seem to have picked up
again…for the moment.
However, knowing when to sell without knowing how many of such bottles exist
with prices varying from bottle to bottle and auction to auction indicates that selling an
antique, especially one in which you feel financially invested, is not for the faint of heart.
While appraisers rely on auction prices to establish values, they do with training and
knowledge. For the novice, auction prices, particularly for those “investment-grade
antiques” at the top of the market, can sometimes be misleading, even though they
establish much of the baseline for sales. The record-breaking auction prices that often
elicit headlines are frequently driven by a small group of collectors and dealers with the
money to drive up prices on what they determine is “hot.” Anecdotally, we have seen
what happens in these situations. Three or four collectors love a small group of objects,
they compete heavily for every quality example that comes up for sale, and then one has
a heart attack and one loses his business. Suddenly, the bottom drops out of whatever it
is they were purchasing, and they’re all left holding pieces that, without someone like
them to push the prices, quickly flounder and depreciate.
“Cashing in” on an antique or art investments can also be challenging because far
more fees and efforts are attendant to selling these objects. Such arrangements involve
shipping, commissions, and fees for everything from photography to storage, and
assuming even a conservative commission percentage like 10-15% of the sale price, the
associated costs can quickly eat up a significant portion of any profits. The Antique
Collectors’ Club in the United Kingdom has published an Annual Furniture Price Index
since 1968, and history indicates that 100 pounds spent in the Financial Times Stock
Index increased 19 times in value between 1968 and 2000, while antique furniture has
increased 33.5 times in value;10 however, many are quick to point out that the average
costs for liquidating stocks are 2%, while liquidating antiques costs on average around
Of course, with investing no discussion is complete without factoring in inflation.
As the cost of living rises year after year, the buying power of a dollar decreases. The
rate of inflation typically ranges from 2-4% each year, meaning that inflation alone will
double the price of goods and services over a 25- to 35-year period (though we should
remember that the value of art and antiques has no direct relationship to the price of
goods and services as tracked by the Bureau of Labor Statistics). For example, let us
assume that in 1970, a person purchased for $2,000 something resembling the antiques
gold standard – a Chippendale chest of drawers, which fetched $10,000 when sold in
2009. To keep the math simple, we will even assume they managed to sell it for that
price without any selling-related expenses. One might be inclined to rejoice at an $8,000
profit, but plugging that $2,000 into the Bureau of Labor Statistics' inflation calculator
will quickly dissipate that joy: $2,000 in 1970 dollars is equivalent to over $11,000 in
2009 dollars. Moreover, had you invested that same $2,000 at just 6% (compounded
annually) in 1970, you would have nearly $20,000 today.
Given all this evidence, from the irrational trendiness of the market to the cost of
selling, it is clear, to us at least, that antiques simply are not reliable investments.
Certainly a dealer or appraiser who has years of experience in the marketplace might be
able to earn respectable profits by speculating in antiques, but for the average collector, it
is a pretty risky endeavor, even having the benefit of any of the dozens of books on
antiques investing currently available on Amazon.com. It’s all too easy to find people –
dealers, auctioneers and even appraisers – who find it easier to tell you what you want to
hear in the moment. Just remember, in thirty years, when you are ready to sell or your
children are settling your estate, those folks will likely be long gone.
Again, we are definitely not saying that you should not buy antiques. In fact, we
think you should. We believe that while buying antiques might not be the best
investment idea, buying antiques does make good fiscal sense. If you purchased that
Chippendale chest in 1970, you might not have gotten all your money back when you
sold it, but had you purchased a new $2000 chest of drawers from a department store in
1970, what would it be worth today? You might get a few bucks at a yard sale or flea
market, but more than likely, the best you can hope for is a tax deduction for donating the
chest to charity. Whatever the antique chest purchased in 1970 sells for today, it is still
very saleable; you could get something for it. Likewise, if you were to buy a $2000
antique Chippendale chest of drawers today, in two, five, ten, or 20 years, it will have
retained value. It may not be worth what it was at the time of purchase, especially if
inflation is factored in, but it will be worth something. The same cannot be said of a new,
Buying smart is the trick. You do not make your money when you sell, you make
it when you buy. It is one of those dealer sayings that may or may not hold up to close
scrutiny, but there is some truth in there. As with any purchase, those of us in the
business should be encouraging buyers to do their homework. Perhaps it is one thing if
the purchase is a $10 toaster from Target, but if people are going to lay out a significant
sum of money and live with something for a long time, they should understand exactly
what they are getting. If a friend needed a car and had $2,000 to spend, no one would tell
him or her to buy the first $2,000 car available. We would tell them to research the
model, ask plenty of questions, really look it over and maybe even spend a few more
dollars getting an expert opinion. With a good purchase and some good maintenance, the
friend would stand a better chance of getting something satisfactory and recovering some
of the purchase price when selling. Antiques and art are no different.
What bothers us most about touting antiques as investments is that we are
changing the nature of the marketplace, and that might not be in our best interest in years
to come. When investments do not meet expectations, people dump them and acquire
new ones. They cease to be special or unique or beautiful, because they are viewed only
in terms of their potential financial payoff.
Of course, as business people, we have to consider all aspects of the business.
