Since I began to stoke my curiosity about blockchain technology a few years back, I began to learn about companies who use it to sell shares of works in order to create investment opportunities. I initially cringed at the thought of buying into an object that you cannot see or enjoy in person purely for the sake of your investment portfolio. I mean, this is the opposite of what almost any artist ever intends for their work. However, have the objects have actually won by now commanding such value that they become an “asset class”?
That said, I want to approach the idea with an open mind. From the point of view of these companies, they want to democratize the ability for people to invest in art and artifacts. Yes, it is still investing, and, yes, you will still not have possession of the object. It is a stock. However, you will vote with your dollars and promote what you like (in theory) like you would a stock. In other words, you would not purchase stock in a company you dislike, right? Will you purchase objects you dislike? Again, in theory we act like this.
With my mind open and my bias caged, I will try out this process with my own money and purchase shares via a company called Masterworks, one that specifically sells shares in works of art.
I want to do this for a couple of reasons, and curiosity is the first. I do not aspire to jump in to a situation just to despise it. I want to genuinely understand the context and the mindset because I come from a far different one. I do not relate to it at the moment because but do empathize with the desire to make money through investing. Can the smoking art student and the captain of the football team possibly get married and have a baby?
Second, I think that the practice of investing in collectibles and, specifically, purchasing shares in them is here to stay, so we best understand it. For more than a decade collectors have actively looked to art as an investment tool that does not parallel the stock market and, thus, balances a portfolio. Fractional ownership merely offers that idea to more people by lowering the barrier for entry: money. This democratizes investment possibilities not access to collectibles, though.
To begin, I want to identify my expectations as a hypothesis for the experiment. I first expect that my goals for collecting objects will fundamentally differ from those buying shares in objects: appreciation for the object and support for the author versus a return on an investment. As I said, however, I will [try to] eject my Gen X art school gestalt like an original scratched CD of Disintegration and cross campus to the business school this semester and like it.
I expect that Masterworks will present the works with few of the artistic and historical merits in favor of historic sales figures and basic introductions to artists and makers. After all, the company wants to make money by making you money.
I also expect them to offer big name works. Blue chip stocks typically provide solid returns over time. Why would blue chip artists differ? People’s opinion of, say, Monet may fluctuate over time but major museums will not suddenly begin mass sell-offs of the work which would subsequently devalue it.
Lastly, I imagine that I will learn very little about the physical object. Where is it? Can we choose to exhibit it? Do I have the option to see it in person? Who decides when to sell it? I assume, even as part owner, borrowing it for a dinner party will not be possible.
In the next post, I will detail the actual Masterworks offerings, procedures, and terms and weigh in on their implications from my point of view.
If you have any experience with this option or have any thoughts I may have missed, please put them in the comments below.