Economy

Art For All? You Can Now Own Micro-Parts Of Basquiat Or Banksy

A new platform called Masterworks allows individuals to buy shares of specific artworks in $20 increments. The platform capitalizes on the democratization of online investing, but is also a variation on a model that dates back a century.

Art For All? You Can Now Own Micro-Parts Of Basquiat Or Banksy

Banksy's Love Is In The Bin Offered at Sotheby's, September 2021

Kathryn Graddy

In the fall of 2018, a Banksy work, Love is in the Bin, sold for US$1.4 million.

Now the original buyer has put the work up for sale, and it's expected to fetch over $5 million – that would amount to a return of more than 250% on the original investment.

What if, instead of the art market's being the sole purview of the deep-pocketed, everyday people could buy shares of a pricy piece of art and sell the shares as they please? That's exactly what a new platform, Masterworks, seeks to do.


Art investment funds have existed for over a century. Masterworks, however, has put a new twist on an old practice, in that the platform allows individuals to buy shares of specific artworks in $20 increments. Investors can then sell these shares in an easy-to-use secondary market or wait until Masterworks sells the piece and receive pro-rata proceeds.

For nearly 10 years, I've taught a course on economics and the arts with art historian Nancy Scott. In this course, we spend time discussing the history and profitability of art investing, both in theory and in practice.

For those thinking of purchasing art purely for investment purposes, it's important to understand how art investment funds have traditionally worked, and whether experts believe it's a good investment.

The French pool their resources

An early art investment fund was called The Skin of the Bear (La Peau de l'Ours), which was based in France during the beginning of the 20th century.

The name comes from a French fable that contains the aphorism "never sell the skin of the bear before you've actually killed it" – the French equivalent of "don't count your chickens before they hatch" – and it alludes to the fact that investing in art can be a risky endeavor.

Partly intended as a means to support emerging post-impressionist artists, such as Picasso, Matisse and Gauguin, the fund was run as a syndicate in which a small number of partners each contributed identical amounts to purchase a collection of paintings.

Businessman, art critic and collector Andre Level managed the fund and arranged the paintings' sale. After the paintings were sold, he received 20% of the sale price for his work. The artists received 20% of the fund's profits on top of the money they received from the original sale. The investors would then receive the rest in equal proportions.

This concept – returning a proportion of the sale price to the artist – is known as the droit de suite, or artist's resale right. Versions of this are now law in most parts of the Western world other than the United States.

This first art fund was a success. It created demand for new artworks and supported innovative impressionist and modern artists, while providing a sizable return to its original investors.

A visitor at the Louvre takes a photo of the Mona Lisa

A tourist taking a picture of Mona Lisa at the Louvre, Paris — Photo: Kadir Celep

Not all funds are equal

Another famous investment in art was made by the British Rail Pension Fund.

This fund was established in 1974 to manage a small proportion of the company's employee retirement holdings, and the objective was to buy works of art over the course of 25 years before selling them off. The fund earned 11.3% in compound returns annually, but because of high inflation during much of that period, the actual gains were much lower.

Other notable art funds ended up as failures. Banque Nationale de Paris' art fund sold its investment in 1999 at a loss and a fund run by British art dealer Taylor Jardine Ltd. did the same in 2003. Britain's Department of Trade shut down The Barrington Fleming Art Fund in 2001 after determining it was set up under fraudulent circumstances. And Fernwood Art Investments, founded by former Merrill Lynch manager Bruce Taub, failed to even launch after Taub was found guilty of embezzling his investors' funds in 2006.

Nonetheless, there are art funds that are still in operation, such as Anthea and The Fine Art Group, and, of course, banks and auction houses have long described investing in art as a suitable diversification strategy for the wealthy.

But what do economists say about art as an investment?

Is it really a "floating crap game"?

