Art: The Chinese Are Buying?

From MANDARIN & MENAGERIE: THE SOWELL COLLECTION Part I (left) and Part II (right) From Christie’s.com

From MANDARIN & MENAGERIE: THE SOWELL COLLECTION Part I (left) and Part II (right) From Christie’s.com

 
Timing is everything when selling art.” This is what Geraldine Lenain said to me when I visited her in Shanghai, China while speaking at a conference there. Lenain was then international head of Chinese Ceramics & Works of Art for Christie’s Auction House in Shanghai and now is with their Paris office.

For me, at no time could her words be more potent. The recent sale of The Sowell Collection II of Chinese export art at Christie’s in New York City on Wednesday could be described as painful. Only 44% of the auction’s offerings sold. This was roughly half of what the Sowell Collection I sold for back in January at the same auction house in the identical city. Then, 74% of the Chinese export porcelains offered sold. The items in the two sales were from the same collector and not substantially different. What did change, I believe, was the willingness of the Chinese to buy back their heritage. I wrote about this phenomenon back in March, in a column entitled, “The Chinese are Buying and Americans Receive the Benefit.”

Today, there appears to be a shift and indicators point to the Chinese economics as the cause. The Chinese economy has virtually gone from boom to bust. This situation, of course, could influence any Chinese buyer and make her shy of spending her money on possessions she may want but really doesn’t need. That era may be over, at least temporally, for most Chinese. Though there are still bidders from China (I heard the auctioneer refer to them on the phone while listening in on this week’s sale), there likely are fewer that want to spend big sums of money.

Read more at: http://www.hcplive.com/physicians-money-digest/columns/my-money-md/09-2015/art-the-chinese-are-buying#sthash.v4fegFvA.dpuf

 

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Why We Collect

Mar 17, 2016    |    My Money MD   |   Shirley Mueller, MD

There are many reasons collectors, whether wealthy or not, collect. But there is one common underlying motivation for all—pleasure.

    A sculpture by Giacometti though not the one Cohen purchased.

 A sculpture by Giacometti though not the one Cohen purchased.

Last year, Steven Cohen, the legendary hedge fund manager, purchased a Giacometti sculpture for $101 million. Whether he did this for love or money is not clear. On one hand, Cohen may have adored the piece. On the other, he might have thought he was getting a bargain as he was the only bidder and thereby he anticipated he could re-sell it later for a profit.

Either way, his purchase makes a point. Super-wealthy people, like others, buy art. Some use it to adorn their homes and make them and their families happy; others have an eye to a future re-sale.

Whatever the case, immediate happiness prevails. This is because the anticipation of buying special pieces fuels the primitive pleasure center in the brain called the nucleus accumbens. Whether it is a Giacometti sculpture, a Ming (1368–1644) Chinese porcelain, an old master painting, a rare stamp, or an unusual fluorescent rock, the nucleus accumbens is sparked on fire when anticipating its purchase.
 
And, that is why collectors collect. Unless, of course, there are inhibiting factors that throw a wet blanket on the fire. For example, if the price is too high, the primitive insula is activated and feeds back to the nucleus accumbens, squelching its vigor. The sale may be disrupted. This same process can also happen with the primitive fear center, the amygdala. If it is stimulated should the buyer feel she is being deceived, its activity counteracts that of the nucleus accumbens. Again, a purchase may not be made.

Read more at: http://www.hcplive.com/physicians-money-digest/columns/my-money-md/03-2016/why-we-collect#sthash.fudVi5tx.dpuf

 

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Art and the Altered State: Correlates of the Sublime

Short Description

Stendhal Syndrome, thought by many to be an emotional reaction, may be more influenced by science. The first of Dr. Mueller's series on Art and the Altered State on Vastari.com.

I stood in front of a work of art that was both unexpected and exceedingly beautiful. It sent me into a trance.  Time ceased.  My body was fixed.  But, my brain was active.   It spoke to me and said,  “I feel happy.” 

Anonymous Art Lover

 

 

 

Tom Kuebler, a physician friend of mine, had a particular feeling when he saw art with which he instantly fell in love.  He described it as ecstasy.  Kuebler is not alone.  Though others may call it an altered state or even a trance, the sensation seems to be the same, intense positive emotion.   In fact, the reaction has a name, Stendhal syndrome.  According to Wikipedia, it is a “psychosomatic disorder that causes rapid heartbeat, dizziness, fainting, confusion and even hallucinations when an individual is exposed to art, usually when the art is particularly beautiful or a large amount of art is in a single place.”

The term, “Psychosomatic,” suggests that the basis of the response is entirely emotional.  But, recent research indicates this may not be the case.  Semir Zeki from University College, London recently demonstrated that the perception of beauty itself can cause simultaneous blood flow changes in a crucial brain area consistent with pleasure and happiness. 

