Art. The fools have stopped being born.
A trillion dollars of art is about to change hands and there may not be enough buyers on earth to take it. Every price was a bet on a greater fool.
THE GIST ON ART: "The Greater Fool"
What is the great wealth transfer?
Art worth a trillion dollars is about to change hands. It's the greatest wealth transfer in human history, and there are not enough buyers on earth to take it. Because every price is a bet that a greater fool is coming, and the fools have stopped being born.
How did the market grow?
Boomers were the biggest and richest generation in history, and the art world built itself to serve them. Galleries quadrupled in a generation. When the supply of famous artists ran out, the market just minted more. In 1988, there were just under 8,500 artists worth selling at auction. By 2012, there were 90,000, because the money needed somewhere to go.
What is the greater fool theory?
Any price is fine as long as a greater fool comes along later to pay more. For 50 years, the fools kept arriving, richer every decade. Now the buyers are dying off and their kids are demonstrably poorer than their parents. If they're buying art, where are they putting it? They haven't got houses.
Where is the art now?
Even museums are refusing donations, and there's a free port in Geneva with 1.2 million works of art hanging in stasis, unsold. The valuation rests on the last paid price, and as long as nothing sells, the house of cards stays up.
This isn't a matter of if, it's a matter of when. At some point, there will be an auction that reverses 50 years of collecting in one afternoon. And it's happened before. Victorian paintings were the priciest on earth, their buyers died and the market collapsed.
Is art the only boomer asset?
The same question is sitting under the most boomer asset of all: houses. The entire generation bought them expecting a bigger, richer buyer to come afterwards. No one's checked that bet either. Do you think it's a matter of if, or a matter of when?
Is expensive art worth the price?
Your take. One tap, then see how everyone else voted.
Quick answers
What is the greater fool theory?
Any price is fine as long as a greater fool comes along later to pay more.
How many artists were worth selling at auction?
Just under 8,500 in 1988, and 90,000 by 2012.
What is in the Geneva free port?
1.2 million works of art, hanging in stasis and unsold, while the market keeps leaning on the last paid price.
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