In October 1987 the World Stock Exchanges Crashed!!
It was the beginning of my art venture and I was in the middle of many investments and expansion. While the stock markets were reeling under the losses, the art market went down by over 50%, I was in the middle of a catastrophe that seasoned investors failed to master.
What happened to me and my art business as an amateur?
Luck is always a primary reason to succeed or fail in anything. If I was unlucky when I started this business, then I would not have been writing these lines nor have this blog for all to read. Luck always on my side and in October 1987 was more than next to me; I believe it guided me. Timing in any sale or business is top priority and the sale of Montezin in October 1987 beat the stock exchange crash by two days, if my memory serves me right. That was some timing!!
Unsold at Sotheby’s; sold at Christie’s
8th October 1987, New York
Thinking about the sale and worrying about another unsold trauma cannot be described easily. Worrying to death, sleeping with nightmares aplenty I managed from day to day. In spite of all the negative emotional issues related to the Montezin, somewhere, deep at the end of the tunnel of torture of unsold paintings, I could see a glimmer of twinkling light because:
· The market was stronger in 1987 compared to 1986.
· My property was included in a much better sale and catalogued amongst more important art, which attracted better buyers.
· The painting had been authenticated by the artist’s son and was going to be included in his catalogue raisonné of the artist.
Waiting to hear the result of the sale was a torment. The year had not been the one I expected up to that point and I was teetering on the edge of a precipice. With fear and trepidation I called Christie’s the same day of the sale, after school and around six in the afternoon London time. Supply teaching earned me the daily bread, but art filled my life emotionally and with greater financial reward.
“Can I have a result from today’s Modern and Impressionist sale, please? Lot number 44.”
“Let me have a look sir…yes, sold for $24,000 sir.”
“How much please?”
“Thank you,” I whispered, and put down the phone. I felt faint. I was speechless, and then I screamed like crazy, “Yes, Yes, Yes!” punching the air, kicking in all directions, I went crazy!
Sold for $24,000 in October 1987 at Christie’s. Unsold in October 1986 at $5,000 with Sotheby’s. You cannot be serious, can you?
I ran round and round like a madman. I sat to rest. I was exhausted! I slowly calmed down and reflected! What a result! That was crazy but it was also the reality of auctions. The sale justified my persistence, my resilience and my hard work in following the markets so closely. I never gave up. I kept trying even when pessimistic. I was not a pessimist any more! I have never been one, anyway! I was right all along and I did everything to perfection this time round. Timing! I had timed the sale of the painting perfectly! It felt so satisfying. The sale gave me a serious financial injection of money, which I desperately needed; £14,000 net from an investment of £4,000 including expenses. What a return and what a turnaround?
Was I that shrewd or was I just lucky? Was I a good trader or was I a bloody lucky trader? I was not sure, but I was comfortable in my belief that I was a good investor, who had luck on his side because, a few days later, the stock exchanges crashed worldwide and with that the art market too.
When an international financial crisis erupts, it takes everybody along with it, or does it? The sale of the Montezin and the stock exchanges crash of October 1987 marked the second phase of my art dealing and its fourth anniversary. How did a financially weak person like myself fare during those stormy times? Did I exploit the crash of October 1987 to success or did I crash too?
The world was in financial turmoil, the markets were diving fast and with those markets the art market too. Being brave in such situations, going against the current and investing when others are running scared is possibly the trait of the best traders and I was about to do it on instinct! The Greek market was defying the markets from what I noticed in London with a sale of a Ghika painting selling extremely well, whereas season impressionist artists failed badly!
Buying first time at a gallery for trade
Athens December 1987 – February 1988, Sotheby’s London
(Greek, [1882-1966] A Belle Epoch artist working most of his life in Paris. Painted beautiful women and landscapes. Respected and collected both in Greece and France. Auction price range £3,000-100,000 plus)
The Galanis drawing was literally sitting on the floor of the shop. You could not miss it, once you turned in that direction. Nothing else was near enough in quality. It stood out and sang to the viewer, “there is nothing else here! It’s just me!” It was a lovely picture of a reclining nude, beautifully and masterfully drawn in pastels. Galanis is considered a master in Greek art and a respected and much in demand master of the Belle Epoch in Paris. The pastel had all the attributes one would expect from such a work and period.
I circled it. I looked at it time and again, and then, unexpectedly, the hoarse, husky voice of a man sounded behind me.
“Good morning, can I help you? I am Pylarinos. This is a lovely drawing,” he added.
“Yes. I like it,” I responded coolly. “I am Peter Constant from London. What’s the cost?”
“This is a privately owned painting. They are asking 400,000 drachmas (£1500). I believe it is worth every penny of it.”