Andrew admits that, around the office, he occasionally refers to the antiques they are
selling as "inventory" (though he is vehemently opposed to the term "merch"), but he is
careful never to use that term in public. In our day-to-day lives, we regularly have to take
a business approach to antiques, as do all dealers, auctioneers, and appraisers. One has to
consider revenue streams and profit margins, but if that business perspective is on display
with the buying public, particularly those new collectors and those under 40, then you run
the risk of turning them off. It just does not convey the sense of passion, fun, or adventure
that people look for in a hobby, which is what buying antiques has been for most people.
We just have to be careful, as we struggling to evolve in the current marketplace
and find a new way to connect with customers, not to give away who we are. By touting
antiques as investments, we risk turning the objects that we love into mere commodities,
things to be bought and sold with only the dollars and cents in mind. To create true,
long-term customers, we need to instill a love of historical objects in our customers, and
love is not about reason and return. We do not treat the things we love and value in life as
commodities; we do not reduce them to a cost-benefit analysis. If we did, many of us
would ditch our pets, our friends, our kids, our homes, our spouses—and our antiques.
Hollie Davis received her master’s degree in library and information science from the
University of Illinois-Urbana/Champaign and is currently a senior editor and the
marketing director of Prices 4 Antiques, an online database of auction prices. Andrew
Richmond received his master’s degree from the Winterthur Program in Early American
Culture and is currently vice president of Garth’s Auctions, Inc. Andrew’s research has
focused on the early furniture of the Ohio River Valley, and he has published articles in
The Magazine Antiques and the Chipstone Foundation’s journal American Furniture.
Andrew and Hollie’s current project is a study of the Germanic furniture of the American
Midwest. They also author “The Young Collector,” a monthly column in Maine Antique
Digest. This article is derived from their December 2008 column entitled “Commodity
Futures (or the Risk of Commodifying Antiques).”
Search performed on January 2, 2010.
Ed Welch, “How to Buy Good Stuff,” The Journal of Antiques and Collectibles, February 2006.
Available at http://www.journalofantiques.com/Feb06/business.html, viewed January 2, 2010.
In the column on which we based this article, we used the term “commodification” but now use
“commoditization.” The difference between the terms is subtle but important and our change represents a
more accurate usage of the terms. Commodification is the assigning of an economic (or market) value on
something that has no inherent economic value, e.g. a social relationship has no inherent economic value
but by turning that social relationship into a business relationship, it now has an economic value (i.e., it has
been commodified). Commoditization, on the other hand, is simply the process by which something that
already has economic value, but also has other values, begin to be viewed simply in terms of their
economic values, e.g. a painting by Renoir has significant economic value to be sure, but it also has artistic,
cultural, and historical value as well. To commoditize a Renoir is to think of it only in terms of its value in
the art market (i.e., as a commodity).
Benjamin Graham, David Dodd, Securities Analysis: The Classic 1934 Edition. New York: McGraw Hill,
1996, p. 54.
Ibid, p. 50.
Toddi Gutner with Kerry Capell, “Funds To Please The Eye,” Business Week, February 14, 2005.
Available at http://www.businessweek.com/magazine/content/05_07/b3920109_mz070.htm, viewed
January 2, 2010. The performance of art versus stocks looks even less impressive in the recent 2009 yearend report from Mei Moses. 2009 saw a 23.5% decline in the art index, while the S&P saw a 23% increase.
While the report does highlight the 5- and 10-year returns favor art over stocks (which is not surprising
given the turbulence of Wall Street in the past decade), the 25- and 50-year returns both show stocks
outperforming art. The same 50-year returns also show that the art market is more volatile than the stock
market. The December 23, 2009 report is available at http://www.artasanasset.com/.
C. Wesley Cowan, an auctioneer in Cincinnati, Ohio, first encountered one of these bottles in Hot
Springs, Arkansas in July 2002 during a taping of the popular PBS series. He estimated the bottle to sell
between $4,000 and $6,000 at auction. After this program aired in early 2003, another bottle was
consigned to Cowan’s spring auction. For more information on Clemens, see C. Wesley Cowan and
Andrew Richmond, “Cowan’s Corner,” September 2005, currently available at http://www.gostar.com/antiquing/cowans_corner0905.htm, viewed January 2, 2010.
The exceptionally high price of this one example ($29,375 at Skinner, Inc. in Boston in November 2007)
was likely due to it incorporating an identified steamboat, the Gray Eagle, in its design. Other boat bottles
have sold, but none of the boats were identified and none of the prices nearly so high.
The 1968 and 2000 numbers from the ACC were discussed in John Fiske and Lisa Freeman, “Antiques
as Investments,” originally published in the New England Antiques Journal, May 2001, and currently
available at http://fiskeandfreeman.com/AntiquesAsInvestments.aspx, viewed January 2, 2010. According
to the Antique Collectors’ Club, the 2008 Antique Furniture Price Index is down to 2,942 pounds.
Auction is generally considered the easiest and most effective way to sell antiques, and in figuring the
costs associated with selling one must include the seller’s commission (usually ranging from 5% to 25%,
depending on the value of the object), any fees (insurance, storage, photography, etc.) and the buyer’s
premium. While the buyer actually pays the premium (usually ranging from 10% to 25%), it does have an
impact on the price the seller ultimately receives since most buyers factor in the premium when calculating
what their top bid will be.