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Do not buy art on cruise ships
In case you did not know. Here is one example of a fool:
It was only after Mr. Maldonado landed back in California that he did some research on his purchases. Including the buyer’s premium, he had paid $24,265 for a 1964 “Clown” print by Picasso. He found that Sotheby’s had sold the exact same print (also numbered 132 of 200) in London for about $6,150 in 2004.
Of course the corruption and foolishness runs deeper than the article lets on. If you shop for contemporary prints in entirely "reputable" Georgetown galleries, they will charge about twice the going auction rate for the prints. They might tell you that the prints are "hard to find" when in fact usually they are not. A good New York dealer, used to dealing with well-informed customers, might charge only 10-15 percent above auction (full price including buyer's premium). The bottom line is that you should never spend more than $1500 on art unless you know at least roughly what it is worth at auction. One of life's good rules of thumb.
Posted by Tyler Cowen on July 17, 2008 at 06:44 AM in The Arts | Permalink
Comments
When you think about it, it is a brilliant system from a seller's perspective. On a cruise ship, there are many potential buyers with a ridiculous amount of disposable income with imperfect information about the market for collectibles. I guess the idea of "auctioning" off these items as opposed to simply opening a gallery is to give an aura of desperation that this is a "last minute" opportunity. It's genius. When is the next time these individuals are going to have the ability to buy a Picasso at "auction price." They really did get jipped.
In any case, anyone who is ripped off on the price of collectibles these days is simply falling victim to the last pockets of imperfect information for the market of collectibles. Theoretically with the search capabilities of the internet you should never unintentionally settle for a bad deal.
Posted by: Daniel Corradi at Jul 17, 2008 8:04:00 AM
Curious, what about art that doesn't regularly go to auction. Specifically, I'm referring to comic book pages, which are one of a kind. Normally, these are sold by the artists or through a service at comic conventions. How do you know how much to spend then?
Posted by: David Parker at Jul 17, 2008 8:19:59 AM
Nope. Comic book pages are sold regularly on Ebay. Look at current and past sales, they have even designated a category for it. The price will vary according to the superhero, the particular artist, and the issue. You can still make an educated estimate using past data for their value.
Posted by: Daniel Corradi at Jul 17, 2008 8:37:01 AM
I was on a cruise ship in May and I had wondered who'd be dumb enough to buy art there. I suspect the free champagne has an impact.
Posted by: Alanna at Jul 17, 2008 9:03:55 AM
That's a great r.o.t. Tyler, here's another: DON'T GO ON CRUISE SHIPS!!!!
Posted by: angus at Jul 17, 2008 9:24:00 AM
Mr. Maldonado was dumb, but Mrs. Vruble was dumber.
“The auctioneer told us we could walk off the boat and sell them for 20 percent more, and they would go up 20 percent a year,” Mrs. Vruble said.
Essay question: describe a model of the market in which either of the auctioneer's claims makes sense.
Posted by: jfalk at Jul 17, 2008 9:45:10 AM
There is only one safe way to buy art: ordering from the supplement in your Sunday paper.
Posted by: MH at Jul 17, 2008 9:51:48 AM
I agree with the premise here. The guy was duped big time.
I am a relatively unknown fine artist, and I regularly sell original art over $1500. I would argue with you on your threshold dollar-wise. Of course, when people see my art, they do see it in a context of market approval (juried show; gallery, etc.), but the market easily supports these over 15K prices for good art.
Of course, I can't blame the public for a general revulsion to art when so many "artists" dip to the level of politics in art, and usually to the far left. Hello. Art is not political.
Posted by: KC at Jul 17, 2008 10:04:34 AM
I would never pay more than $10/unicorn and $6/per rainbow when I buy art. For kittens or Elvis, I got a bit higher.
Posted by: MH at Jul 17, 2008 11:27:34 AM
@jfalk:
Duty free wine, spirits and tobacco products can be sold in some cases for a swift profit. Of course that is because there is a cut out in the duty system for small "personal" quantities. Of course most Duty-free stores are still a rip off for everything but tobacco. Though not the year on stuff of course.
But yeah here all you are avoiding is sales tax (and in this case I believe your purchase may be covered by use tax so you don't even really avoid that legally).
Of course there are art types that would qualify, things made of poached Ivory could be resold for quite a bit more once inside the country so long as you were to say they were found in your attic. But that is smuggling, and an entirely separate matter.
So really your best bet is to buy some something made out of an endangered species that is almost extinct smuggle it in, and hope the species continues to grow more extinct (or for greater anti-poaching rules which ammount to the same thing for your purposes). See it is possible!
