Recession of 1990-1998
The late 1980s were years of prosperity for most people in the UK. The money from privitisations, the new policies of the Thatcher years gave most people confidence. All that well being went to the wind come the summer of 1990. With that I was swept away and struggling to survive with NO job but art dealing, which went dead in UK, two young kids and a wife just returning to work after the kids started going to school.
Serving huge loans and investments was impossible but had to be done!!
Losing the house, losing all the art assets was a real possibility and the threat was daily. I had to furrow new routes and new ways to survive the storm that looked never ending once 1991 and 1992 went.
18th August 2015
Can Victorian art pay off with quick returns in 1992?
Trading art and acquiring experience from the activity has been long and arduous. Victorian art was the beginning of that learning experience. I soon concluded that it was best to concentrate on more international art and cross borders between buying and selling, if possible, once I realized what tough competitors English dealers were and how low the profit margins were. However, from time to time there were opportunities to invest in Victorian paintings, and that I did with success whenever there was potential profit. It was pure mathematical calculations, which worked out perfectly most of the time.
(English, [1851- 1906], Victorian painter of genre scenes mostly popular with English collectors. Auction price range £1000- 5000)
7th July 1992, Philips London – 27th October 1992, Sotheby’s Sussex, England
The 1992 exhibition had brought in some money and a small amount of this I invested unexpectedly in a good Victorian painting. The sale at Phillips, now Bonhams, in July 1992, was not expected to be the top sale under the circumstances of that summer, recession, war in the Gulf and slow business. Such circumstances however present the right conditions to invest and I expect there will be similar good opportunities during the current recession of the 2010s.
When everybody is selling, the smart ones should invest!
The Charles painting was fresh on the market, a good Victorian interior scene and in pristine condition. I felt I had a chance to resell quickly, if I bought at the right price. With no issues and no counter-bidding, I bought the painting at the best possible price for £1,100. It was a bargain as far as I was concerned, but that had to be proven on its resale, not on my hypothetical calculations of profits and returns. One month later I consigned the Charles for sale at Sotheby’s Sussex to be sold in October 1992. They knew nothing of the sale at Philips, and of course I kept quiet about it myself. It had not been recorded in the Sales Art Index of 1991-92 yet.
Sotheby’s West Sussex was a new venue many local, well-heeled investors in art, and especially British art, frequented. I banked on that fact knowing full well the clientele of Sotheby’s and their investing preferences. I had attended those auctions many times and I was surprised at the prices achieved for Victorian art, which was the very reason I decided to sell at that venue.
The painting came up for sale in October with an estimate of £1500-2000, just enough to cover my costs, if sold at the lower estimate. Eventually it sold for £2,400 plus commissions, thus justifying my belief in buying and selling for profit quickly. A 100% return in four months was respectable, even though that had to be done at least ten times over the year to cover the basic costs of running the business, which was about ten thousand pounds annually.
Could I do that often enough? Victorian art was not my kind of art in 1992 but hitting the profit margin of 100% within such a short time was great. It boosted my confidence and proved to me that even in hard times there is money to be made, albeit not as much as in boom times. Buying for a quick profit rather than for stock was one new aspect of my activities in the 1990s, and the more successes I had the more vigorously I got into it.
Could I follow up that sale with more of the same? Could I do it after November 1992, when I had a full-time teaching job? Why not? I asked and reasoned. Ten years of experience were enough to guide me to wise investments, while I earned steady money from teaching.
Mother and Child by Guy Cambier brings much needed relief
24th September 1992, Christie’s, London – 29th September 1993, Sotheby’s New York
The Gulf War erupted and the world plunged into a much deeper recession than the one that began in the summer of 1990 with the Iraqi invasion of Kuwait. The salerooms were empty, good quality paintings on offer were very few and far between and anybody out for a bargain had opportunities to buy third-rated paintings for very little money and potentially good profits. Luckily Greek art was looking after me and I had a few pennies to invest in bargains.
September is generally a very slow month in the art market. Only minor sales take place and Christie’s South Kensington in London was a place where one could sell, albeit at lower than average prices. However, opportunities to buy were certainly more plentiful. Buying third-rated, obscure artists in London who sold well elsewhere was one of the main strategies I followed in the 1990s. Following the market worldwide, I knew it was possible to buy in London and sell in New York with returns in the region of 100% and upwards which was my target. Buying French artists in London and selling them in France was also profitable. Could that be achieved time and again?
(French, [1923 – 2008] Painted figurative art in dark, moody colours selling particularly well in the USA. Auction price range £200- 2000)
The Paintings Sale at Christie’s South Kensington in September 1992 had a couple of paintings that attracted me immediately. One was reasonably estimated and allowed me a good profit at the lowest estimate. Mother and Child by Guy Gambier was not the most colourful painting, but that was the style of the artist and the market in New York indicated a selling possibility close to a thousand pounds. That was a tasty prospect and on the day I had no difficulty in securing the painting at £210 inclusive of commissions and taxes. The purchase of Gambier reminded me of the earlier Mother and Child painting I had bought in the same rooms in November 1990, an investment I refer to elsewhere in the diary.
I expected the Gambier to sell in New York for about a thousand pounds ($1200-1500). It sold at Sotheby’s New York a year later in September 1993 for £950 net returning me a good 400%. It was one of several over the period. Such small injections of money helped the balance of expenses and profits to a level I could afford. It also justified to the bankers and more importantly proved to myself that the prospects of the business were good. However, the expenses were substantial month after month and the small sums generated here and there were still a drop in the ocean.