The great Warren Buffet famously said: “only when the tide goes out do you discover who's been swimming naked.” If the markets have shown anything recently, it's that holders of growth stock powerhouses like TSLA, AAPL, and AMZN are in need of a bathing suit. Since 2022 began, more than $1 trillion combined has been wiped from their total share value.
Cryptocurrencies, often touted as a hedge to choppy markets, are mimicking the stock market’s slide. According to Arcane Research, the 30-day average correlation between Bitcoin and the Nasdaq reached as high as .82 in early May. Bitcoin has plunged more than 50% from November highs. All while inflation continues to run-hot, pushing real bond yields into negative territory.
All Eyes on This Safe-Haven Asset
While financial markets around the world are hanging by a thread the $1.7 trillion art market has shown resilience and delivered record-breaking results.
In the midst of all this turmoil, the art market had some of its biggest sales on record. As the New York auction season revved up, a masterpiece by legendary artist, Andy Warhol fetched $195 million at auction.
For many collectors, this isn’t a hobby—it's serious business. Jeff Bezos, who once attempted to collaborate with Sotheby’s in an ill-fated venture in 1999, has set record prices with recent art purchases. In 2020, Bezos spent a combined $70 million for two paintings by Ed Ruscha and Kerry James Marshall.
As an investment, fine art is prized for not only its appreciation but its low correlation to public markets, and inflation-hedging qualities. In its latest art market report, Citi concluded that art has historically had a near-zero correlation of -.04 to developed equities, the lowest of any major asset class.
With investors fleeing to safety, experts expected the demand for high-quality works to be high. Even still, the results shattered expectations.
Is this market just heating up?
If the recent auction results are any indication, 2022 could be one of the best years for the art market on record. In the first half of the year, the grand total generated at art auctions came out to $5.7 billion.
The art market’s resilience is not a new phenomenon. According to data from Citi, the art market returned 28.2% during COVID-19.
New Demand is Driving Growth
Demand in the art market has been linked to increasing levels of wealth. In recent years, fast growing emerging economies in Asia have been a massive source of demand, particularly for younger buyers. But in today’s digital world access to the art market has also improved dramatically.
As Citibank recently reported, fractional investing of fine artworks has opened the market to investors well beyond the ultra-wealthy. With the Wall Street Journal recently calling the art market one of the hottest in the world, investors are flocking to alternative investing platforms.
The recognized leader in the space, and first such platform to hit the market, is Masterworks. According to the company, it has regularly offered investments in blue-chip artists like Andy Warhol, Basquiat, and Banksy to its members. Masterworks cites a track record of 14.3%, net of fees, since its inception.
Masterworks' mission is to democratize the art investing world and help people tap into an investment previously exclusive to the ultra wealthy. We are the only platform that lets you invest in multi-million dollar works of art by artists like Basquiat, Picasso, Banksy, and more.