Old Moore Predicts: A Crash in the Art World

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1280px-Claude_Monet,_Impression,_soleil_levant

Claude Monet’s Impression, soleil levant (Impression, Sunrise), of 1872, became the source of the impressionist movement’s name.

In the 2016 edition, Old Moore has predicted that global finances will be unstable. And today, he has also said he believes the art market is in a very over-inflated bubble. And soon it will pop spectacularly.

As he hit send on this email to us, some experts are saying the same thing. Researchers at the University of Luxembourg are warning of an overheating art market, one of the fastest-growing investment sectors of the past decade. They have said this after applying a new bubble detection method analysing millions of auction records.

Few sectors of the market have rebounded as robustly as art – particularly contemporary art, which has doubled in value since the beginning of the financial recovery following the 2008/09 financial market crisis. Pundits on the side-lines have commented that such market growth is unsustainable, warning there is a bubble in the making that is sure to burst, as seen in the early 1990s and in 2008/09. Headline-grabbing sales of post-war and contemporary works for over $100 million appear to support this argument. So is this bubble about to pop all over us?

The Irish know all about bubbles, we rode one through the property market and it didn’t end well. So how do we define a market bubble? Pretty much, it is when there is a dramatic escalation in the volume of trading in assets at prices that exceed their fundamental value. Then it all goes wrong and everyone then tries to sell off previously trendy item, which causes horrible collapses and makes rich people less rich.

For most assets it is relatively easy to project this value – for example through dividends on stocks or rent on real estate. But in the case of art, there are no rules. Returns can rarely be correlated to costs of production. What is trendy is what is valuable. And who knows what will be trendy? No one in history so far.

Three statistic boffins, Dr Roman Kräussl, Prof. Thorsten Lehnert and Dr Nicolas Martelin, have run the numbers. They all work at the Luxembourg School of Finance at the University of Luxembourg. They have developed a statistical method of bubble detection. Applying this to the art world, they have analysed more than one million auction records from the past 36 years, examining the major art styles.

The style areas they say are in bubble mode and are about to pop are:

-Impressionist and Modern

-Post-War and Contemporary

-American and Old Masters

They say these art styles are particularly overheated, raising the potential of a severe correction in the foreseeable future.

Old Moore however said this morning that all art was about to take a nosedive in value, and the biggest disaster will be in Chinese art and antiques. The advice for today? Unless you have anything by Irish artist Knuttel (which Old Moore says will hold its value) ….SELL, SELL, SELL!!

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