Signals Mixed on Outlook : For Some Investors, Appeal of Collectibles Has Grown

When the stock market started doing its wild dance two weeks ago, art dealers were anxiously unpacking their wares to sell at the New York Fine Print Fair, an annual exhibition featuring art from the 1500s through the 20th Century.

“This debacle occurred, and we were all scared,” said Michael Schwartz, owner of Galerie Michael on Beverly Hills’ Rodeo Drive. “What happened was amazing. People poured into the fair . . . and they bought the best things.”

While Schwartz was enjoying his most lucrative fair in 23 years as a dealer, back in Beverly Hills Galerie Michael was also having a record week, he said.

“All I can say at the moment is business is terrific,” Schwartz said. “I wish it was this good all the time.”

The stock market crash has meant worried moments for dealers in art, antiques and collectibles.

Many sellers of everything from fine paintings to old cars to stamps say it is too early to tell how their businesses will be affected by the plunge in stock prices. Some dealers say they have already benefited as investors pull their money out of stocks and the weak dollar draws more foreign buyers, while others have been hurt by the uncertainty surrounding the stock market’s problems. Some collectors say they plan to be more conservative in their purchases for a while.

And in the long term, if the stock market’s gyrations lead to a prolonged economic downturn, the discretionary income used to buy collectibles could well disappear, experts say.

In the 1970s, inflation pushed collectibles to outperform financial assets like stocks, bonds and Treasury bills, but that trend reversed in the 1980s. For the year ended June 1, the value of U.S. coins rose 10.7%, Old Master paintings had a 8.6% return, Chinese ceramics increased 6.7% and U.S. stamps inched up 0.5%, according to Salomon Bros. During the same period, stocks gained 20.6%.

Since the stock market’s plunge, signals on the outlook for art and collectibles have been mixed. Expensive, high-quality merchandise seems to be doing well, but lesser items in a variety of categories are collecting dust, many dealers said. Collectors are hoping the uncertainty will help bring down prices for fine art, which keeps setting records.

Among the 225 members of the Associated Antique Dealers of America, “sales are down, but good things are still selling,” said President Sonia DeLew.

At her Benecia, Calif., store called Trifles and Treasures, “the treasures are selling and the trifles stay. It used to be the trifles paid the rent,” DeLew said.

Only three days after Black Monday, a Gutenberg Bible from the Estelle Doheny Collection sold for $4.9 million, well above the predicted $1.5-million to $2-million range, to a Japanese book seller.

But at Christie’s in New York on Tuesday, about 25% of the contemporary works offered did not sell. In the world of fine art, the auctions this week and next at Christie’s and Sotheby’s in New York are being watched as a barometer of the economic future.

‘Middle Disappointing’

Under particular scrutiny is the sale of Vincent van Gogh’s “Irises,” scheduled for Nov. 11 at Sotheby’s. The painting is expected to sell for between $21 million and $39 million, which would not break the record $39.9-million auction price paid last March by a Japanese insurance company for Van Gogh’s “Sunflowers.”

At Christie’s auction Tuesday night, which brought in $7.8 million, “the top (price level) was very strong, the bottom was strong, but the middle had some disappointments,” spokeswoman Robin Riley said.

The dealers speculate that some buyers, particularly of high-end items, have taken money out of stocks to make their purchases. In addition, the weak performance of the dollar against most foreign currencies has made U.S. purchases cheaper for foreign buyers.

“The Japanese are in town and are very active in the market,” said Gilbert S. Edelson, administrative vice president of the New York-based Art Dealers Assn. of America. “The decline in the dollar for Japanese, German and Swiss (collectors) has been very good, so to some extent, they’re putting some life into the market.

“The overall tone continues to be good,” Edelson said. “Some people report that some deals didn’t go through” after the stock market crash. “How extensive that is, I can’t say. That is somewhat troubling.”

Fieldstone Co., a Newport Beach home builder with a growing collection of historic California paintings, said the stock plummet caused a re-examination of its art-buying program.

“We’ll probably take a more conservative approach to buying until things settle down,” said Mary Hendrickson, collection administrator for Fieldstone, which recently received a “Medici Award” from the Los Angeles Area Chamber of Commerce for its contribution to the arts. “We are in the business of building homes. That’s our first priority, and art comes second.”

But Eli Broad, chairman and chief executive of Kaufman & Broad and founding chairman of the Museum of Contemporary Art in Los Angeles, said he has no plans to cut back on purchases for the personal, foundation and corporate collections with which he is involved.

Photograph Sales Stable

“We never viewed art as an investment,” Broad said. “I would venture to guess we have bought as many works of art as anyone in the community and will continue to do so.”

Similarly, Security Pacific also has not changed its art buying policy. “We have been very aggressive in the last two years and we will continue that policy,” a spokeswoman said.

Sales of photographs “seem relatively stable,” said Kathleen Ewing, owner of a gallery bearing her name in Washington and president of the Assn. of International Photography Art Dealers. “We’ve seen some people moving away from making purchases, particularly in my area, which is contemporary photography.”

Among dealers of classic cars, “the consensus seems to be that it’s a little too early to tell,” said Bob Hall, associate editor of Old Cars Weekly. “Most seem to agree that people wouldn’t get into cars unless they had an interest in cars in the first place.”

Leo Gephart has been selling classic cars in Scottsdale, Ariz., for 35 years, and he figures “it will do the same thing it did in 1968 and ’74 and ’78. I think it will help the cars for a little while. It scares a lot of people into investing in other things” than stocks.

Sales are better than normal for this time of year, “and I’m thinking that’s part of it,” Gephart said.

Florence Theriault admits that she was nervous about an auction last Saturday conducted by Theriaults, the Doll Masters, an Annapolis, Md., company she owns with her husband, George.

Stamps Resilient

“We were very heartened and surprised to see the prices held up very well,” said Theriault, whose company, the nation’s largest doll auction house, last year sold a doll for a record $45,000. “We saw some hesitation, as we have for the last three years, on the lower end merchandise.” Stamp dealers have seen little change so far, probably because the type of expensive stamps bought by well-heeled investors make up a very small segment of the generally inexpensive hobby, said Michael Laurence, editor and publisher of Linn’s Stamp News, the world’s largest stamp publication.

“A typical stamp hobbyist spends a few dollars a week, and if he lost his job he would probably spend more,” Laurence said. “The stamp hobby had its greatest flowering during the depth of the Depression.”

But if the stock market turmoil were to bring on a recession, most types of art and collectibles probably would be hurt, said Marvin H. Newman, head of the Los Angeles office of Butterfield & Butterfield, a San Francisco auction house.

“If this drifts down and pervades the whole population, to the man on the street who doesn’t own a share of stock . . . then there’s trouble all over,” Newman said. “When that happens, our business is the first thing affected. The things we sell, people can well do without.”