The Investment U e-Letter: Issue #619
by Dr. Mark Skousen Fine Art Investment: You Can’t Get These Investments On Wall Street “Fine art is a fine – if not the finest – investment in more ways than one.”
~ J. Paul Getty, How to Be Rich
The holiday season might be a good time to ask yourself the following question: “Why am I working so hard to make money in the stock market?”
Lin Yutang, my favorite Chinese philosopher, said it best in his wise book, The Importance of Living: “O wise humanity, terribly wise humanity! Of thee I sing. How inscrutable is the civilization where men toil and work and worry their hair gray to get a living and forget to play!” Since stocks have turned in a good performance this year, how about using some of your gains to purchase some fine art investments – paintings, sculptures, rare books and antique automobiles? It could be fun… and profitable. Here are some affordable ways to build a fine-art collection… Recreate Your Favorite Work of Fine Art Last year, in honor of Ben Franklin’s 300th birthday, I commissioned Prestige Fine Art of Coral Springs, Florida, to re-create Norman Rockwell’s famous painting, “Ben Franklin and the French Ladies.” A few months later, this first-class oil painting was delivered and is now hanging in my hallway. Now I probably couldn’t afford to buy the original, even if it was for sale. But this re-creation, which looks as good as the original, cost me only $2,000. And Prestige Fine Art does not create printed pictures, but real oils. Over the years, I have collected paintings such as “The Irises,” by Van Gogh, “The Declaration of Independence,” by John Trumbull, “Dash for the Timbers,” by Frederick Remington, and “George Washington Praying at Valley Forge,” by Arnold Friberg. I can’t afford the originals, but I can afford hand-painted re-creations offered by Prestige Fine Art. My home is so much more alive because of these oil paintings. If you would like to create your very own mini-museum in your office or home, containing your favorite classical paintings, this is a great way to do it. The company’s president and longtime friend of mine, Ed Mero, takes pride in finding treasures of the art world and having his master forgers create hand-painted copies. Yes, that’s right – forgers. But they are acting in a perfectly legal manner, as long as they don’t claim they are originals. Ed called me recently and offered the following deal to Investment U readers: You can acquire any of the paintings he has in inventory, up to 30’’x40’’, for $1,500, plus the frame. A 30’’x50’’ is ordinarily $5,100, plus framing. (See below for Prestige’s contact information.) Now for original works of art… If You're Looking for Fine Art Investments, Use My Discount Art Dealer If you want to buy original art, let me recommend to you a unique service: A discount art dealer named Mike Kuschmann, president of Fine Arts Limited of Winter Park, Florida. Mike can save you thousands by acting as your agent in buying artwork “wholesale,” saving you 30% or more off gallery prices. I've been recommending him for years to my subscribers, and they love his service. Many years ago, I bought a first edition of Adam Smith’s Wealth of Nations and saved $10,000 by using Mike. Here are some examples of savings he’s made in the past year: A doctor and his wife were on vacation in New York and came across a “Jiang” sculpture they liked, retailing for $6,800. They had read about Mike from my newsletter and decided to hold off buying the sculpture until they could talk with him. He was able to negotiate the price down to $5,250. Several friends took a trip to Carmel, California, and one of the women admired a beautiful painting by Jacquelynn Kresman, priced at $16,750. One member of the group suggested they call Mike after he had heard about him at an investment conference where I spoke. Because it was a one-of-a-kind item, Mike had to deal with the gallery in Carmel. He succeeded in getting his customers' price down to $11,200, saving them $5,550. You can even invest in fine art to lower your tax burden… Donate Your Art and Get a $20,000 Tax Deduction As we approach the end of the year, you might be interested in this unique “low profile” tax-saving idea… After enjoying your discounted artwork for a year or more, donate it to your favorite college, foundation or charity for a tax deduction. If you hold the art for a year or more, you can donate it to your favorite organization and receive a tax deduction based on the appraised fair market value, which can in many cases be higher than your cost basis (especially in today’s bull market for collectibles). Mike can do all the work for you. He buys the artwork (at a discount), ships it to you, then helps you donate the art the following year, showing you how to fill out the IRS forms. The deduction is limited to $20,000 each year. Good investing, Mark Today's Investment U Crib Sheet - For a full color catalogue of Prestige Fine Art’s inventory, visit the company's website. You can also call 800.838.9885. To get in touch with Mike Kuschmann, call Fine Arts Ltd. at 800.229.4322 or 407.702.6638, or email him at mkuschmann@cfl.rr.com and ask for his free brochure pack.
- Investment returns of fine art and collectables are competitive… The Mei Moses All Art Index tracks data on repeat sales of fine art auctions from Sotheby's and Christie's. The index includes nearly 6,000 sales, and it returned 14.52% in 2005. In one of the greatest bear markets (1966-1975), fine art rose 256%. Take a look at the Mei Moses All Art Index. (It’s free, but you’ll have to register.)
- Did you know? Citigroup’s private banking division has an art-advisory service, which now employs twice the number of art specialists than it did in 2002… In the last seven years, UBS AG has doubled the size of its group dedicated to “art banking.” And AIG’s Private Client Group has expanded its art-underwriting department. According to The Wall Street Journal, it’s seen a 30% annual increase in such policies since 2000.
Shock Stocks Shares of fruit producer Chiquita Brands International, Inc. (NYSE: CQB) climbed 5% Friday. The company reported that banana prices are up 4% in North America. At $16.20, the stock is well off its 52-week high above $21, but pays an attractive dividend of 2.5%.
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