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Originally Posted by Gorditadogg
You make some interesting points, especially when you touch on one of the risks of speculating in cards.
With respect to whether art is an investment, I think you answered your own question. Many people, once they achieve a certain level of wealth, spend some of their money to buy things for their own enjoyment. It's fine to have a collection of nice watches or a garage full of vintage cars. And it's nice to have expensive paintings on your wall. But people don't do that, for the most part, to increase their wealth but instead to appreciate what they have.
You mentioned Bitcoin as an investment. Do you own Bitcoin? If so, tell me how you decide what is a fair price. It's trading right now for about $100,000 per coin. Do you think that's a good deal or a bad deal? Tell me why.
For any investment, you should be able to estimate how much income the asset will earn for you, over what period of time, and based on that, you can decide how much you will pay for it.
If instead you are speculating, then all you can say is I expect this asset to go up or down because.....
There are some instances I suppose where art can be an investment. For example, if an art museum wants to display a Jackson Pollock and you can rent one to them, then there is intrinsic value there to base a price. For the most part, though, art is not an investment. You could make money on art: as you say, it goes up and down, but volatility in price does not by itself make something an investment.
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I hate to hijack another's thread by taking it too far off track, but since you posed direct questions, I will venture to address them. You asked if I own Bitcoin. Yes, I own one coin, which I bought a few years ago, along with 5 Ether. I admit that every ounce of my being rejected the concept of cryptocurrency for a decade before I purchased, and I still think it is a "pet rock." But, I ultimately decided that to be truly diversified, I needed to have a little piece of every asset class just to ensure that I am not the one left behind. If Bitcoin rises to $10M some day and crypto-kids are ruling the world, at least I will be able to continue my current quality of life.
You seem to have a very narrow view of what constitutes an investment, and for you the definition includes some ability to forecast future returns. Ironically, the three investment types you reference (stocks, bonds and real estate) fail your own definition. We can no more predict what Nvidia, P&G and Microsoft will be worth in 10 years than we can a 1952 Topps Mickey Mantle. And anybody that believes the real estate market is predictable was not paying attention during the bust cycles in the 80s and late-00s. I have spent enough time in both the stock market and real estate market to know that neither one of them is the least bit predicable, but I invest heavily in both because (like cards and numerous other asset classes), they have performed well over my lifetime and, as previously stated, I want to be invested in what everyone else is investing in so I am not the one left behind when society prospers.
At base, I believe every dollar you spend on an asset that is not intended to be "used up" is on some level an investment. From there, it is up for society to determine whether such purchase was a "good" or "bad" investment, which is usually only knowable with hindsight.
Circling back to your original premise that art purchasers are primarily people who have achieved a level of wealth and simply want to spend their money to "enjoy" a piece of art, I do not believe that to be true. I have talked and read of several art purchasers who purchase notable art pieces, and while enjoyment certainly enters the equation, the expectation that the art will appreciate is usually at the core of their purchasing decision (unless it is a publicity stunt where a guy just wants to burn millions of dollars to eat a banana). I believe that in over 90% of cases where a 1952 Topps Mantle is sold, the purchaser's motivation includes value retention and appreciation. Very few are spending 6 digits completely ambivalent to the asset's future value.