Economic theory suggests that, by definition, investing in art could provide lower returns than investing in stocks. That's because it's thought of as a passion investment. Like investing in sports memorabilia, jewelry or coins, part of the return to investing in art ought to be the intrinsic enjoyment of the objects themselves. The total return consists of the monetary return and the enjoyment of ownership.

As stocks do not, for most people, provide this enjoyment value, the monetary returns to investing in these financial instruments should, in theory, be greater than the monetary returns to investing in art.

But it's important to actually analyze the numbers.

One of the very first papers on the monetary return of art investing was published in 1986 and written by the late eminent economist William Baumol.

The title? "Unnatural Investment: Or Art as a Floating Crap Game."

Baumol estimated the long-run inflation-adjusted returns to investing in art, over a 300-year period, to be just 0.6%. Some researchers have since estimated higher returns. For example, work by Yale finance professor Will Goetzmann and economists Jiangping Mei and Mike Moses found inflation-adjusted returns of 2% over 250 years and 4.9% over 125 years, respectively. Estimated returns vary based on the time period, sample and methodology.

Furthermore, these studies don't include transaction fees, which, when it comes to art, can be sizable, thanks to the hefty commissions charged by the auction houses or private dealers for serving as the middlemen. They also don't take into account sample selection; paintings that plummet in value often can't be sold at auction.

Both the Goetzmann and the Mei and Moses studies, however, estimate that the performance of the stock market doesn't seem to be correlated with returns on art investments. So there may be some benefit to investing in art as a way to diversify your portfolio.

Art for all?

Masterworks, however, is a bit different from the traditional art funds discussed above. Investors are buying shares of a single piece of art, rather than investing in a fund that includes multiple works. The price of entry is much lower, and, as long as there are willing buyers for the share of artwork, investors aren't locked into the fund for a particular time period. Investors can earn a return just by selling shares that go up in value, without waiting for the artwork itself to be sold.

But like the traditional art funds, investors in shares of art sold by Masterworks will make money if the price of their artwork goes up, and lose their money if it goes down.

Ultimately, Masterworks seems innovative and fun. The format will likely appeal to a younger generation of investors, many of whom may have started investing small amounts through apps such as Robinhood.

The site is easy to navigate and could provide some enjoyment – even I was tempted to dabble in buying some shares.

But should you hope to get rich from investing in art? Probably not.

Furthermore, unlike Skin of the Bear, it doesn't necessarily benefit emerging artists. Masterworks focuses on established works with a track record, by artists such as Banksy, Andy Warhol and Claude Monet, to name a few.

That being said, Masterworks could bring investing in art to a mass audience. But, caveat emptor: Art is a risky investment.

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food / travel

The True Horrors Behind 7 Haunted Locations Around The World

With Halloween arriving, we have dug up the would-be ghosts of documented evil and bloodshed from the past.

Inside Poveglia Island's abandoned asylum

Laure Gautherin and Carl-Johan Karlsson

When Hallows Eve was first introduced as a Celtic festival some 2,000 years ago, bonfires and costumes were seen as a legitimate way to ward off ghosts and evil spirits. Today of course, with science and logic being real ghostbusters, spine-chilling tales of haunted forests, abandoned asylums and deserted graveyards have rather become a way to add some mystery and suspense to our lives.

And yet there are still spooky places around the world that have something more than legend attached to them. From Spain to Uzbekistan and Australia, these locations prove that haunting lore is sometimes rooted in very real, and often terrible events.

Shahr-e Gholghola, City of Screams - Afghanistan

photo of  ruins of Shahr-e Gholghola,

The ruins of Shahr-e Gholghola, the City of Screams, in Afghanistan

Dai He/Xinhua via ZUMA Wire


According to locals, ghosts from this ancient royal citadel located in the Valley of Bamyan, 150 miles northwest of Kabul, have been screaming for 800 years. You can hear them from miles away, at twilight, when they relive their massacre.