This is Dr. Zeki’s story.  He studied the brain’s response to a range of paintings, some beautiful and others less so, by using functional resonance imaging (fMRI).  This technique measures changes in blood flow associated with increased metabolism that directly correlate with enhanced underlying brain activity.    When art judged as beautiful is perceived, a particular part of the brain known as the medial orbitofrontal cortex (mOFC), a recognized pleasure and reward centre, increases in activity.   Zeki described his findings along with his co-author, Tomohiro Ishizu in a recent paper entitled, “Toward A Brain-Based Theory of Beauty"

For the rest of the article published on Vastari.com and authored by Shirley M. Mueller, please go to Art and the Altered State: Science Correlates with the Sublime.

The Cyclical Rotation Effect: A Factor in the Art Market and the Stock Market

The first lot in the Marques dos Santos Leilões sale of Chinese export porcelain on Sept. 25 sold for nearly $20,000 including commissions.

The first lot in the Marques dos Santos Leilões sale of Chinese export porcelain on Sept. 25 sold for nearly $20,000 including commissions.

My phone representative said, “He never takes down his hand.” This was my counter-bidder for Chinese export porcelain at the Marques dos Santos Leilões sale of Chinese export art Sept. 25 in Oporto, Portugal. Chinese export porcelain is porcelain made in China and exported to the West.

What was surprising was not that I was outbid, but the nationality of my opponent. He was not Chinese (this ethnic group been rabid in the auction market of late for all things Chinese). Rather, he was from India.

This competitor for the auctioned Chinese export porcelain lifted his arm and did not drop it when he wanted to make a purchase. Bidders in the room found this intimidating no doubt, but it was also intimidating to me as a phone bidder. I knew that if I desired a lot and this man did too, he wouldn’t stop until he won it. Of course, that could mean he paid too high a price, but perhaps no matter to a wealthy person whose anticipation of owning Chinese export made his pleasure center burn brightly.

Secondary bidders in the sale were evidently Brazilian and English with Chinese buyers scarcely to be found according to my phone representative. So, it is with art. When a country’s economy nosedives as it has in China, generally fewer art enthusiasts buy art.

http://www.hcplive.com/physicians-money-digest/columns/my-money-md/10-2015/the-cyclical-rotation-effect-a-factor-in-the-art-market-and-the-stock-market#sthash.NFN0t4Xh.dpuf

 

Collecting Gone Amuck

When my uncle died he had multiple new items (for example, billfolds) still in unopened boxes stored in his house that was already short for space. They had no apparent purpose because he could never use these items due to his advanced age. Similarly, a rich neighbor also gathered package upon package of new shirts and simply kept them, never to be worn. 

These scenarios seem counterintuitive.  Why would someone do these things?  

A paper by Steven W. Anderson and his colleagues entitled “A neural basis for collecting behavior in humans” throws light on collecting gone amuck similar to that described above. Though the group studied patients with brain lesions, the findings can be extrapolated into a provisional hypothesis for collecting behavior in normal humans. This paper is extremely important because it is the first of its kind.  

Anderson, et al studied 87 subjects with brain lesions. Thirteen exhibited abnormal collecting behavior that was severe and associated with troublesome accumulative of useless objects. In the study, the collecting set of subjects exhibited this behavior only after the onset of their lesions, not before. A close relative, usually a spouse, was the source of this information. In order to qualify as a collecting subject, the individual had to accumulate objects of little value to excess in such a way that the collecting interfered with daily function. For example:

A 70-year-old, right-handed, retired bank clerk with 13 years of education underwent resection of an orbitofrontal meningioma. Her husband noted that all of her life she had been reluctant to throw away items with potential value, but that this characteristic was not so prominent as to cause any problems. However, following surgery, she began to collect large quantities of a wide array of items, to the extent that serious space problems arose in their home. She began ordering large quantities of unneeded items, particularly clothes, from mail-order catalogues, most of which her husband would intercept and return. 
Patient 8 from “A neural basis for collecting behavior in humans” by Steven W. Anderson, Hanna Damasio, and Antonio R. Damasio.

When the collecting set was compared to the non-collecting set, they did not differ in age or standardized neuropsychological tests designed to determine intellectual abilities. Additionally, the two groups were alike when examined for executive function skills and anterograde memory. The difference between the two sets of subjects was that the collecting group all had damage to a specific part of the frontal lobe called the mesial frontal region. The non-collecting group did not. The mesial frontal area is located in the executive frontal lobe of the brain medially.

Read more at: http://www.hcplive.com/physicians-money-digest/columns/my-money-md/05-2009/Collecting-Gone-Amuck#sthash.fGy395bB.dpuf

Art and Lots of Money: What to know

This past week NYC hosted the Antiques Fair at the 67th street armory and the Ceramics Fair at the National Academy of Design.  There were also simultaneous high end sales at Christies and Sotheby’s to coincide. The events brought out not only art collectors, but also art advisors buying for their clients, some of which were high net worth individuals (HNWI). Art advisors buy art for HNWIs to smooth out the overall return of their investment portfolios within the ups and downs of specific categories in the art/luxury markets.

