Aboriginal Art was mentioned in the article and i thought it would be worthwhile listing it here for those who didn't see it in The Australian.
A considered approach to building wealth
Derek Parker | June 25, 2008
THE recent crop of books on personal finance underlines the trend towards DIY investment, running the gamut of possibilities across the spectrum of experience.
In the past year there has been a shift away from "get rich quick" tomes towards books emphasising value, innovation and diversity, in line with a more conservative, considered investment climate.
For novices and experienced investors, an essential text is Martin Roth's Top Stocks 2008, now in its 14th year of publication.
Roth has refined selection criteria that reveal the best performers on the ASX. This year 107 companies make the grade.
He is interested in solid, proven companies rather than the more speculative breed, and he provides useful information on performance, history and prospects, as well as comparative data and in-depth ratio analysis.
A good companion for Top Stocks 2008, given the commodities boom, is Top Resource Stocks 2008, by Allen Trench, Mickey Thompson and Leonard Lau.
It looks at the largest 100 listed companies in the mining and energy sector and supplements company information with geological data.
For investors who are new to the business of stock trading, a good place to start is Stuart McPhee's Trading in a Nutshell.
It explains the mechanics of buying and selling as well as the basics of technical analysis and pattern recognition.
McPhee also points to the need to know when to cut your losses and when to let the profits run, which is a matter of having a plan and knowing what you want to achieve.
This emphasis on self-discipline and organisation is also a theme of Value: Finding Hidden Gems on the Sharemarket by James Carlisle.
Compared with McPhee's chartist approach, Carlisle prefers to focus on company accounts and financial data, including quality of management and broad economic trends.
The key is to find companies that are on the verge of growth. This requires detailed research and a measure of intuition.
But despite their different emphases, McPhee and Carlisle agree that occasional losses are inevitable, and portfolio diversification is a good way of minimising the risks.
For those who prefer to more tangible investments, property remains a good option, and Peter Cerexhe's Smarter Property Investment is a good place to start.
Cerexhe notes that investment in property is a long way from a sure-fire path to riches and he does a good job of explaining what can go wrong and how the traps can be dodged. The chapters on selecting the best property in terms of purchase price, ongoing costs and potential for capital gain are particularly useful, and he provides helpful advice on dealing with lenders over finance.
He also includes a comprehensive section on tax matters, an area often overlooked in connection with property investment.
A less conventional, but potentially lucrative, area of investment is art.
Michael Reid, in How to Buy & Sell Art, explains that art investment is not for everyone, but it can add valuable depth to a portfolio, especially for super funds.
Reid casts a wide net, ranging from buying methods to up-and-coming artists.
He includes an extensive section on the booming area of Aboriginal art and provides a comprehensive listing of galleries, auction houses and collecting associations as well as a glossary of specialist terms.
Investors who prefer to look to the far horizon will find Jim Rogers' latest book, A Bull in China, an interesting perspective on China and Hong Kong.
He identifies the areas of China's economy, such as energy and technology infrastructure, that are doing particularly well and points to the leading companies in those fields.
But a problem is that Rogers, while always entertaining, tends to skip over some of the regulatory issues around investing in China, such as the limitations on non-Chinese holding large amounts of Chinese currency and repatriation of profits.
An even broader canvas is a feature of When Markets Collide: Investment Strategies for the Age of Global Economic Change by Mohammed El-Erian, who oversees $US800 billion as co-chief investment officer of Pacific Investment Management in the US.
He looks at the shift in global economic weight to countries that were once considered chronic under-achievers and then examines how these trends affect investment decisions.
He suggests that a balanced portfolio should include equities from fast-developing countries as well as bonds and hedging instruments.
As a practical strategy, this is probably better suited to large investors than smaller players, but the book offers interesting insights into how the financial architecture is changing.
1 comments:
The 1954-2004 data shows, over the last 50 years, stocks (as represented by the S&P 500) returned 10.9 percent annually, while the art index returned 10.5 percent per annum. The most recent annual five and ten year returns for art, 16.2% and 10.3%, exceed the returns of stocks often offering investors a safe heaven during stockmarket crashes.
AUSTRALIAN ABORIGINAL ART & RETURN OPTIMISATION
More recently, art funds have been created to allow rich people to invest in a portfolio of fine art assets (e.g. a London-based Fine Art Fund, created by a former Christie's executive). Art has always followed the money, and money follows the strongest markets. Dealers like Larry “Go-Go” Gagosian, Daniella Luxembourg and Jeffrey Deitch, hedge fund moguls and newly born oligarchs want to participate in $30 Billion Private Art Sales Around the World buying multi-million dollar works. In the meanwhile, Professors Moses & Mei found (page 22, Figure 3) that art purchased for less than $100,000 produced significantly higher returns than art purchased for $100,000-$1m or higher. Professor Worthington of QUT School of Economics and Finance studied global art markets and calculated returns in Australian art market based on about 36,000 auction sales. In his study at University of Wollongong he identified Australian Fine Art as a separate Alternative Investment asset class, that produced 30-year average annual returns of 8.23% for all artists as average, in line with other world art markets, and works costing $10,000-$35,000 providing highest returns.
Prior to 1990s Australian aboriginal art was viewed merely as part of tourism only to power charge resale values, like $1.056 million for Emily Kame Kngwarreye's Earth's Creation and $2.4m for Clifford Possum Tjapaltjarri’s Warlugulong in recent years. The Warlugulong painting was bought by Commonwealth Bank of Australia (CBA) in 1977 for $1200. In 1996, Melbourne art dealer Hank Ebes acquired the painting for $36,000 and in 2007 National Gallery of Australia acquired the painting at the Sotheby's auction for a princely sum of $2.4 million. This returned Ebes more than 6,500% on his investment (1996-2007). Never mind, if CBA would have held to their $1,200 investment, it would have returned them 200,000% (1977-2007). Aboriginal art works are called the outstanding paintings of the 20th century and form a $700 million industry:
http://artbank.ch/art.html
With recent success in Bahrain and Musee du Quai Branly in Paris aboriginal art of Australia is a rather hot investment commodity.
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