[CydeWeys]

I'm amazed that the article doesn't discuss the end of ZIRP. The bursting of the art market bubble in mid 2022 coincides exactly with when interest rates started rising following the 'transitory' inflation caused by pandemic relief measures. This was also the same time that we started seeing hiring freezes in tech, the bursting of the luxury watch bubble, etc. It's all tied together, and has the same root cause: It stopped being cheap to borrow money, and it started being lucrative to lend it out for guaranteed returns (e.g. by buying Treasuries) rather than speculating on artworks, or NFTs, or whatever.

[anonymars]

Yes and no - 2022 also drastically changed taxation of software development

https://www.resourcefulfinancepro.com/news/irs-section-174-c...

[qaq]

Tech firms lobbied this change because they care about EBITA it makes their numbers look better

[e40]

My tax accountant said every one of his clients was freaking out about it. So, I have to disagree.

[nerdponx]

If there was any lobbying incentive, it would be anticompetitive suppression of smaller companies that can't afford the tax increase.

[throw__away7391]

This change has zero effect on your EBITA.

[anonymars]

How would that make EBITA look better? (Even if you meant EBITDA, same question)

[qaq]

You are right reporting is via GAAP rules this only affects tax accounting

[non_aligned]

> I'm amazed that the article doesn't discuss the end of ZIRP.

I'm not sure this particular phenomenon can be explained this way. For example, antiques auctions are doing quite well, with prices rising quite briskly year after year. There's still plenty of money chasing the kinds of long-term investments you can hold in your hand, put on a shelf, and show to your friends.

Jewelry sales are doing fine too.

There are other reasons why going to a fancy gallery in London to buy some decor for your mansion just isn't as enticing as it used to be a decade or two decades ago.

[tjwds]

The end of ZIRP definitely hit the contemporary art market — what the article is referring to — harder than the fine art market.

[boston_clone]

I do wonder if one of those reasons is that the general sentiment of the public is moving beyond contempt and towards sharp objects not dissimilar to how friends across the channel tended to handle things.

[incone123]

I doubt wealthy people are afraid to shop at London galleries or auctions. There are street robberies but they target watches and phones, not so much antiques.

[boston_clone]

Maybe my comment didn't capture the zeitgeist - it's not that they're afraid of robberies per se, but rather simply living as a wealthy individual in a society with massive inequalities of income has much more social pushback than say, twenty-five years ago.

[incone123]

What do you think the social pushback would look like from the wealthy person's point of view? If you get chauffeured from your London home to your country house and all your social circle are in the same bracket then you won't encounter much of it. And their children might be following activists on social media but they'll still join the family heli-skiing trip to Canada.

[freejazz]

Hasn't seemed to stop the rich at all

[jfengel]

The US stock market and cryptocurrencies are both going gangbusters. You don't need ZIRP to be awash in cash. Money can print itself when rich people are optimistic.

I don't know what causes bubbles to pop, but I don't think it's directly related to US monetary policy. I suspect that the bubble just moved elsewhere.

[echelon]

It might be that anyone can generate "art" now.

While canvas, sculpture, and other media are far removed from jpegs, the scarcity of adjacent digital forms going away may have reduced the interest in the market for "shaped aesthetic things".

The attention, and thus money, has moved elsewhere.

[csomar]

Pretty much every country is in conflict at their border. However, resolutions can happen peacefully. Nations are essentially pillaging structures and thus want to always expand their borders.

[red-iron-pine]

what does this have to do with the above points?

[djtango]

Someone in the space told me that China were big buyers of art but suddenly they stopped.

This could be because of capital controls, financial stress or increasing sense of national pride - take your pick

[csomar]

Not only China and they didn't stop because of national pride (wouldn't have bought them in the first place). The reason is that they were using them as financial instruments and now they have less confidence on the West. So they are moving to other things.

[benjiro]

> The reason is that they were using them as financial instruments and now they have less confidence on the West. So they are moving to other things.

Only partially correct. The reason why so many Chinese invested into the West is because the Chinese Government has strict monetary policies in place.

We have all seen news of people becoming miljonairs, billionaire's and then they leave for another country. The issue is that this was happening a lot in China. Rich folks made their money in China and then took the money outside the country. The issue was that they converted that money into foreign assets, what drain the national currency reserve (mostly dollars).