However, whether adding art as another asset class is beneficial to return is still a matter of speculation. The British Rail Fund (BRF) used art in its portfolio for 25 years and made an annualized return of 11.3%, which is perfectly respectable, but was not as high as the rest of the BRF’s portfolio.

Today, the BRF does not invest in art as an asset class. Its concerns could have included the cost of storage and insurance for the art or luxury item. In addition, this category has no dividends or income like stocks and bonds. Moreover, they cannot be disposed of rapidly. They are only worth what someone will pay for them and the market can be very thinly traded. Therefore, valuing art/luxury items can be speculation more than a solid determination.

A recent research paper by RFA Campbell, however, challenges this concept. It suggests that art is worth considering as an asset class in a HNWI’s investment portfolio. She looked at art as yet another alternative asset class and treated it like real estate, commodity futures, private equity and hedge funds. Each of these can be used to broaden diversification within an investment portfolio. She focused on bear markets because it is there that the benefit of diversification is most needed. The author used data from both the Art Market Research and Mei Moses All Art Index that compare repeat sales prices of particular items at auction.

Read more at: http://www.hcplive.com/physicians-money-digest/columns/my-money-md/02-2010/science_of_art_investment#sthash.cSR18K4g.dpuf

Auction Overbidding: The Drive Behind it

Feb 15, 2010   

At a recent ceramics auctions in NYC, I bid successfully at both Christies and Sotheby’s. It was nice to get pieces that I both wanted and added to my collection. It was less pleasant to pay what I considered high prices. Nevertheless, most of the time, if I purchased these same articles at a dealer, they would cost anywhere from two to five times more than what I paid at the public sale. So, I was happy. The question is, was pleasure my overwhelming feeling the moment I purchased the items?

Elizabeth A. Phelps and her colleagues would argue that it wasn’t. The scientist from the New York University in NYC and associates would instead suggest that I bid not to win, but because I was afraid of losing. Contradictory as it seems, this is what their research data shows.

Scientific experimental auction work done as far back as 1982 suggests that bidders tend to overbid. One explanation is that bidders bid to win. They submit higher and higher offers because they have a rival for the prize. In Phelps’ and colleagues experiment, however, that didn’t happen.

The testing went like this. The seventeen volunteers participated in both an auction and a lottery. The auction was against another person and the lottery was played opposing a computer. Functional Magnetic resonance imaging (fMRI) was used to examine patterns of activation in the brain during the different trials. The goal of the fMRI study was, “to examine the effects of type of social competition (auction versus lottery) and type of incentive (money versus points) on blood oxygen dependent responses to winning or losing.” The BOLD (blood oxygen level dependent) response is related to increased blood flow secondary to neuronal activation.

Read more at: http://www.hcplive.com/physicians-money-digest/columns/my-money-md/02-2010/fear_of_losing_auction_overbidding#sthash.9UfRygaK.dpuf

Why Your Brain Prefers a Bargain

Sep 14, 2010    |    My Money MD     |   Shirley M. Mueller, MD

People love bargain-hunting so much there is even a website devoted to stories about it. Investors, of course, like a good buy too. Now, we know why this is a universal quality.  

Brian Knutson, Scott Rick and others studied the phenomenon in “Neural Predictors of Purchases,” published in the journal, Neuron. In a nutshell, it showed that the subjects did not respond as much to absolute price as to the price relative to what they thought was suitable. In other words, preconceived notions of cost influenced their purchases. Though the authors studied the purchase of various products, if one considers stock as merchandise, the same results would appear to apply.

The subjects were examined using functional magnetic resonance imaging (FMRI) while taking a SHOP task. (SHOP stands for “Save Holdings or Purchase.”) The test is comprised of trials where participants could purchase products. They were identical in the time sequence.  Those taking part saw a labeled item, then its price, and lastly chose whether to buy or not. The scientists predicted that: 1.) During the initial presentation the item would activate neural circuits associated with anticipated gain; and 2.) During the price appearance excessive costs would activate circuits associated with potential loss, as well as deactivate brain regions previously associated with balancing potential gains against losses.   

The authors were correct in their prediction: During the product presentation, the nucleus accumbens (NAcc), or pleasure center of the brain, was activated indicating anticipation of a gain. But, if the price was excessive per the judgment of the subject, the product was unlikely to be chosen.  Then the medial prefrontal cortex (MPFC) that is associated with decision-making was deactivated, while the insula --  known to be related to losses -- was stimulated. This suggests that the insula suppressed the MPFC.

