In the early 2000s, The Oakland A’s baseball team did something unexpected:
It started winning.
The reason for its success? It used computer models to build the right team.
No more scouting for talent based on intuition. No more bias against pitchers who threw funny or looked funny. And no more favoring overpaid “stars.”
Just crunch the numbers and predict outcomes.
This successful strategy became known as “Moneyball.”
But now this strategy is being taken to a new market…
And for investors like you, it might be a great profit opportunity.
The Art Market
The market I’m referring is Art.
Currently, this market is very exclusive. It’s estimated that less than 10,000 investors are active participants worldwide.
But the low participation level isn’t due to lack of profits—on the contrary, certain investors in this market are earning twice the returns of stocks:
As Stanford University recently reported: “Art has been emerging as a new asset class for the well-diversified portfolio. The reported returns are enough to catch anyone's eye: the index of fine art sales, used by art advisors to sell art funds, shows an average annual return of 10% over the past four decades.”
Instead, the lack of participation in this market is due to high investment minimums, often as high as $1 million.
But now, an innovative new website is changing everything…
And it’s opening up this exclusive marketplace to you.
A Lucrative Corner of the Market
Investors in art are making fortunes nowadays:
Recently, for example, a Willem de Kooning paining, “Interchange,” sold for $300 million. So did a Gauguin oil painting, “When Will You Marry?”
These are the highest prices ever paid for a painting.
You see, thanks to hedge fund titans and wealthy citizens from China, Latin America, and the Middle East, billions of dollars are being injected into the global art market.
This is leading to an unprecedented rise in prices—and unprecedented profits.
Prices for Rodin sculptures and Dali paintings have gone up 3 to 4 times…
And prices for modern artists like Basquiat have risen nearly ten times.
Historically, making money in this market has been the sole provenance of wealthy collectors or well-connected art dealers…
But as you’ll see in a moment, now it’s your turn.
Buying Art Versus Investing in Art
If you’re anything like me, you’ve bought art before.
You see something you love, you buy it, you hang it on your wall.
But when you’re investing in art—when you’re actually trying to make money with it—it’s more complicated.
To invest in art, you need access to the right sort of deal flow…
You need an expertise in a specific artistic category…
And perhaps most importantly, you need significant capital.
Or at least, you used to need all these things…
A Website called Arthena
To solve these complications, a “crowdfunding” website called Arthena recently got started.
Arthena allows investors to pool together their capital, and invest it in investment-grade art.
Here’s how it works.
First you browse various funds that Arthena has put together.
For example, investors with a moderate tolerance for risk can invest in a “Blue Chip Artists” fund. And those willing to take a more aggressive stance can invest in a “Rising Emerging Artists” fund.
Once you find a fund you like, you invest a minimum of $10k into it.
The Fund will then use your capital, plus the capital of others, to acquire a collection of art.
When the Fund buys a new piece, Arthena stores it securely and insures it, and occasionally, you can “borrow” it and hang it in your home.
Then, after five years, Arthena will aim to sell the collection of art, and distribute any profits back to you. (As reported in The Wall Street Journal, the average holding period for contemporary art is two years—so five years seems like plenty of time to try and make a profit.)
And since Arthena makes money only when you make money (it makes 20% of any profits), your interests are aligned.
But how do the pieces of art get selected?
That’s where Moneyball comes into play.
Moneyball for Art
Just like the Oakland A’s used data science to put the best team together, Arthena is using data science to find the best investments in art.
Specifically, it looks at a multitude of factors including an artist’s commercial success and the year of an artwork’s creation. Then it combines that data with an analysis of art auction results to predict a piece’s likely return on investment.
Basically, this is a quantitative strategy for the art market…
This is “Moneyball” for Art.
As Business Insider recently reported, "What [founder and CEO Madeleine] D'Angelo is building is an entirely new way to be an art collector, one that lets go of the ego contests of old, and is built for the digital age."
And with the help of this technology, now it’s your turn to capture some of the art world’s profits.
Because of the $10,000 minimum investment, and because only “accredited” investors (those with at least a $1 million net worth or $200k in salary) can invest in these funds, this deal won’t be for everyone.
Hopefully, Arthena will offer a lower entry point for all investors soon. We’ll keep you posted about that.
In the meantime, however, here are a couple of options that allow non-accredited investors to seek out art world profits:
Sotheby’s (NYSE: BID), which specializes in auctions of fine art…
Or even eBay (NASDAQ: EBAY), which has a partnership with Sotheby’s, as well as a Collectibles & Art section of its own.
Please note: Crowdability has no financial relationship with Arthena, Sotheby’s or eBay. We’re an independent provider of education, information and research on start-ups and alternative investments.