In the spring 1221, the fortress built by Buddhist Ghorids in the 6th century became the theater of the final battle between Jalal ad-Din Mingburnu, last ruler of the Khwarezmian Empire, and the Mongol Horde led by Genghis Khan. It is said that Khan's beloved grandson, Mutakhan, had been killed on his mission to sack Bamyan. To avenge him, the Mongol leader went himself and ordered to kill every living creature in the city, children included.

The ruins today bear the name of Shahr-e Gholghola, meaning City of Screams or City of Sorrows. The archeological site, rich in Afghan history, is open to the public and though its remaining walls stay quiet during the day, locals say that the night brings the echoes of fear and agony. Others claim the place comes back to life eight centuries ago, and one can hear the bustle of the city and people calling each other.

Gettysburg, Civil War battlefield - U.S.

photo of rocks and trees in Gettysburg

View of the battlefields from Little Round Top, Gettysburg, PA, USA

Unsplash/@nemo23


Even ghosts non-believers agree there is something eerie about Gettysbury. The city in the state of Pennsylvania is now one of the most popular destinations in the U.S. for spirits and paranormal activities sight-seeing; and many visitors report they witness exactly what they came for: sounds of drums and gunshots, spooky encounters and camera malfunctions in one specific spot… just to name a few!

The Battle of Gettysburg, for which President Abraham Lincoln wrote his best known public address, is considered a turning point in the Civil War that led to the Union's victory. It lasted three days, from July 1st to July 3rd, 1863, but it accounts for the worst casualties of the entire conflict, with 23,000 on the Union side (3,100 men killed) and 28,000 for the Confederates (including 3,900 deaths). Thousands of soldiers were buried on the battlefield in mass graves - without proper rites, legend says - before being relocated to the National Military Park Cemetery for the Unionists.

Since then, legend has it, their restless souls wander, unaware the war has ended. You can find them everywhere, on the battlefield or in the town's preserved Inns and hotels turned into field hospitals back then.

Belchite, Civil War massacre - Spain

photo of sunset of old Belchite

Old Belchite, Spain

Belchite Town Council


Shy lost souls wandering and briefly appearing in front of visitors, unexplainable forces attracting some to specific places of the town, recorded noises of planes, gunshots and bombs, like forever echoes of a drama which left an open wound in Spanish history…

That wound, still unhealed, is the Spanish Civil War; and at its height in 1937, Belchite village, located in the Zaragoza Province in the northeast of Spain, represented a strategic objective of the Republican forces to take over the nearby capital city of Zaragoza.

Instead of being a simple step in their operation, it became the field of an intense battle opposing the loyalist army and that of General Francisco Franco's. Between August 24 and September 6, more than 5,000 people were killed, including half of Belchite's population. The town was left in rubble. As a way to illustrate the Republicans' violence, Franco decided to leave the old town in ruins and build a new Belchite nearby. All the survivors were relocated there, but they had to wait 15 years for it to be complete.

If nothing particular happens in new Belchite, home to around 1,500 residents, the remains of old Belchite offer their share of chilling ghost stories. Some visitors say they felt a presence, someone watching them, sudden change of temperatures and strange sounds. The ruins of the old village have been used as a film set for Terry Gilliam's The Adventures of Baron Munchausen - with the crew reporting the apparition of two women dressed in period costumes - and Guillermo del Toro's Pan's Labyrinth. And in October 1986, members of the television program "Cuarta Dimensión" (the 4th dimension) spent a night in Belchite and came back with some spooky recordings of war sounds.

Gur Emir, a conquerer’s mausoleum - Uzbekistan

photo of Gur Emir (Tomb of Timur) i

Gur Emir (Tomb of Timur) in Samarkand, Uzbekistan

Chris Bradley/Design Pics via ZUMA Wire


The news echoed through the streets and bazaars of Samarkand: "The Russian expedition will open the tomb of Tamerlane the Great. It will be our curse!" It was June 1941, and a small team of Soviet researchers began excavations in the Gur-Emir mausoleum in southeastern Uzbekistan.

