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  Some Other Risk Factors
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Public Commentary

  Chelsea Now
    Vol. 3, #16
  Art + Auction
    March 2009


Sufficiently robust transaction data and analytic frameworks exist to define comprehensively the financial risks of individual works of art (or antiques), of schools of artists, and of diverse collections. It is now possible for bankers, asset fund managers, auctioneers, and other financial intermediaries, to define, monitor, and manage their portfolios of risk.

Proprietary microeconomic research and mathematic tools lie at the heart of this analytic capability and are then aligned with other relevant inputs. As a cursory example of some risk factors, consider the following:

Microeconomic Facts:

Since the art sector is affected by deep information asymmetries and persistent opacity, elements as simple as the average selling price and the overall rate of "buy-ins" become factors of risk.

French Impressionist Paintings

Kusin Classification Code #s 001.001.003.002

Between the start of January 1985 and the end of September 2001, 4,243 fully attributed paintings by 16 French Impressionists were offered for sale at 130 different auction venues.

30% of the lots offered for sale failed to find buyers, or were "bought in," to use the parlance of auctions. Measured by value, 15.6% of the works offered at auction was bought in. The average nominal sale price during the period was $769,582.

Dutch Old Master Paintings

Kusin Classification Code #s 001.001.009.004.001

Between the start of January 1988 and the end of September 2001, 9,486 fully attributed paintings by 219 Dutch Old Master artists were sold at 230 different auction venues.

Of all the lots offered, 41% failed to sell. Measured by value, the buy-ins were 24.3% of that offered for sale. The average nominal sale price during the period was $58,662.

Eighteenth Century Case Furniture and Seating

Kusin Classification Code #s
American Furniture    002.001.001.001.001
English Furniture       002.001.002.001.001
French Furniture        002.001.003.001.001

Between the start of January 1988 and the end of 2000, 2,096 fully attributed English, French and American examples of case furniture and seating were offered for sale at 42 different auction venues. Each of the works had been built by a named craftsman or a distinctive regional school between approximately 1750 and 1800.

20.3% of the lots offered for sale failed to find buyers. Measured by value, 9.6% of the value offered at auction was bought in. The average nominal sale price during the period was $54,070.

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