1. BWAD presents: The Global Art Market Art as an alternative investment vehicle by Serge Tiroche February 21, 1999

2. Feb. 21, 1999 "Investing in Art" by Serge Tiroche 2 Contents n Scope n Market Structure n Key Players n Oligopoly ? n Art as an investment n Who should buy Art ? n How to buy Art ? n Recommendations n Conclusion

3. Feb. 21, 1999 "Investing in Art" by Serge Tiroche 3 Scope n Vast Market n Focus on Market for Impressionist, Modern and Contemporary Paintings and Sculpture (i.e. 1860-1960) n But same reasoning applies to all types of Collectible Art, Furniture, Vintage cars, Carpets, etc...

4. Feb. 21, 1999 "Investing in Art" by Serge Tiroche 4 The Market - Players & Structure n Artists n Collectors n Gallerists n Dealers n Consultants n Museums / Trusts / Institutions n Auction Houses n Art Fairs n Internet

5. Feb. 21, 1999 "Investing in Art" by Serge Tiroche 5 Market trends n Growth ($, # of players, new segments) n Concentration (in Auction Houses) n Major trend: Disappearance of retail n Cyclicality and correlation n Consolidation (eg. France) n Sophistication –More players –More products (Art Credit, Packaged deals, Guaranteed Minimum with advances) –Internet (On-line auctions, Prices, Virtual Galleries, Brokers, Access to information)

6. Feb. 21, 1999 "Investing in Art" by Serge Tiroche 6 Oligopoly or free market ? n Free market develops into oligopoly n Reasons: Supplier Cost, Buyer Price Demand Supply Client base Auction Houses

7. Feb. 21, 1999 "Investing in Art" by Serge Tiroche 7 Art as an investment n Basic economics apply: Return vs. Risk n But, not a commodity, prices flexible n Less efficient - i.e. opportunity n Less liquid - i.e. time lag n Diversification benefit n Enjoyable investment n Other benefits (e.g. cultural image)

8. Feb. 21, 1999 "Investing in Art" by Serge Tiroche 8 Who should buy Art? n First and foremost, must enjoy Art n Home owners (decorative purposes) n Patrons (supporting young artists) n Those looking for a new hobby/passion n Status seekers n Private Investors/Collectors –Have a mix of the above profiles –Seek diversification of invested capital –Optimists (every piece is unique)

9. Feb. 21, 1999 "Investing in Art" by Serge Tiroche 9 How to buy Art ? n By yourself –Requires extensive research –Cheaper but riskier (Authenticity, Condition, Valuation) n With Professional Advice (for higher value) –Added value ? (Market knowledge, contacts & experience) –Where to get advice Banks Auction Houses Independent Consultants, Galleries & Dealers

10. Feb. 21, 1999 "Investing in Art" by Serge Tiroche 10 Recommendations n Start by discovering your tastes (theoretical knowledge helps a lot) n It’s a passion - invest in what you love ! n Take your time, build collection slowly n As tastes evolve, replace old with new n Diversify, buy young and established n Don’t get carried away - extra cash only n Take an advisor you trust

11. Feb. 21, 1999 "Investing in Art" by Serge Tiroche 11 Conclusion n Art is an alternative investment vehicle n Risks and rewards n Must have strategy & basic knowledge n Avoid short-termism and speculation n Good advice has real added value n Patience builds good collections n Can start today ! n Enjoy, enjoy, enjoy