The aim was to prove that the remains in the tomb did in fact belong to Tamerlane — the infamous 14th-century conqueror and first ruler of the Timurid dynasty who some historians say massacred 1% of the world's population in 1360.

Still, on June 20, despite protests from local residents and Muslim clergy, Tamerlame's tomb was cracked open — marked with the inscription: "When I Rise From the Dead, The World Shall Tremble."

Only two days later, Nazi Germany invaded the Soviet Union, with the people of Samarkand linking it to the disturbing of Tamerlane's peace. Amid local protests, the excavation was immediately wrapped up and the remains of the Turkish/Mongol conqueror were sent to Moscow. The turning point in the war came with the victory in the Battle of Stalingrad — only a month after a superstitious Stalin ordered the return of Tamerlane's remains to Samarkand where the former emperor was re-buried with full honors.

Gamla Stan, a royal massacre - Sweden

a photo of The red house of Gamla Stan, Stockholm, Sweden

The red house of Gamla Stan, Stockholm, Sweden

Unsplash/@hkblind


After Danish King Kristian II successfully invaded Sweden and was anointed King in November 1520, the new ruler called Swedish leaders to join for festivities at the royal palace in Stockholm. At dusk, after three days of wine, beer and spectacles, Danish soldiers carrying lanterns and torches entered the great hall and imprisoned the gathered nobles who were considered potential opponents of the Danish king. In the days that followed, 92 people were swiftly sentenced to death, and either hanged or beheaded on Stortorget, the main square in Gamla Stan (Old Town).

Until this day, the Stockholm Bloodbath is considered one of the most brutal events in Scandinavian history, and some people have reported visions of blood flowing across the cobblestoned square in early November. A little over a century later, a red house on the square was rebuilt as a monument for the executed — fitted with 92 white stones for each slain man. Legend has it that should one of the stones be removed, the ghost of the represented will rise from the dead and haunt the streets of Stockholm for all eternity.

Port Arthur, gruesome prison - Australia

a photo of ort Arthur Prison Settlement, Tasmania, Australia

Port Arthur Prison Settlement, Tasmania, Australia

Flickr/Eli Duke


During its 47-year history as a penal settlement, Port Arthur in southern Tasmania earned a reputation as one of the most notorious prisons in the British Empire. The institution — known for a brutal slavery system and punishment of the most hardened criminals sent from the motherland— claimed the lives of more than 1,000 inmates until its closure in 1877.

Since then, documented stories have spanned the paranormal gamut: poltergeist prisoners terrorizing visitors, weeping children roaming the port and tourists running into a weeping 'lady in blue' (apparently the spirit of a woman who died in childbirth). The museum even has an 'incidence form' ready for anyone wanting to report an otherworldly event.

Poveglia Island, plague victims - Italy

a photo of Poveglia Island, Italy

Poveglia Island, Italy

Mirco Toniolo/ROPI via ZUMA Press


Located off the coast of Venice and Lido, Poveglia sadly reunites all the classical elements of a horror movie: plagues, mass burial ground and mental institute (from the 1920's).

During the bubonic plague and other subsequent pandemics, the island served as a quarantine station for the sick and anyone showing any signs of what could be Black Death contamination. Some 160,000 victims are thought to have died there and the seven acres of land became a mass burial ground so full that it is said that human ash makes up more than 50% of Poveglia's soil.

In 1922 a retirement home for the elderly — used as a clandestine mental institution— opened on the island and with it a fair amount of rumors involving torture of patients. The hospital and consequently the whole island was closed in 1968, leaving all the dead trapped off-land.

Poveglia's terrifying past earned it the nickname of 'Island of Ghosts'. Despite being strictly off-limits to visitors, the site has been attracting paranormal activity hunters looking for the apparition of lost and angry souls. The island would be so evil that some locals say that when an evil person dies, he wakes up in Poveglia, another kind of hell.

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