Like 12+ years ago the government implemented strict rules, disallowing money to be transferred out of the country, if it exceeded a specific amount. Its been a long time and i do not remember the exact limit. But there is used to be a backdoor, that if you knew the right people, and it was a company investment or other investment that build up soft power of China in the West. And voila, money flowed out that way. Of course, not for normal citizens ;)

O, you are investing a million or 5 into some painting. Well, now that money got transferred out of the country but the value (as in the painting) is now in the US, EU, ... Its the same reason why we had a TON of movies being made with Chinese backers. It was all used as a way to launder money out of China.

That means, if the Chinese government confiscated your assets at home, you had value in other countries to be tapped. Its not coincidence that a lot of rich folks their families study in the west and live in the west but the husband/family head works in China. Its a way of protection. And the West where if you leave a country, there is no real check on you leaving, China is different.

A few years ago, with Covid, China was in constant lockdowns, areas sealed off. The big cities like Shanghai, entire area's felt like prisons the moment somebody tested positive. So a lot of people with money tried even harder to get out.

It was around that time, even more stricter laws got introduced regarding "foreign investments". The whole backdoor regarding "foreign investments" has been restricted and is under much more scrutiny if you want to bring money out of China.

Hong Kong used to be a exit door but that has also been under a lot more pressure.

Its not that Chinese have less confidence in the West but that the government has "advised" that investing at home is the "better choice" for you and your family.

That means, if you do not want to be investigated and jailed. A lot of rich celebrities have been publicly investigated and jailed for short times. Charges like tax evasion was a thing. Until they paid a nice big sum to the government (with some money sticking on the edges), and a very, VERY public apology about their bad behavior. What in turn keeps the rest in place. As in, sure, you can play around but do not get too big for your bridges and think about moving money out of the country.

Getting money out of China, unless you have some connections is a hard thing. The level of control is much larger then 2010, and has only gotten worse with time.

You think about setting up a company in the West? You better be sure its registered in China (forgot the branch) or you can enjoy jail time when found out. Its all about tracking where money goes and ensuring control.

Its the same reason you see a lot of Chinese companies that used to be in China, now having head seats in Singapore etc. People using that route to get assets out.

So no, its not just about the West becoming less interesting, and people being more patriotic, its literally about way more financial and people control, what in turn affects that massive money flow from China into outside assets.

Funny thing, you ever wonder why so many, just BAD movies have been coming out the last 15 years. Check the investments and the money trail.

Its because even if the movie loses money, what then gets reported as a lost value in China, part of the money is still transferred out sideways. O, we spend 20 million on X movie (but it looks like a 2 million budget movie). O, ... i wonder what happened to those other million. We earned only 1 million from the movie sales, so we "lost" 19 million. Reality is that a lot of that money simply flowed somewhere else. 101 money laundry ..

[cluckindan]

These aren’t limited to China:

- fewer people can afford a home, let alone multiple = less wall space for premium art

- it’s way easier and cheaper to launder money through cryptocurrency casinos than art auctions

[djtango]

I'm not convinced that the first point has necessarily affected the premium art space unless you're referring to the spill in effects. TFA talks about a space in Art Basel costing 100k - the target clientele for all intents and purposes are completely unaffected by the recent economic problems. Some have gotten even richer if anything

[solomonb]

> - it’s way easier and cheaper to launder money through cryptocurrency casinos than art auctions

Sure art sales can be used to launder money, but that can't be the majority of sales. Doesn't laundering rely on being masked by a larger legitimate cash flow?

I think a much more significant portion of the art market is people speculating on prices and people collecting to look cool. Both of which are highly sensitive to changes in mood and sentiment as described in the section of the article talking about Beth Rudin DeWoody .

[throwawayq3423]

> it’s way easier and cheaper to launder money through cryptocurrency casinos than art auctions

Art was always a favorite way to launder money. This is a good point.

[EGreg]

2022 is also when the wars in Ukraine and Gaza started in earnest

When wars are going on, most people in affected countries are thinking about heavier things than going to an art exhibit and boosting their collections.

2020 and 2021 was when the pandemic happened. Businesses started feeling the crunch all over the world from the lockdowns. Supply chains got bullwhipped. People weren’t exactly interested in going to buy artworks after their one-time UBI checks and PPP funds ran out. And other countries didn’t send those out at all.