In the words of the authors, “The findings are consistent with the hypothesis that the brain frames preference as a potential benefit and price as a potential cost, and lends credence to the notion that consumer purchasing reflects an anticipatory combination of preference and price considerations.” Scott Rick, the paper’s co-author, summarized its importance in an email, “The paper helps us better understand how emotions influence spending behavior. Specifically, the paper provided the first physical evidence suggesting that people rely on distress to deter their spending. The notion of a ‘pain of paying’ had previously been used to explain some non-rational behavioral phenomena, but there had never been any clear process evidence supporting the notion.”

A New Concept: Art for the Average Investor

Nov 18, 2010    |    My Money MD    |   Shirley M. Mueller, MD

A few weeks ago, I gave a lecture in Paris entitled “Art: For Love or Money?” It was in association with Deloitte S.A. Luxembourg’s third annual “Art and Finance” conference regarding the art market and finance. The two intersect because studies by Rachel Campbell, assistant professor of finance at Maastricht University in the Netherlands and others show that holding 5% of a portfolio in an art fund results in a positive for return over time, at least for high-net-worth individuals (people with net worth of $30 million or more).

At the conference, Thierry Hoeltgen, the lead partner of Deloitte Luxembourg, made a surprise announcement (at least it was a surprise to me). Deloitte wants to bring the art-fund concept to the average investor. The scheme is evidently preliminary, as no details were given. Nevertheless, what we know about art funds for the wealthy is likely applicable. Art adds diversification to an investment portfolio in that it has low correlation with stocks – when stocks go up or down, art does not necessarily follow. 

Art as an alternative investment has been promoted by Jianping Mei, a professor of finance at the Cheung Kong Graduate School of Business in Beijing, China, and by Michael Moses, previously an associate professor of management and operations at NYU Stern School of Business. The two launched a company called Beautiful Asset Advisors LLC, which created the Mei Moses Art Indexes based on the researchers’ data. The index tracks returns on some 15,000 objects that have been repeatedly sold in major auctions over the past 75 years, according to the Wall Street Journal. 

This graph indicates that currently the All Art Index is back to 2005 levels, while the S&P Total Return is hovering near levels it hit in the early part of this decade. 

This graph indicates that currently the All Art Index is back to 2005 levels, while the S&P Total Return is hovering near levels it hit in the early part of this decade. 

The 2008-09 downturn in the art market occurred after logging strong returns since the late 1990s, though not always in tandem with the S&P 500. This is, of course, why Campbell and others find low art and stock market correlation.

Read more at: http://www.hcplive.com/physicians-money-digest/columns/my-money-md/11-2010/A-New-Concept-Art-for-the-Average-Investor#sthash.4lH35kml.dpuf

The Chinese are Buying!

Mar 22, 2012    |    My Money MD    |   Shirley M. Mueller, MD

Editor: Shirley learned the hard way that sellers should beware too! Read about the troubles she and others have run into.

Anyone with Chinese art around the house, whether purchased before 2000 or inherited from the family, might want to take a closer look to determine its current vale. The Chinese art market is hot right now as nationals are buying back their heritage that was exported abroad.

In 1984 I purchased a lacquer box at a “going out of business sale” at a reputable NYC Madison Avenue shop. At the time I bought it both because it seemed like a good deal and I liked it.
“Send it in,” the Asian art specialist at Christie’s said to me. “The Chinese are buying.”

He was referring to the recent upswing in sales to Chinese collectors at Christie’s and other auction houses. I had a Chinese cinnabar lacquer box that consequently might sell well.

The large carved red lacquer globular box and cover that I sent to Auction. Ming Dynasty, late 16th/17th century. Courtesy Christies  .


The large carved red lacquer globular box and cover that I sent to Auction. Ming Dynasty, late 16th/17th century. Courtesy Christies.

Indeed, the Chinese are buying. According to the Mei Moses Index, a respected art buying guide, the purchase of traditional Chinese art burst forth like an Asian firecracker during 2000 to 2011. It achieved a compound annual return of 15.82% compared to 0.47% for Standard and Poor’s 500 Index (the leading indicator of the U.S. equity market).

The Mei Moses World Collecting Comparative Performance Table 2000-2011 (September) above shows the returns of the S&P and the Traditional Chinese market on the right in bold. The traditional Chinese market is composed of art that the Chinese produced for themselves rather than export to the West. Still, some of it was exported abroad. All categories lagged behind the Traditional Chinese, in part because the recession in Europe and the U.S. diminished buyers in the impressionist, old masters and post war categories in which these countries commonly purchased.

Read more at: http://www.hcplive.com/physicians-money-digest/columns/my-money-md/03-2012/The-Chinese-are-Buying#sthash.07dHzGyF.dpuf

The Chinese are Buying (They’re Just Not Paying!)

May 31, 2012    |    My Money MD|   Shirley M. Mueller, MD

 

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Americans who do business in China know that they will be operating under unfamiliar rules. Now United States owners of Chinese antiquities are finding the same thing when they sell to mainland Chinese.

