Friday, August 26, 2011

simon's bar mitzvah

We were leaving a party in Jerusalem and decided to forego the bus back to Tel Aviv and make a dash to the hotel. We got into a random taxi outside the Dung Gate (a highly memorable designation) of the old city and the driver was of Saphardic descent. My wife asked: are you going to kill us? If you don’t, I will give you extra 100 Shekels; can’t deny her logic, its good to incentive-ize people. After we safely made it back we planned dinner. Another ostensibly less threatening taxi ride ensued where we argued the merits of a traditional Arab meal vs. the Israeli counterpart. You can imagine who took which side between my wife and I with the cab driver weighing in of course…it is Israel. After a salad and meat packed feast, my 15 year old’s face began to alarmingly swell, amidst a breakout of hives. So we had an after dinner drink at Tel Aviv’s very busy emergency ward—where the ambulances were demarcated as originating from New Jersey—I guess its hard to find good health care in the State’s nowadays. A little Cortisone and three hours later he was good to go.

In the morning I went for a run, with my glasses—had I gone without like last time in the rain, the ramifications could have triggered an international incident. When you think of the (sometimes heavy-handed) politics of the region, there is no reason the Jews, long persecuted, and Palestinians should not have peaceful places to prosper and co-exist. I went to the historical, stunning Arab city of Jaffa. I passed a gallery with kitschy, cartoonish paintings like a Palestinian Peter Saul—I actually ran through the exhibition; I am sure there is a joke there but I am not going to search. When I (barely) made it back in the scorching midday 30+ degree heat, I plopped down on a hotel bench and the security guard reprimanded me: “don’t sit after you run.” It is Israel after all.



Saturday, August 20, 2011

Wet Run

It was raining so hard I had to run (didn't have to but need to seize the initiative when it crops) with no glasses on, the result was kind of like Mr Magoo. I am a step or two away from legally blind not to mention a stigmatism—my corrective lens need to be ground down so as not to resemble bulletproof glass. Wasn’t so much harrowing for me as for the hapless passers-by. Not being able to focus so much on my other-than-immediate surroundings was like going into a trance. I read of an ancient Arabic scholar who used the word unlearning to describe peasants who, with no formal education, could memorize the Koran by heart. This was more a matter of unseeing. At one point a postbox resembled a woman and at another, a group of four tourists huddled together in hooded raincoats I mistook for a horse. I stepped off the sidewalk to avoid pedestrians and when I tried to remount didn't realize the curb was two-tiered. My foot slid across the top level and I saved myself just before falling headfirst into oncoming traffic and becoming road kill. Near the end I resembled a wet t-shirt contestant, but more like a slightly chubby one on reality TV. A runner called out to me and I didn’t know if I knew him or he was voting for me. Maybe I should do an existential experiment and take off my specs for a week. If so, watch your flank.

Monday, August 15, 2011

"Gold and Picasso: Going Topless", for the Fall 2011 issue of Marc Faber's Gloom, Boom & Doom Report.



Gold and Picasso: Going Topless.


Sotheby’s (BID), the world’s largest publicly traded auctioneer said second-quarter earnings rose 48 percent for its best quarter ever, though the share price is, at the time of this writing, down over 40% since May 2011. It has been repeatedly pointed out that about every time the shares experience such a decline (and precipitous may be too gentle a description in this instance), a spike in the same direction for the art market in general is all but certain. That would not seem to portend a happy fall season for the upcoming spate of auctions, fairs, private treaty sales, exhibits, etc, etc. More like a happy fall in the loopy prices seen in the market of late, like the purchase for $250,000,000 of a Cezanne painting, the Card Players. Throw in the downgrading of the USA—how they deserve even an AA+ beggars belief, if I performed as badly surely I’d struggle for a B-; the imminent collapse of Europe; and the summer sacking of the UK in riots that witnessed mass pillaging and worse. It was always clear if widespread hardship rendered people unable to buy food, they’d ultimately take it. Rice was among the items depicted in the arms of London looters. Thus, all the ingredients would seem to be in place for the ideal recipe for the death knell of the art market as we know it.