I remained silent! I kept looking and checking the painting’s frame and the exquisite image. It was all genuine, old, non-trade, untouched since its inception some seventy years earlier. To make matters worse for me, money was burning in my pocket. I was anxious to invest.
“It is cheap for a Galanis,” continued the husky voice interrupting my train of thoughts.
Silence on my part! It was a fair price, but in Athens one needs to bargain, one needs to play the game of negotiation and mutual giving in of some ground. The norm is to offer just about 50% of the asking price. I remained looking and admiring for another minute or two. I did not make an offer. I thanked the gallery owner and left. I was confident the painting would be there the following day. I needed to think over the possible purchase and my strategy in going about it. I am very slow in getting things done and thinking quickly is not my trademark. Slow as a donkey but always getting there somehow!
This was the first time I was buying something from a private gallery in order to trade. It was an important sum of money for a good painting. I had to consider all those factors and take them into account before my second visit, when I planned to buy the painting, there and then in cash, in sterling, hard currency!
A similar drawing by Galanis
Should you pay the full asking price or bargain in certain countries?
The pastel drawing was exquisite. A small gem that I felt could sell for about £2000 at auction in London. I could not afford to spend more than £1000. I had to be very strict with my purchases and how much I paid for them. It was a matter of good business, knowing fully well that bargaining in the east is a must. It was a matter of making as much money as possible. I slept over the issue, gave it a good thought in the morning and by midday I was in central Athens at the shop on Sophocleus Street. I had a little time for a chat, but really I was in a rush to buy and get back to London the following day.
Time is money and for me it was indeed significant money.
On entering the gallery, the owner recognized me and immediately came to me. I was straight with him, no need to beat around the bush.
“I like the painting and came to have a second look.” I looked and stared hard briefly at the beautiful nude. It was attractive and sensual and very much a drawing I would have loved in my bedroom. Why not others with more money than myself?
It was about time to try to buy. It was bargaining time. I had to bring the price down.
“What’s the last price on this?”
“I am not sure, but we can ask. I am sure a 10% discount is in line.”
I looked him straight in the eye and responded firmly. “I have very little time as I am going back to London tomorrow,” which was true. “I have £1000 in sterling for the painting. I can pay now, collect and go.” Cash is king, was my idea.
He screwed his eyes, groaned a little and then, “let me make a call, please.”
The call was made, the conversation was over quickly and he was back with me soon.
“Are you paying in pounds?” “ Yes, right now, if we reach an agreement.”
“It’s a deal,” he declared smiling.
Well, well, well! I did not expect it to be so easy. I was very happy with my new investment. Reward for the trip, I guessed. The painting was wrapped well, while I counted the money. I was on my way out of the shop when the owner unexpectedly addressed me once again.
“Can I ask for a big favour, if you allow me?”
“Yes, by any means, if I can help.” Help if you can, rest assured it will always benefit you too! One good turn brings another!
“I need a cheque of £300 for something I am buying in London. Can you help me?”
“Of course,” I replied. “No problem.” I wrote the cheque and he was ready to give me the equivalent in drachmas.
“No, no need for that. Next time I visit Athens I might buy something else from you to settle this.”
He was startled. He stared at me speechless for a moment. He took his glasses off, he looked at me for a few seconds and then he declared shakily in a hoarse whisper:
“Listen,” his voice came out emotionally loaded, “I have been in this business for thirty years. Nobody ever gave me money. Nobody trusted anything in me without a guarantee. My shop is yours from now on. Anything you buy, take it and go. You can pay me anytime you want and can.”
What a turning point and what an event! It is twenty-five years since then but it is so fresh in my mind. I made a valuable friend, who stood by his word and our business relationship was one of gentlemen helping each other.
I wasted no time with the Galanis pastel. Sell and reinvest was the idea. On my return from Athens I entered it for sale at Sotheby’s in London. It duly sold for £2500 in their secondary Impressionist Sale in February 2008. No after effects of the October 1987 exchanges crash in Greek art! Doubling my money within three months was super and my first investment in Athens proved very encouraging. It was easy to conclude that:
· Galleries offered bargain opportunities.
· Bargaining in Greece was not only necessary but also the only way to trade.
· When other markets struggle and one is new and pushing forward that is a clue to investing in that section of the market.
I had a good run of sales in spite of the stocks crash of October 1987. The money was coming back in the account in the thousands and the idea was to invest in something major with the accumulating money from all those sales. What and when was the serious question? There were opportunities, but not the one I was looking for, the major opportunity to splash a serious sum of money for the long term! Would I get the opportunity to invest in something important with little outlay?