This hit me personally. I sold a 16th/17th century cinnabar box at Christies, NYC at its March 22, 2012 sale. It fetched a respectable price. Though this was cause for celebration, more than two months later I haven’t been paid. The reason according to the auction house is that the buyer didn’t reimburse them.

The large carved red lacquer globular box and cover that I sold at Christies during their March 22, 2012 sale is above. The buyer has not paid.  Photo: Courtesy Christies.

The large carved red lacquer globular box and cover that I sold at Christies during their March 22, 2012 sale is above. The buyer has not paid.  Photo: Courtesy Christies.

When I pressed as to whether the purchaser was Chinese, the Christie’s person wouldn’t say for reasons of confidentially; however, it’s probably a good bet. The market for antique cinnabar boxes tends to be wealthy mainland Chinese, and, unfortunately, this group is notorious for not paying for the items they buy at auction.

 According to Melissa M. Chan who writes for the China Digital Times, almost half of Chinese auction bids are unpaid. Other articles, such as the one in Newsweek Magazine, reported the same scenario. Though both publications focused on Hong Kong and Asian auction houses, there is no reason the same thing can’t happen in the United States and elsewhere when mainland Chinese bid.

Read more at: http://www.hcplive.com/physicians-money-digest/columns/my-money-md/05-2012/The-Chinese-are-Buying-But-Not-Paying#sthash.6a7Ix7gB.dpuf

 

It's Not Easy Diversifying a Portfolio with Antiques

Jun 20, 2013    |    My Money MD    |   Shirley M. Mueller, MD

Being a Chinese antique is not all it’s cracked up to be.
 
There can be unexpected vicissitudes along the way, including total rejection. This is what happened to my seemingly very worthwhile 16th/17th century Chinese cinnabar lacquer container. I was assured somebody would desire it, which was true. Except he or she didn’t want to pay for it.

A large carved red lacquer globular box and cover. Ming Dynasty (Late 16th/early 17th century). It sold for 43% less in 2013 than the year before. In 2012, the Chinese buyer who bought it at auction did not pay for it.

A large carved red lacquer globular box and cover. Ming Dynasty (Late 16th/early 17th century). It sold for 43% less in 2013 than the year before. In 2012, the Chinese buyer who bought it at auction did not pay for it.

I was left holding the bag. This is the story. I first sold the object at Christie’s New York at its March 22, 2012, sale for a very respectable price. However, my elation turned to confusion, and even sadness, when the Chinese buyer did not pay the auction house. This means Christie’s didn’t reimburse me. Instead, they held the box to resell it at their 2013 Spring Asian sale.
 
Of course, buyers do not know why the box is back on the market so quickly — they feel it is tainted. Its value was diminished. Though the box sold (again) in 2013, its sale price was 43% less than in 2012. Of course, I still had to pay the 12.37% seller’s fee and the $750 for “marketing,” which was really photography.

Read more at: http://www.hcplive.com/physicians-money-digest/columns/my-money-md/06-2013/Diversifying-a-Portfolio-with-Antiques#sthash.lgIyS6n7.dpuf

Antiques, Auction Houses and Your Portfolio

Sep 26, 2013    |    My Money MD     |   Shirley M. Mueller, MD

“It takes just as much effort to sell an object for $10,000 as for $100,000” — Anonymous

An example of an art piece that meets the new criteria for the increased buyer’s premium. Before the enhanced pricing, the buyer’s premium was 20% — now it is 25%. From  Christies.com : A FABERGE-STYLE SILVER GILT AND ENAMEL KOVSH, AND A PILL BOX,20TH CENTURY, sold for $52,500 at Sale 2721 Interiors 23-24 July 2013 New York, Rockefeller Plaza

An example of an art piece that meets the new criteria for the increased buyer’s premium. Before the enhanced pricing, the buyer’s premium was 20% — now it is 25%. From Christies.com: A FABERGE-STYLE SILVER GILT AND ENAMEL KOVSH, AND A PILL BOX,20TH CENTURY, sold for $52,500 at Sale 2721 Interiors 23-24 July 2013 New York, Rockefeller Plaza

Antiques and art are recommended for a limited part of an investment portfolio, at least for high-net-worth individuals. Recently, Christie’s and Sotheby’s whittled away at any benefit this might have for buyers of more modest artwork by increasing the threshold for their buyer’s premium in their lower two tiers (Effective 11 March 2013 for Christie’s).

                              Before                                          Now

Tier 1 (25%)          <$50,000                                   <$75,000

Tier 2 (20%)        $50,000-$1,000,000                  $75,000-1,500,000

Tier 3 (12%)          >$1,500,000                                >$1,500,000

Percentage of U.S. buyer’s premium depending on item value for Christie’s. Note the figures for the lower two tiers increased. Sotheby’s increased similarity. 
 
