Dan's Papers - April 25, 2008 -

While some investors are getting cold feet about jumping into various market segments, the art world is booming. But those looking to get started in the world of art shouldn't get caught up simply with the numbers.

Investing in art may be one of the most confusing pastimes. A man who splatters paint on an oversized canvas? Adults who draw with crayons? Or cut shapes out of cardboard? To the average person, purchasing pieces like these doesn't make sense. And if that's the case, then he or she shouldn't buy them.

The first rule of collecting art is to buy something you like. There is no reason to spend tens of thousands of dollars on something you are going to keep in storage because you cannot bear to look at it or, even worse, shudder every time you gaze at your wall. You will surely be able to find something that meets your aesthetics in the same price range.

If the inheritance has just kicked in and you've decided to invest your money in art, but haven't a clue where to start or don't have any notion of what you like, you should really start with the basics. Visit museums and galleries, pick up some art anthologies, and even attend an art appreciation class. The knowledge you have when you begin a collection will be reflected in the actual collection.

Mark Borghi of Borghi Fine Arts in Bridgehampton and Manhattan has some great advice about starting a collection - know what you want, know whom you are buying from and when you find a dealer whom you respect and trust, stick with them. They can help you continue establishing your collection. Also, buy American. "American paintings have great upswing," he explained.

Borghi's other recommendation is to stay away from auctions, because the auction market is insane right now. Blue Chip artists are out of most people's range, but even lesser known artists are selling at prices that exceed their quality. Therefore, most dealers have shied away from purchasing art at auctions and so should you. This is especially true of contemporary artists, who are experiencing inflated values of their work, which may not hold.

If the inheritance didn't just kick in, this doesn't mean you have to wait until you've got a million in the bank to start buying art. Start like many artists have, with works on paper. You can get some great pieces in the $10,000 to $15,000 range and for a little more de Kooning's works on paper start around $40,000. It may seem like a lot of money, but when you consider that his "Untitled XXX" painting sold for $10.6 million at an auction, it's a drop in the bucket.

The trick is to buy the best your money can buy. If you've got $5,000 spend $5,000, if you have $1 million buy a $1 million painting.

But don't speculate on an artist, Borghi advises. It isn't worth it. You may think you are discovering the next great, unknown artist, but you probably aren't. If you like the work and don't mind spending the money, then fine. But if it doesn't appreciate, don't get mad. A general rule to remember - to ensure the value of your art will increase buy only work by known artists.

There are also a few fallacies you may want to keep in mind. The first one is that bigger is always better. Yes, some oversized paintings sell for millions upon millions, but they are also quality pieces. As with anything, quality is key.

The second thing to remember is that dead artists don't mean big bucks. According to Borghi, speculating on the death of an artist and purchasing their work while alive, does not guarantee you a fortune once they pass away. The reason that so many works by dead artists are so valuable is because they have proven their resonance generation after generation. Collecting art isn't exactly like collecting antiques. Age doesn't play as much of a factor in price. It is track record that counts. Many pieces have auction records, which will explain how their prices have appreciated over the years. This can give you information about an exact piece or a general idea of the value of an individual artist.

Also, provenance is a must for anything. You should have authenticated documentation that tracks how a piece of art got from the artist's hands to yours. It is the only bonafide way to prove the piece is original. If you are buying the piece from the artist, have them write a bill of sale including the date, price, title of the artwork and their signature.

If you follow these tips and keep tabs on the art world, you can really make your investments grow. But overall, you really need to enjoy art for its beauty.