Art Markets: Record $120 Million for “The Scream”

Image from Wikipedia.org

From Yahoo

Edvard Munch's painting "The Scream," one of the world's most recognizable works of art, sold for $120 million at Sotheby's on Wednesday, setting a new record as the most expensive piece of art ever sold at auction.

The sale at Sotheby's Impressionist and Modern Art auction featured other works by Pablo Picasso, Salvador Dali and Joan Miro, but Munch's vibrant piece was the centerpiece of the auction in a salesroom packed with collectors, bidders and the media.

The vibrant pastel from 1895 was conservatively estimated to sell for about $80 million at Sotheby's, but two determined bidders drove the final price to $107 million, or $119,922,500 including commission, during a 15-minute bidding war.

One of four versions by the Scandinavian painter, which was being sold by Norwegian businessman Petter Olsen, "The Scream" easily eclipsed the old auction record held by Picasso's "Nude, Green Leaves and Bust," which went for $106.5 million at Christie's two years ago.

I have been pointing out that symptoms of bubbles have not been limited to towering skycrapers, but also to art and wine prices.

The record sale of “The Scream” which coincides with today’s easy money (zero interest rate) environment and central bank QEs, I believe has been highlighting this.

Nevertheless “The Scream” whose artist Edvard Munch described as…

I was walking along a path with two friends – the sun was setting – suddenly the sky turned blood red – I paused, feeling exhausted, and leaned on the fence – there was blood and tongues of fire above the blue-black fjord and the city – my friends walked on, and I stood there trembling with anxiety – and I sensed an infinite scream passing through nature.

…seems to be a propitious theme in today’s sharply volatile politically influenced markets, as driven by serial bubble policies, unwieldy debt, politically desperate actions manifested through rampant inflationism and financial repression.

Anxiety channeled through the "sense of an infinite scream passing through nature" seem to be part of the world we are living in.

Alternative Investments

In an inflationary boom, the tendency is for asset inflation to become broadbased and not limited to the traditional classes such as equities and commodities, but to a wider range of non conventional assets or otherwise known as “alternative investments”.

Minyaville presents 10 possible alternative investments:

1. Vintage Apple Computers and Other PCs

2. Fine Art

3. Gemstones

4. Litigation Funding

5. Rare Stamps

6. Fine Wine

7. Luxury Food and Tea

8. Baseball Cards

9. Celebrity Autographs

10. Vintage Toys

They write, (bold emphasis mine)

If you're looking to protect at least a portion of your money, one option is to move into uncorrelated investments -- buy some stamps, gemstones, wine or fine art. Risky and not always easy to exit, these markets are tempting to many because they're typically unaffected by the highs and lows of the general economy. They are said to be recession-proof, able to hold their own during downturns, or even grow at astounding rates of 10 to 20%.

If you choose to go this route, however, it's imperative to know your risks. Some experts complain that the hype about market-beating returns is based only on the success stories, not the average transaction. Critics also claim that some seemingly uncorrelated markets have become correlated -- they're now attached to traditional assets -- meaning they're just as vulnerable to larger market crashes as any other investment.

You may read on from this link or go above to the specific alternative asset markets and press on the link accordingly.

I’d like to say that I belong to the latter- the skeptics, whom are not convinced that these are ‘recession proof’ nor are they assets that signify uncorrelated nature useful for portfolio ‘diversification’.

The art markets as previously argued is one the many metrics I use in trying to gauge on the state of the bubble.

I’d also say that liquidity of such markets could also pose as a problem.

Thus returns may be greater but so are the risks.

Bottom line: There are many ways to exploit asset investments in today’s environment, but we should be circumspect or know about the risk profile of the particular asset market we intend to deal with before plunging in. Risk comes from not knowing what we are doing as value investor turned political entrepreneur Warren Buffett used to say.