Whether this was to squeeze an additional premium from clients or to discourage lower and medium-end sellers and buyers from consigning to them is the $64,000 question. Javier Lumbreras from Artemundi Global Fund tackled this puzzle with data in his article entitled, “What is the True Reason Behind Christie’s and Sotheby’s Increase in Buyer’s Premiums?” It was published in ArtBanc Intelligence, in June 2013 (issue 4).
 
Lumbreras performed a statistical analysis on more than 9,000 lots sold at Christie's and Sotheby’s during 2012. To do this, he grouped the lots sold using the before period and then the after increase in pricing structure at both Christie’s and Sotheby’s. He used the lots in each tier and their share in value to calculate the percent of premiums the auction houses gained from the sales.

Read more at: http://www.hcplive.com/physicians-money-digest/columns/my-money-md/09-2013/Antiques-Auction-Houses-Your-Portfolio#sthash.UGOGWBdd.dpuf

 

The Fine Line between Collecting and Hoarding

old-books-2-1418362.jpg

In a day when art objects are considered part of an investor’s portfolio (especially for high net worth individuals acquiring assets of $20 to $30 million and above), over collecting can become an issue. Too much invested in art can mean too little placed in other financial assets, resulting in an unbalanced portfolio.
 
If this happens, some might call this collector is overenthusiastic. Others might term her or him obsessive or even a hoarder.
 
A research team at King’s College London is looking into these differences.
 
Ashley Keller, a PhD candidate researching hoarding at King’s College, believes there are certain characteristics that distinguish hoarding from collecting. The biggest difference is levels of organization: collectors engage in “ritualistic behavior around organizing their items,” she explains, “whereas with our hoarders we see a much more indiscriminate acquisition process, and this emphasis on organization just isn’t there.”
 
The second distinguishing feature is distress.
 
“Most of the collectors we see are enjoying their behavior even when they’re acquiring quite a bit… Whereas for hoarders, while they may enjoy getting the items and they may enjoy talking about an individual item, the overall behavior is very destructive and it’s very unpleasant for them.”
 
However, one of the most intriguing findings from the research on hoarders and collectors at King’s College was that collectors tend to have larger property sizes than hoarders. Keller says that there are two conflicting interpretations for this.
 

Read more at: http://www.hcplive.com/physicians-money-digest/columns/my-money-md/11-2013/The-Fine-Line-between-Collecting-and-Hoarding#sthash.ox5PZVgA.dpuf

Now may be an Opportune Time to Sell Your Art

Jan 16, 2014    |    My Money MD      |   Shirley Mueller, MD

When I purchased early eighteenth century tea wares from a ship cargo seven years ago in Amsterdam, they cost much more than anyone would have predicted. As an absentee bidder, I didn’t know whom I was bidding against. When I enquired, I was told the individual was Russian.

The teapot I purchased from the Sotheby’s cargo sale held in Amsterdam Jan. 29-31, 2007. Photography by Thomas M. Mueller

The teapot I purchased from the Sotheby’s cargo sale held in Amsterdam Jan. 29-31, 2007. Photography by Thomas M. Mueller

More recently, I sold a late sixteenth/early seventeenth century Chinese lacquer boxnot at the highest possible price that I hoped, but still a respectable one. The buyer, I believe, was Chinese. Other nationalities, too, are beginning to buy art in increasing numbers.
 
Some of what they are purchasing was originally their own and lost through colonization — the necessity to sell because of desperate times or due to being physically forced to give up their treasures. Other pieces currently being acquired by these individuals just entering the art market are newly made rather than old.
 
In an article in Spear’s Magazine last year by Ivan Lindsay, Steven Murphy, CEO of Christie’s International said, “Twenty-five per cent of our buyers last year were new to Christie’s…”
 
Who they may have been was clarified by the results of the Sotheby’s Old Masters Sale in London July 3, 2013. Top lots were purchased by Chinese, Russian and Indian nationals. All three countries are considered emerging economies compared to the United States.

Read more at: http://www.hcplive.com/physicians-money-digest/columns/my-money-md/01-2014/Now-is-an-Opportune-Time-to-Sell-Your-Art#sthash.D8WSktwU.dpuf

 

The Art Market in a Muck

The back of the Chinese plate I purchased and sent back.

The back of the Chinese plate I purchased and sent back.

If buying a fake piece of art can happen to Steve Martin, the actor and clearly a high-profile individual, why can’t it happen to you and me? 

According to many experts, 50% of the art on the market is fake. This gives us a moment for pause. One issue is whether high-net-worth individuals ($30 million and above) are really improving their overall asset positon by including art as a small percentage of their investment portfolios. Another is whether it is safe for the rest of us to be buying art at all. Or, yet another consideration, should we just not care and purchase what we can afford and like?