Oh yeah, and AI has now sent a supply shock to the whole art industry. But we can’t say that on HN, there will always be someone popping out of the woodwork claiming AI is a non-factor and saying things were always like that.

[pjc50]

> 2022 is also when the wars in Ukraine and Gaza started in earnest

This is just wrong for Gaza; either you take the "conflict has been running continuously since 1948" approach, or you date the present intense fighting to October 2023.

> AI has now sent a supply shock to the whole art industry

Not to the "fine art" part of it, no. It's taken out the lower and middle tiers; people doing commissions for a few hundred dollars are squeezed out, and there's much more slop to sell to tourists, but any business which cares about uniqueness and provenance (sometimes more than the content of the art!) is not going to notice.

[weregiraffe]

The conflict started long before 1948. Hint: creation of the State of Israel is an effect of the conflict, not its cause.

[doctorpangloss]

The public is not conscious of how big of a deal the war in Ukraine is.

[randmeerkat]

> The public is not conscious of how big of a deal the war in Ukraine is.

My sincerest desire is that there’s a peaceful resolution to this conflict before they’re forced to realize it.

[esarbe]

The only peaceful resolution is Russia accepting the sovereignty and territorial integrity of its neighbors.

Otherwise there will be no peace, just oppression and torture of the occupied population. And more war down the line, when Russia feels it can take another bite.

[NoOn3]

By saying this, you must understand that many more people may die for this purpose, and even yourself.

[esarbe]

It's Russia's purpose to attack its peaceful, friendly and neutral neighbors.

No one forces Russia to attack its neighbors.

As long as Russia insists on waging war against its sovereign neighbors, Russia is a threat to Europe.

[red-iron-pine]

you put your life on the line now, or you put everyone's on the line, later.

WW2 didn't have to happen, and the UK and France could have interviened sooner, before the Nazi war machine took over the Czechs, the Poles, etc.

ounce of prevention vs. a pound of cure

[throwawayq3423]

Did you read what he said? You are guaranteeing the war will continue if you reward an invasion with land.

[YeahThisIsMe]

It's not a "conflict" and there will not be a peaceful resolution of it.

[khazhoux]

Of course it's a conflict. Every war is a conflict.

[nine_k]

Roman Empire, or Genghis Khan, or Nazi Germany did not have a "conflict" with neighbors, some kind of quarrel that can end in a compromise. They had a desire to conquer, subdue, and consume the neighbors. There could be no resolution beside a complete capitulation and becoming annexed.

Russia is currently acting in this mode. There can be no "resolution", only a devastating military defeat of one of the sides.

[monero-xmr]

If I was going to buy art as an investment I would only buy the absolute best - old master, Picasso, ancient artifacts with absolutely no question to their authenticity or provenance that would restrict its resale.

Collectibles are very tricky. You want to buy something that isn't a fad. Like a movie prop, you'd want to buy the 100% most legendary movie that is timeless, like something from Casablanca, that has been appreciated decade-after-decade as worthwhile and valuable across many generations and fads. I wouldn't buy an expensive sports or trading card. Something related to Western culture is much safer, like the Magna Carta, or a founding US-related historical document. It's very hard to predict what will remain valuable decades or centuries out, so if something is still valuable now after centuries, it is likely to remain valuable

[cortesoft]

The problem with your strategy is that the items you listed have very little upside; yes, the prices won't collapse, but they also wont go up a ton. Their prices have reached somewhat of an equilibrium.

A lot of collectors are trying to find something they can buy for cheap and then sell when it goes up in price by a lot. If you want that, you have to pick something that hasn't had its price hit an equilibrium yet. You need to take a risk on something new.

[dfxm12]

Collectors are different from speculators or investors. Collectors want something for personal reasons, whatever they are.

Speculators are just trying to buy low and sell high. Investing has overlap with speculating, but it's generally more long term.

I think this is important to understand when considering buying collectables. You have to know the different types of people you're bidding against, whether it's an out of print magic the gathering card or a painting.

[monero-xmr]

Here's a rembrandt for sale: https://www.masterworksfineart.com/artists/rembrandt/etching...

No idea the price, but I would much prefer this to a Charizard pokemon card!

