An Investment In One Of These Three Artists Last Year Would Have Outperformed Tesla, Apple and Microsoft

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Artwork has only recently become widely recognized as a popular investment, even though ultra-wealthy investors and hedge funds have been profiting from this asset class for decades.

The limited recognition for this market is mainly due to the fact that it’s been mostly closed off for average investors. The most valuable works are sold in private transactions or in auction houses that have traditionally only given access to well-connected buyers and art brokers.

This all changed in 2021, however. The pandemic essentially shut down the market, causing the top auction houses to take even the most exclusive auctions online. Fractional art investments also gained traction during that time, allowing retail investors to buy shares of multi-million dollar works of art through platforms like Masterworks and StartEngine.

It would be fair to say the art market has gone through a transformation over the past 18 months, which has spurred increased activity and price movement.

Let Me Explain The Data First

Before getting into some artists that have seen major price gains in the past year, I want to clarify that these gains are based on an overall index of each artist. The price level is based on the average value of an average piece by the artist. The data is provided by artprice.com and you can read their methodology on calculating price level here.

Not all works from these artists have seen the same increase in value. Some have generated much higher returns and others lost value. The price increases are also being compared based on full year 2021 price changes since that’s how the art price levels are calculated.

The Stocks

2021 was an overall exceptional year for the stock market. The S&P 500 gained 27.04% as the market continued its recovery from the pandemic-related crash in 2020. Meanwhile, Apple Inc (NASDAQ: AAPL) gained 33.82%, Tesla Inc TSLA rose 49.76% and Microsoft Corp MSFT gained 51.21%.

The Artists

Pablo Picasso: Perhaps the most well-recognized name in terms of 20th-century art, Pablo Picasso had the highest priced auction sale in 2021 with one of his paintings going for $103,410,000.

Across all of his works, the artists only managed to beat Apple in gains with a 43.7% price increase. When looking at just his sold paintings, the price gain was much more impressive at 220.64%.

Jean-Michel Basquiat: Achieving the second highest price at auction in 2021 for his painting titled “In This Case” (1983) that sold for $93,105,000, Jean-Michael Basquiat had a stellar year in terms of price gains across all of his works.

The artist’s works had a 62.5% gain across all mediums while his paintings gained 79.66% for the year.

Ed Ruscha: Hitting a new all-time high in 2021, Ed Ruscha is one to watch for higher gains over the next several years. The artist’s price level was hitting the same resistance levels since 2015, but broke out in 2021 despite significantly lower total auction turnover since it last met resistance in 2019.

The artist’s price level gained 63.7% in 2021, his second best year in the past two decades. His highest priced piece for the year, “Ripe” (1967), was actually sold to Masterworks, which is currently offering shares of the painting to retail investors through its platform.

Related: Masterworks Sells Albert Oehlen Painting For $2.7 Million, Resulting In A 33.8% Net IRR To Investors

What does this all mean? The comparisons made here are extremely general and there’s no way to invest in a specific artist’s index that I know of. More than anything, the data is interesting to look at. So while I’m not suggesting that anyone dump all of their stocks to invest in art, I will say that if you follow the money, you’ll see a lot of big investors, hedge funds and even banks are putting more of their capital into this market.

Visit Benzinga’s new Art Hub to further explore the opportunities in this market.

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