Felix Salmon’s Art Market Analysis

Felix Salmon, a financial blogger for Reuters, along with Thierry Dumoulin and Katharine Markley from Artnet teamed up to analyze “how different artists have their auction peaks at different times, and how some artists fade away while others become newly fashionable.”  Ultimately, the research did not show what they had expected as it became apparent that each of the 25 artists (Greens – Impressionist; Yellows – Modern; Purples- Contemporary), chosen by Markley, appear to move in unison.

The two highest peaks occur in 1989 and 2007, when the art market was undeniably the strongest. While monetary value in 1988 was very different than the dollar today, adjustments for inflation have been made so all values are in 2013 dollars.

What stands out most in this graph is how out of control the Contemporary market is. If we view the data after the market fell off in the early 90’s, the contemporary works begin a comeback a short while later and the rebound is rather volatile. Comparatively, Impressionist and Modern works moved more gradually in their recovery up until 1999, where it appears the market as a whole falls off a bit again (Interestingly, Picasso appears to follow the trend of the Contemporary market). A similar pattern emerges again as the Contemporary market skyrockets in 2004, this time pulling the rest of the market along for the ride, albeit a much more tame ride (perhaps something like “It’s a small world” vs “Kingda Ka”). Since then, the market as a whole has remained at its elevated level(excluding the major dip in 2009 after the stock market crash).

Salmon states in an overview of the chart: “None of this is particularly scientific, but it does help to put today’s record-setting auction prices in perspective. Once you adjust for inflation, they’re basically back at 1990 levels, as is underscored by the fact that the most expensive work of art ever sold at auction remains Vincent Van Gogh’s portrait of Dr Gachet. If the rule of bubbles is that each successive bubble is larger than the last, then that might mean we have a little ways yet to go, before this one bursts.”

Read Salmons entire overview here