New England’s harsh winds and beating rain seemed to be conspiring against me as I rushed to the airport, for a flight that I hoped would not be cancelled or delayed. My ultimate destination was 1200 miles away and much warmer—opening night of Art Basel/ Miami Beach. Carried up by a gust of wind, my umbrella turned inside out, as if to punish me for not wanting to remain and enjoy Mother Nature’s celebration of the changing seasons. Determined, and with 100,000 square feet of art awaiting me, I braved the elements, a crowded and chaotic scene in the New York airport where I transferred to another flight; ultimately stepping into the sultry air of Florida, my art fair destination the only thing on my mind. fine arts magazine

Ah, intoxicating Miami! For the next week, this celebrity-filled event will hold enough contemporary art, host enough VIP parties and project enough glamour to earn its reputation as the country—if not the world’s—hottest art fair. Approximately 250 galleries from the U. S., Europe, Latin America, Asia, India and Africa are showcasing paintings, drawings, sculpture, photography and prints, by 2,000 of the world’s pre-eminent contemporary and modern artists. I noted a fair number of galleries from Russian galleries are here, too. While still gaining a footing in the fast-moving American market, the stats suggest that it was exposure, not sales per se, that was their primary motivation for exhibiting.

The gallery scene is dominated by international ‘super dealers’ like Gagosian, who have managed to attract talent and generate enough buzz to electrify Miami Beach’s Convention Center. A gateway to the emerging wealth of Latin America, Art Basel/ Miami Beach gives galleries both strong sales and tightened relationships, not only with serious collectors who come year after year; but, access to a new brand of collector. New wealth is being seen in emerging markets, primarily Latin America and Asia. Brazilians, in particular, were being seduced by marquee names in the art world and emerging artists alike, accounting for an unusually-high percentage of sales, across all categories.

With attendance at more than 46,000 visitors, the mood at this year’s fair was remarkably upbeat, especially given the current volatility of the capital markets, the Euro-crisis and geo-political tensions in Asia. Before the event opened, Chinese artist, Alex Guofeng Cao, was in demand, as proven by the sales of seven of his prints ranging from $7,000-15,000 by New York’s ChinaSquare Gallery; a sculpture by Anish Kapoor fetched $220,000 (represented by Munich dealer, Gallery Terminus) and a Basquiat drawing sold for $85,000. Nick Komiloff, Director of Art Miami told artdaily.org. (‘[…]celebrates’ 12.2.10), “Interest in masterworks from marquee artists is a strong indicator that people are looking for quality and extraordinary pieces this year. There is also a noticeable trend in Latin American and Chinese artists…”

Indeed, it is this search for quality for which, as a financial advisor by day, I, too, am always prowling. Post-financial meltdown, post-art market crisis and just barely the Fed’s second round of quantitative easing—and with bond prices falling, investors desperately searching for yield and, no doubt, the Silver Bullet—I scouted the Art Fair, to determine if I was literally surrounded by an asset class that could drive profitability in a portfolio: contemporary or modern art, by the best that the world has to offer.

Sean Kelly, a New York gallery owner, believes that collectors are putting more money into art now, because Wall Street has let them down. “We are benefitting from the trust being placed in us, “he claims. Fair Co-Director Marc Spiegler said : “Of course, the blue chip work, the work that if you don’t buy now you’ll never have access to again, will move, in the same way of course that some young artists will be favored. But, I think, what we have seen in the last two years, with the economy being different, is that people are really focused as much on the mid-career artists as the young artists” (artdaily.org. ‘[…]collectors’, 12.2.10).

Warhol wrote that ‘business art’ is the best art. How could he have possibly predicted the staggering values, even for his own works, seen in today’s market. Real estate mogul, Aby Rosen, said that “art has tremendous asset potential. All the other luxuries depreciate, and art is one thing that has the potential to appreciate.” (NYT, ‘Where Art[…]’, 12.10.10) While differing in this assessment (Steinway pianos and vintage luxury watches both refute Rosen’s claim, for example), I do agree that art has a place in every investor’s portfolio (as do Steinways and vintage luxury watches.) Collector Beth Rudin DeWoody, who happens to collect the work of several of my artist-friends, asks: “Where else would you put your money, if you are still solvent and you are still buying?” (NYT, ‘Where Art […]’, 12.10.10) While dividend-paying stocks come to my mind, I would personally collect great art, if I were a member of this stratospherically-rich jet set, too.

What I believe is that, as in Modern Portfolio Theory, a diversified art portfolio is every bit as valid as a diversified portfolio of intangible assets. Just as I would add international and emerging markets equities to my clients’ portfolios of domestic stocks and fixed income instruments, serious art collectors are adding Latin American, Chinese, African and other emerging artists to the marquee artists already in their collections. The established collectors, with their solid base of classic modern and contemporary art, are the same who had the foresight, thirty years ago, to start collecting emerging Latin American, European or U.S.-born artists and are also tracking today’s crop of art ‘rock stars.’ An equivalent position in a stock and bond portfolio might be a blue chip, high growth company like Apple; go back a bit further and look up the price-per-share of Intel or IBM, and see what you could have earned had you picked up and held onto these for the past thirty years.

Older, established collectors scan the globe, looking for emerging talent—nursing their passion for art objects—and attempting to satisfy their obsession to own these works. Collector Ella Fontanals-Cisneros, a native Venezuelan and Founder of the Cisneros Fontanals Art Foundation, Miami, in an interview and panel discussion held at the Fair, admitted to originally collecting only Latin American art. But, as time passed and her tastes evolved, she eventually stepped into the global arena in her search for contemporary art. Her collection, while steeped in art from Venezuela, Brazil and Peru, includes art found on her global travels. This strategy adds rich flavor to her extensive portfolio, while mitigating risk at the same time.

