What does Monet have to do with your money?
On Monday, one of Claude Monet’s paintings of water lilies, “Nymphéas,”fetched over £31.7 million (about $53.9 million) at an auction at Sotheby’s in London. That was the second-highest ever paid for a Monet painting. The auction featured other popular modern artists, including Piet Mondrian and Pablo Picasso, and took in almost £122 million ($207.2 million).
These high prices echo some of the top dollars spent in 2006, just before the financial crisis. In November 2006, entertainment tycoon David Geffen sold two of his paintings for record-breaking amounts. Fintech Advisory’s David Guzman reportedly paid Geffen $140 million for Jackson Pollock’s “No. 5, 1948” in what was then the most ever paid for a painting. That was followed up the very same month when Steven A. Cohen of SAC Capital bought Willem de Kooning’s “Woman III” from Geffen for about $137.5 million, then the second-highest for a painting.
Within a year of those two sales, the U.S. stock market peaked. We all know what happened next.
But, is a hot art market a sign of an overheated stock market?
According to Gina Sanchez, founder of Chantico, money is going into art because there aren’t enough good deals in stocks.
“When there’s excess money in the market, you tend to see it flowing into the collectibles,” said Sanchez, a CNBC contributor. “The art market is a perfect example. The European Fine Art Foundation released a market report that showed that the average auction prices in Britain are up 82 percent, and in the U.S. up 100 percent from 2009 to 2013. If that isn’t an indicator of liquidity, I’m not sure what is.”
Nonetheless, stocks may continue to move higher if Steven Pytlar, chief equity strategist at Prime Executions, is correct. He sees the benchmark S&P 500 index continuing along an uptrend begun in August 2011. That’s sort of picture could be worth a lot more than any painting if the perspective is right.
“The charts are actually very strong,” said Pytlar. “Since the 2011 bottom, you can see that it’s been very stable, and we don’t see price extending or diverging from that trend in a meaningful way.”
A topping process forms when there’s a big move away from the trend line, Pytlarsaid. “We just don’t see that right now,” he added. “What we see is an ongoing uptrend, and we’re still positive.”
To see the full discussion on the S&P 500, with Sanchez on the fundamentals and Pytlar on the charts, watch the above video.
- Visual Arts
- David Geffen
- Piet Mondrian
- Pablo Picasso