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Aesthetic Investments

Are aesthetic investments other than gold (such as art, gems, stamps and wine) viable portfolio options? These blog entries address investing in these alternative asset classes.

Return on Gems

Do gems offer good returns? How do the returns of these tangible assets compare with those of other asset classes? In the April 2011 version of their paper entitled “Hard Assets: The Returns on Rare Diamonds and Gems”, Luc Renneboog and Christophe Spaenjers examine recent returns on precious gems in U.S. dollars. They concentrate on the upper end of gem quality for three categories: white diamonds, colored diamonds and other gems (emeralds, rubies and sapphires). They consider gem attributes such as weight, color, clarity, cut, location of sale, auction house, brand and certification as allowed by subsample sizes. Using worldwide auction data spanning 1999 (the first year of representative coverage in the source database) through 2010 (3,952 total sales), along with the contemporaneous values of the U.S. Consumer Price Index and returns for other worldwide asset markets, they find that: Keep Reading

Return on Stamps

Do stamps provide a good return compared to equities? Can investors use stamps to hedge against inflation? In the February 2010 version of their paper entitled “Ex Post: The Investment Performance of Collectible Stamps”, Elroy Dimson and Christophe Spaenjers investigate the returns on British collectible postage stamps over the long term. Using Stanley Gibbons stamp catalog prices to construct a value-weighted British stamp price index/returns and returns for other asset classes over the period 1900-2008, they conclude that: Keep Reading

Return on Art

Do works of art provide a good return compared to equities, or do they carry an aesthetic discount? Can investors use art to hedge equities? In their July 2009 paper entitled “Art as an Investment: the Top 500 Artists”, Roman Kraeussl and Jonathan Lee employ public auction prices from Artnet.com to construct and analyze a Top 500 Art Market index based on historical prices of artworks by the top 500 artists in the world (as ranked by Artprice.com). They relate art returns to those for commodities, corporate bonds, 10-year U.S. Treasury notes, hedge funds, private equity, real estate, global stocks and U.S. Treasury bills. Using prices for nearly 100,000 art transactions and contemporaneous quarterly levels of indexes for other asset classes over the period January 1985 through March 2009 (as available), they conclude that: Keep Reading

Art and Stocks

How do prices for art relate to prices for equities? Does art underperform or outperform stocks over the long run? In their November 2009 paper entitled “Art and Money”, William Goetzmann, Luc Renneboog and Christophe Spaenjers investigate relationships between equity prices and art prices and between incomes and art prices. To enable their analysis, they construct an art price index spanning 1765-2007. Since art price data draws heavily on sales in Great Britain, they focus on the British equity market and incomes. Using their art price index, a British equity market index and GDP data for 1830-2007 and British income data for 1908-2007, they conclude that: Keep Reading

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