Guess what? Not for the sake of being a gratuitous contrarian, but I am still bullish for the upcoming 2011-12 art market, and foresee records tumbling, not to the downside but rather falling upwards as new highs will be achieved before there is any palpable correction. Talking about fundamentals, the factors fueling the recent frenetic art market activities are only becoming magnified in the face of such worldwide jitters and uncertainly. Shares? If 500-point intraday swings don’t make you queasy, I am sure there are some strategic opportunities on the horizon. Currencies? I don’t think anyone in their right mind would proffer a guess as to the short term gyrations we are about to experience, other than the Swiss Franc seems poised to continue to behave like a balloon freshly filled with helium. Property? Still a mixed bag, with only the best of the best in the top regions performing, and there are less top regions by the day. Commodities? A whipsaw investment not for the unwary as speculation about the sustainability of China’s continued growth, pressure on demand, and spiraling costs. Interest rates seem to reside full time in the doldrums, unless you find zero an exciting number. Cash is going to earn negative returns for the next two years according to Bernanke’s statement last week and bonds can’t go much higher—and there is no sovereign default risk with Picasso. In a macro sense, the USA appears to be morphing into the new Japan, according to Bill Gross (more or less), who runs the world’s biggest bond fund at Pacific Investment Management Co. quoted on Bloomberg.com. Such a grim scenario gives new meaning to the doom and gloom in the GBD Report, which perhaps should consider dropping the boom in favor of a few extra heaping portions of gloom and doom.


But every cloud has a gold lining, if you are an art collector or holder of physical gold, which seems to have been going topless all summer. Where will it stop? I can imagine $2,400 to $2,800 an ounce in the short term, in the same fashion as I can comfortably accept that sooner rather than later the $250m Cezanne record will be eclipsed, pushing further into the clouds the stratospheric value placed on unrepeatable trophy art. Gold equals Picasso, and Picasso = gold. Picasso is the measure of value against which all else in the art market is compared, not to mention Warhol hasn’t been faring too badly either, thank you very much. Let us put to rest the notion that art is an erudite, unknowable, illiquid vehicle seen as a frivolous pursuit of the wealthy to impress upon their friends. Previously I would have said it was a pastime led by the Greenwich, Connecticut hedge fund elite, but markets and investigations have pretty uniformly battered them all of late. Art is a store of value, a systematic, objectively (for the most part) measureable asset class viewed in such a way by more and more collectors, investors and institutions, even. As a whole, art has never been as liquid, global and covetable as it is now, from China to Brazil, New York (still) to Russia, and India and Europe (still). These are good times for art and will continue to be so, for at least the next year or two. Baring some unforeseen, unspeakable tragedy all things art will trend up, but even a cataclysmic event can add to art’s allure. People want art so badly nowadays they are literally prepared to steal it; there's been a spate of art thefts, it's that desirable.


Some rather curious art world manifestations (shenanigans?) that have come to light recently are the notion of a Special Purpose Acquisition Company (SPAC) to list on the London Exchange’s AIM, somehow involving art works and SplitArt, an actual art exchange to buy and sells shares in specific works of art. In their own (not entirely convincing) words: “SplitArt will operate the first regulated market for art, indeed the company is in the application process to obtain its license from the CSSF (financial sector supervisor of Luxembourg) and thus establish an electronic trading platform for art securities (MTF Multilateral Trading Facility) that will offer a wide audience access to a new transparent and potentially liquid market with low transaction costs.” I am not so sure how many people would be lining up to have their Picasso’s fractionalized like a time share in Florida, but one you can’t use for holidays. But stranger things have happened. Also, there are more and more funds with tangible collectibles as the core of their holdings like cars and wine, and more banks willing and eager to jump on board, from lending facilities to advisory services. These are all telltale signs of a maturing market with wider breadth and acceptance than at any prior stage in history. In my estimation, the plethora of new art initiatives, even the far-flung and unorthodox, is ineluctable evidence of the concept that art is more, much more, than a pretty picture. In effect, art is flying off the shelves faster than electronics in a London melee. We are in an age of art's rising economy; call me the voice of Boom amidst the chorus of Gloom & Doom. The right art is a safe harbor in today's rocky waters and a great place to dock cash.

Monday, August 1, 2011

Art4August

Today’s art collecting tidbit: Do NOT purchase art at art fairs, any, ever. Demand steeply exceeds supply (or so you are led to believe) and one is bound to get caught up in the irrational exuberance and impulse of unconsidered buying. The same applies for auctions; simply don’t. Ditto buying at commercial galleries during what is considered high season—for me that is eleven months a year. Rather, engage in what I call Art4August, Get the dealers when they are down on their collective knees, or cash flow anyway. Turn the tables on the typical master slave relationship that is the norm when patronizing snooty art galleries. Summer collect! When business crawls to a near halt, vist spaces or reach out to dealers for jpegs. The art supply is more or less consistent whether its Calders or Colens; there’s always death, divorce, taxes and pruning in all seasons, and contemporary continues to be churned out at an alarming pace, I meant carefully and willfully created. Sure the rule still applies to buy what you love, but make sure you love what you buy—do diligence!