Hope Springs Eternal
Recently I purchased a blue and white Chinese plate said to be made around the year 1600. When I acquired it from a dealer located in a major capital city abroad I was already a bit suspicious. To me the blue coloration was off and the design on the large plate was less than traditional. Still, I needed it for an exhibit I was planning and wanted the plate to be as it was described—made around and about 1600. So, I talked with the dealer to discuss my concerns. I was told the color was not true in the photography and literally, “Not to worry.” Being more optimistic than prudent, in part since I had dealt with this dealer before and trusted him and his partner, I chose to buy the plate for the projected exhibit.

Read more at: http://www.hcplive.com/physicians-money-digest/columns/my-money-md/11-2014/The-Art-Market-in-a-Muck#sthash.Y6nuePQt.dpuf

 

Cubism Exposed

Dec 04, 2014    |    My Money MD     |   Shirley Mueller, MD

A new exhibit at the Metropolitan Museum of Art in New York City displays Cubist art. 

Science helps us understand why we see what we see.   

Since cubist art reduces natural forms into the abstract, it has to be interpreted. As I walked through the new Cubist show at the Metropolitan Museum of Art in New York City this past Thanksgiving week, I noticed that I seemed to favor those paintings that I could decipher easily. The exhibition entitled, “Cubism:  The Leonard A. Lauder Collection” runs through Feb. 15, 2015.

So, I got to thinking, am I the only one who prefers forms I readily understand rather than those I have to work to interpret? As it turns out, the answer is “no.” Others also lack energy for this kind of task. 

We have researchers in Germany (Kuchinke, et. al.:  “Pupillary Responses in Art Appreciation: Effects of Aesthetic Emotions”) to thank for this knowledge. They examined pupillary response to cubist art of varying degrees of complexity in their laboratory. In this way, standard pupil measurements could be taken while the art was observed. The pupil dilates and constricts not only to dark and light, but also when a viewer is interested in a work of art (dilates) or not (no response). 

When the volunteers identified shapes that they recognized within the Cubist art, their pupils dilated indicating interest. These same paintings were also those most preferred in a questionnaire.

When the subjects could not process the representations, their pupils basically showed no change. This artwork was also less favored upon questioning. For example, in the above illustrations a) proved to be of more interest than c). It was also a) that had the most easily identifiable form within it. 

Read more at: http://www.hcplive.com/physicians-money-digest/columns/my-money-md/12-2014/Cubism-Exposed#sthash.oe37hoDi.dpuf

 

Fakes in the Art Market: How a Dealer Turned a Lemon into Lemonade

Dec 18, 2014    |    My Money MD    |   Shirley Mueller, MD 

The Ceiling of the Oranienburg Palace outside Berlin painted in 1697 by August Terwesten. The underside of the large plate, center left, is like the dish I purchased and then returned. Photo from Wikipedia.

The Ceiling of the Oranienburg Palace outside Berlin painted in 1697 by August Terwesten. The underside of the large plate, center left, is like the dish I purchased and then returned. Photo from Wikipedia.

Buying is easy; Returning—not So much
For me, this story is very strange. A dealer sold me a fake. (See my previous column, The Art Market in a Muck, for the backstory.) Then, he resisted taking it back. To put me further off from returning it, he cited his years of experience handling and selling Chinese porcelain as proof the piece must be authentic. For further ammunition, he threatened to take the case to BADA (the British Antiques Dealers Association) to discredit me. Lastly, he said that he would never sell to me again—

I’m not sure he had to worry about the latter, but it is duly noted.

So, there was tension between the dealer and myself regarding my wish to return the dish I purchased. The seller wanted me to retain it and he would keep my payment. I wanted him to take it back and make a refund. We were at loggerheads. 

But there was one thing I knew for sure. If I didn’t send the piece back, my money would never be repaid. So, I took a chance. I completed the complicated paperwork and packaging to ship the porcelain back to London. Within, I included my own weapons. They were composed of the statements of 2 experts who wrote books on the particular kind of dish I was returning. In addition, I included scientific observations by a specialist who uses surface microscopy to determine fake from authentic Chinese porcelain. All the experts independently came to the conclusion that the porcelain was not authentic.

As an aside, when I told the dealer over the phone about the surface analysis, he completely discounted it, saying something to the effect that “one expert says one thing and another, another.”
 
Remaining civilized
The dealer did refund my money in parts after he received the package. Though I had bent over backwards to make my case for returning the piece, I hoped he would not be angry. In a small field like Chinese porcelain, it is best to avoid making enemies. Also, this merchant had sold me wonderful objects in the past. He probably just made a mistake. 

So, when the microscopy specialist was in London giving a presentation, I took the opportunity to go to London to hear it and also to take him to the dealer. My purpose was to demonstrate scientific evidence to the dealer that his piece was not real.

Analytics trumps aesthetics
When I arrived with the specialist in tow at the dealer’s shop, the dish the dealer sold me was nowhere to be found. But, he had other items that he thought might be less than authentic. He brought out 2. Between them, one was genuine using the microscopy technique and the other wasn’t. The dealer was impressed. He saw that science can trump judgments made purely by the eye. He wanted my companion to stay and continue examining his porcelain (free of charge). 