Ms. Fontanals-Cisneros also noted that art and philanthropy go hand-in-hand more readily in the U.S. than in Latin America or some European countries, where tariffs and a private arts culture weigh heavily on collectors. Moving art into and out of these countries is difficult, to say the least. Added to these barriers is the lack of government-sponsored tax breaks and broad political support and you get an increasingly complex art arena in which to do business.

The difference today lies, perhaps, with the new breed of collector, who tends to buy emerging artists or even mid-career artists, at the expense of or to the exclusion of the more established names. I believe this new breed—hedge fund managers, media moguls and athlete or entertainment celebrities—tends to focus their collections on emerging artists, because they have an intuitive (let alone, experiential) familiarity with recognizing and rewarding fresh, young talent. Let’s not forget the lessons taught by the Internet, reality-television and instant sports celebrity: new talent, once it goes ‘viral’, has monetary potential limited only by one’s wildest imagination. Think Britney, Miley, Tiger and Paris!

As the parties revolving around SoBe attested, this art fair inclines towards the young and the restless. Youthful-looking collectors, pushing babies in expensive strollers and conversing intelligently with dealers about expensive pieces (mostly in Spanish and Portuguese), were everywhere. Cleverly playing to a youthful audience, an iphone 4 mobile app available within the show allows you to identify artists by simply scanning the work of art into your phone. And, according to the numbers, this particular clientele was buying.  Remember that at the Basel events, in particular, only 1% of attendees actually purchase art! 99% of attendees are on the art interest scale of vague-to-genuine; they are equally, if not more, interested in the culture of the fair.

And in Miami, culture pervades. At the Art Basel Miami Beach’s VIP Preview Party, celebrity and Miami culture vultures co-mingled with art dealers, collectors and the art they represented. While wading through the indoor and outdoor sculpture exhibition and video show, In What We Trust, guests nibbled on hors d’ oeuvres by Spuntino Catering; martinis from Miami’s Bootlegger Martini Bar and espressos from Segafredo Zanetti Espresso, syncing perfectly with the South Beach vibe.

Later, at a private party poolside with executives from Creative Time, the public installation people, some of us gathered around the Hanukkah menorah, imbibing vodka and latkes and paying homage to the Jewish traditional holiday occurring during the same week as the show, in the name of, ‘tis the season’. When combined with the glamour of this tropical, outdoor paradise, one would be hard-pressed to agree which culture– the art culture or the party culture–prevailed, particularly for that 99% non-collecting set.

One of my favorite after-parties was held at the W South Beach, where Arts Fund intersected two of Miami’s most alluring asset classes: waterfront real estate and emerging art. A third class—high fashion—was represented by the leggy models that, I assumed, were hired just to show up at this event. My friend, an art agent, argued that Miami doesn’t need to hire beautiful young women dressed to kill, as they are as ubiquitous in the city as mojitos and sunshine. But for the event, ‘6 on 12’, curated by White Walls Gallery, these three asset classes prevailed, cloaked in edginess and an abundance of polite air kisses. The W took six of their multi-million dollar waterfront units on the twelfth floor and filled them with showcase artists Eddie Colla, Casey Gray, Hush, Mindy Linkous, Robert Malmberg and Kofie One. Beautiful residential real estate brokers lounged with guests on white sofas and attempted to talk art, but what they really wanted to do was entice you to re-position your assets into SoBe property. Indeed, the view out the balconies was tantalizing, especially if the unit held unobstructed vistas of water along with glimpses of Creative Time’s outdoor art installation.

Then it was on to the Wolfsonian Museum, where hard bodies shoved against hard bodies, all vying for the elevators to see the art upstairs. I found their gift shop to be a fascinating and thought-proving bonus to an enlightening evening, and spent quite a bit of time there. Picking up a book on Cuban art and culture for my Cuban-born husband made my day.

In the end, when all was said and done, it should be noted that Art Basel/ Miami Beach is about exceptional quality and global representation. For my three-day investigation, I happily ate pre-dinner finger foods, in party rooms filled with strangers. But for dinner, we went with the tried-and-true. On my last night there, Joe’s Stone Crabs, was the destination I shared with my closest friends and hosts for my stay. For Joe’s, a Miami Beach institution, is still in the blue chip sleeve of any diner’s restaurant portfolio. It continues to pay dividends long after the meal is over.

The Great Recession, most arts professionals would agree, brought prices of contemporary and modern art down to more realistic levels. Those of us old enough to remember the 90’s remember, all too well, the dotcom ‘bubble’. Students of art, serious collectors and investors of art owe at least a few of their lessons to Wall Street. Real value and exceptional quality has its place in the art world. And if Art Basel/ Miami Beach stood for one thing, it stood for that.

by Carolina Fernandez, Editor-at-Large

*After the title of a well-known book about investing: Burton Malkiel. A Random Walk Down Wall Street. New York & London: W.W. Norton & Co. (2007)

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Bibliography

1. “Art Miami Celebrates Opening Night with Marquee Works Drawing Large Crowds and Sales.” artdaily.org, December 2, 2010.

2. “Collectors from Around the World Gather at Art Basel Miami Beach as It Opens Its Doors.” artdaily.org, December 2, 2010.

3. Trebay, Guy. “Art Basel Miami Beach: Where Art and Commerce Come Together and Party.” The New York Times, December 10, 2010.