[smokel]

When buying etchings, beware of fakes. Since Rembrandt is very popular, people have found ways to make additional prints, by using the same copper plates in or after his lifetime.

The Rembrandt House in Amsterdam sells new prints that are made with copies of the original plates. They do add a big sign on the paper, but they are genuine prints, and look very pretty indeed. But the original works are made by the master himself and once you get into etching you get to see very minor nuances in the print that you may grow to like.

One thing to look for is whether the paper is original, but even here people use old paper from his period, for instance by ripping the first empty page from an old book.

Another interesting thing is that Rembrandt often reworked his plates, so there are multiple "states" of his etchings. If you ever find a non-final state of some print, you can be fairly sure that he or a student of his printed it. Which adds to the value :)

[randmeerkat]

This is such a beautiful piece. How did you learn about it? How does one get further into this world?

[monero-xmr]

Collectibles have a lot of friction, and being physical they have a lot of middlemen and questions. If I want to speculate on an investment, even property would be far more liquid, let alone something disambiguated like company stock. I think investing in physical collectibles for a quick flip is pretty dumb. Why not buy domains related to the same subject? Far easier

[cortesoft]

Ok, then I guess I don't understand your point in your first comment. You seemed to be explaining what approach you would take to invest in collectible in your first comment, by saying you would only buy something that has established value.

I agree that trying to make money from collectibles is not the best way to make money. But then if you aren't buying collectibles for money, your first comment doesn't follow; you should collect things you want to collect yourself, which means it shouldn't matter their ability to hold value.

[monero-xmr]

I'm saying as an investor, collectibles are very difficult and highly speculative, and the friction makes them even less attractive. I disagree that buying old, consistent collectibles cannot themselves be speculative - if you wait for the right moment they can make significant returns. But the downside is significantly reduced if you restrict your investments to something that has been consistently valuable across the longterm.

If you are into something, buy all means buy it. I just mean if you are a dispassionate investor looking for a return it is a pretty poor area to invest in. But if you like something - art, pokemon, whatever - just do what you love

[QuantumFunnel]

Labubu

[_DeadFred_]

When I had that level of friends the ones that collected art very much wanted to be part of a fad with some of their collection. It was the intro to getting to show the rest of their collection off to people. It was the piece that guests would know the artist of, or were able to get excited about when giving the current story.

[cyberax]

> I'm amazed that the article doesn't discuss the end of ZIRP.

There's a bigger culprit: NFTs. They sucked away a huge portion of art spending, with a promise of a fungible growth asset that you can just sell as needed. Art has always been considered a safe long-term investment (along with a means of conspicuous consumption), but it has always been non-liquid.

[Terr_]

I think that art-to-NFT flow is not really about storing value long-term, but about money laundering.

To be more specific, the main purpose of the "object" is to provide plausible-deniability for one half of an exchange where the other half can't be shown because it's illicit.

[brazzy]

A popular hot take, but if that were the case, the art market should have collapsed when NFTs were booming, and recovered after they disappeared. Unless you can give a credible alternative that has eclipsed both.

[Terr_]

> the art market

How would one measure "the art market" in a way that can be graphed?

> should have collapsed

Through what mechanism would it "collapse? Laundering tricks don't involve bidding wars or high volumes of items. Consider this scenario:

1. Alice wants to transfer $5m to Bob in exchange for something off the books.

2. Bob goes and buys anything he can find that seems to have a consistent ~50m price point. Since Bob's task doesn't require any specific item, he doesn't get into bidding wars to drive up prices.

3. Bob privately sells it to Alice, who deliberately pays a higher amount of $55m. No auction, no bidding wars.

4. Alice can either resell the item to unrelated people for probably ~$50m, or keep it around for a bit to provide either plausible-deniability or a future tool for an inbound cloaked transaction with someone else.

How would that kind of activity charge up "the art market" in a way that is easy to measure?

> when NFTs were booming

Most of that boom was other speculation. My point is that an NFT by cyber-Rembrandt is a lot more convenient than certificate a real Rembrandt held in a freeport as its ownership shifts.

The trick is getting something where the generally-accepted value is high enough that transactions can plausibly be hidden as noise in the signal.

[rsynnott]

This seems dubious, because the NFT market peaked and collapsed _before_ the art market did.

[pjc50]

Well, that's very dead now.