Posted by: yasth at Jul 17, 2008 11:43:51 AM
WE NEED A LAW TO PROTECT THESE VULNERABLE CRUISING ART PURCHASERS!!!!!!!
Posted by: GU at Jul 17, 2008 12:15:51 PM
"The bottom line is that you should never spend more than $1500 on art unless you know at least roughly what it is worth at auction."
How do you find out what art is worth at auction? The papers report the $75 million are. But how do you find the auction price of $4,000 art?
Posted by: Philipw2 at Jul 17, 2008 12:22:34 PM
"The bottom line is that you should never spend more than $1500 on art unless you know at least roughly what it is worth at auction."
How do you find out what art is worth at auction? The papers report the $75 million are. But how do you find the auction price of $4,000 art?
Posted by: Philipw2 at Jul 17, 2008 12:23:00 PM
"The bottom line is that you should never spend more than $1500 on art unless you know at least roughly what it is worth at auction."
How do you find out what art is worth at auction? The papers report the $75 million are. But how do you find the auction price of $4,000 art?
Posted by: Philipw2 at Jul 17, 2008 12:23:04 PM
Art is not political.
Since when?
In any event, caveat emptor. Duh.
Posted by: at Jul 17, 2008 1:23:08 PM
I disagree with some of the above comments about cruise ship art. I don't think it's the case that a cruise has "many potential buyers with a ridiculous amount of disposable income". I think most cruisers are middle-class Americans who are splurging on a nice vacation. However, like the poster above, they have this conception that cruises are for members of high society, so when they are presented with the opportunity to attend an art auction, they think "oh, well this is what the fancy people do.." and they attend. It is certainly a chance for the cruise companies to take advantage of information asymmetries, but I don't think the victims have ridiculous amounts of disposable income. In fact, this makes the scam even worse, since these are people to whom $25k is a very large amount of money.
As far as the question of how to find out the value of $5,000-ish art... Look at the Sotheby's or Christies website... They auction a lot of art in this price range (and a lot of art that is much more valuable, of course...).
Posted by: guest at Jul 17, 2008 1:24:33 PM
The better rule of thumb is don't make *any* discretionary purchases on a cruise ship.
Posted by: meter at Jul 17, 2008 1:56:32 PM
Another nifty wrinkle in this story is that if the "auction" transaction takes place in international waters, the duped buyer may not have any practical legal recourse -- what country has jurisdiction over a fraud on the high seas?
Posted by: Paul at Jul 17, 2008 2:22:00 PM
Paul: What law makes murder on the high seas illegal?
Answer: Every ship is under the jurisdiction of the flagging nation.
Now, this will very rarely (due to various legal reasons involving making it cost a lot) be the United States, but I'm pretty sure that the various nations that are commonly used to flag cruise ships all have fraud laws.
(They might not really care, but they have laws. Plus there's the question of proving the fraud, finding the perpetrator who has likely vanished...)
Posted by: Sigivald at Jul 17, 2008 3:21:40 PM
This is typical. There are a lot of web sites
Posted by: bob mcmanus at Jul 17, 2008 3:50:14 PM
I've been on a cruise ship and I've bought art there. I did not get ripped off. But I also took advantage of the expensive but available net to check on prices. Or I spent considerably less than I already knew it cost. There were substantially expensive pieces available, but the auction house was a reputable one from Florida.
I would be concerned about fraud if I were sold a Picasso that Sotheby's had sold four years before, though it might be the same piece.
I will say that the nicer the cruise, the more reputable the art dealers.
Posted by: Suzi at Jul 17, 2008 5:02:56 PM
I submitted your rule of thumb to rulesofthumb.org
Posted by: Walter Underwood at Jul 18, 2008 12:02:51 AM
It is easy to slam the folks that run the auctions on cruise ships - I mean come on - rampant cases of stomach flu on multiple ships, sleazy singles cruises, grandma and grandpa in really bad matching Hawaiian shirts, etc. But, they're not all like that. My cousin is an art auctioneer on a cruise line. She has a degree in Art History from a major University and has studied abroad in Italy and Spain extensively. I am sure she'd rather be working at a major museum in NYC - but she enjoys her job and does it well. And, I know she is not out to rip anybody off - In fact, she'll often call her parents if there is some art that she thinks they might like. She spends an incredible amount of time learning about each artist and she gives that information to the auction attendees. I'd trust her and buy from her. Don't paint all cruise auctions with a broad brush.
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