 

Read more at: http://www.hcplive.com/physicians-money-digest/columns/my-money-md/12-2014/Fakes-in-the-Art-Market-How-a-Dealer-Turned-a-Lemon-into-Lemonade#sthash.Y4yz8dx7.dpuf

Gender and Art Appreciation: Sex Makes a Difference

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Beauty is in the eyes of the beholder. Men and women generally are drawn to dissimilar styles of paintings. A man’s preference is on the left (illustration from Wikipedia) and a woman’s is on the right (illustration from Happy Painting). 

In behavioral studies, men and women are known to rate the beauty of artistic and decorative stimuli in different ways. Although this tendency is recognized, the reason why is not. Recently, Camilo J. Cela-Conde and his colleagues began to explore the answer to this question. This is what they found.

During visual artistic appreciation, a particular area of the brain, the parietal lobe, was stimulated in both sexes. However, the sides of the brain that displayed activity in the 2 sexes were not the same. In females, it was on both sides and in men, it was primarily the right. The authors explained, “Our results showing an early activity of parietal areas for stimuli rated as beautiful in both sexes seem to indicate that the processing of spatial relations is crucial in the human appreciation of beauty. However … activity in the parietal regions is bilateral in the case of women but lateralized to the right hemisphere in the case of men.”
 

Figure 2 from  the paper &nbsp;showing the subject’s brain response to stimuli rated as beautiful rather than not beautiful. Women (on the left) showed primarily bilateral brain response to visual stimuli at several millisecond stages compared to unilateral for men.

Figure 2 from the paper showing the subject’s brain response to stimuli rated as beautiful rather than not beautiful. Women (on the left) showed primarily bilateral brain response to visual stimuli at several millisecond stages compared to unilateral for men.

To reach their conclusion, the researchers studied 10 female and ten male neurobiology students. Their average age was 23.6 years. They had no earlier training or special interest in art. All were shown the same set of photographs of artistic paintings or natural objects that were divided into 5 clusters. There were 50 pictures each for the first 4:  abstract, classic, impressionist, and postimpressionist art. The final group consisted of 200 photographs of landscapes, artifacts, urban scenes, and similar.

Magnetoencephalography (MEG) was used to record brain activity and appropriate data analysis was applied. MEG is a method for detecting changes in magnetic fields produced by postsynaptic neuron activity with a time resolution of milliseconds. For more detail, please see the paper

Read more at: http://www.hcplive.com/physicians-money-digest/columns/my-money-md/02-2015/Gender-and-Art-AppreciationSex-Makes-a-Difference#sthash.e87cP49K.dpuf

 

Why People Buy What They Know They Won't Use

May 07, 2015    |    My Money MD    |   Shirley Mueller, MD

A collector friend of mine in her eighties said, “We have to get that goblet to complete the set.” Her passion, resolve and determination were evident in her voice. Her goal is to match antique glassware to complete a set, for example, 6 instead of 5 or 8 rather than 7.

As a fellow collector, this makes sense to me. I do the same, but with unmatched Chinese teapots meant to demonstrate different shapes and patterns over 2 centuries. Our shared passion is completion, whether it is of a pattern (my friend) or different prototypes of the same object over time (me).

Three Chinese export teapots from the 18th century. They range from early on the left to late on the right. Though they are not a set in the traditional sense of the work, they fulfill my objective, which it to show how style changes over time.

Three Chinese export teapots from the 18th century. They range from early on the left to late on the right. Though they are not a set in the traditional sense of the work, they fulfill my objective, which it to show how style changes over time.

Catherine Carey gives us insight into this force of human nature in the Journal of Economic Psychology. She discusses collecting for the purpose of set completion rather than financial gain or other reasons, though they are not mutually exclusive. For example, a set may be worth more in the secondary market than its parts individually.

What is new in Carey’s paper is that she constructs an economic model out of a pastime usually perceived in these terms. She explains the economic utility of collecting in sets.

By dictionary definition, economic utility is the ability of a good or service to satisfy the need or want of a consumer. Carey’s explanation is broader, “Utility maximization is indeed the seeking of satisfaction and the tradeoffs taken to enhance such pleasure.”

In more simplified terms, set collectors initially gather objects that have value to them as individual units. Later, as more parts are added and a set begins to take shape, single pieces are of less interest, but valued rather for the good they offer to make the set whole. In Carey’s words, “The social value may simply be the individual’s utility from owning the complete set ….or it could be a collecting community’s idea of the collection’s financial worth on the secondary market. In either case, set completion motivates collecting behavior.” The author goes on to say that the relevant literature suggests that this model represents a significant percentage of collectors. My experience is compatible with this.

Read more at: http://www.hcplive.com/physicians-money-digest/columns/my-money-md/05-2015/Why-People-Buy-What-They-Know-They-Wont-Use#sthash.uUfbAfg7.dpuf