2011 was admittedly a pretty volatile year for investing. It was up and down and up and down to the point that I felt a little bit sick watching my modest investments plummet and recover. But, the überinvestors, the Übermensch of the financial world, while no sympathy is necessary, were all over the place. If I lost 20% and then gained it back we are talking about $20 daily swings. For them, we're adding six zeros. On a daily basis! Again, I'm not advocating sympathy for these guys, just admitting my astonishment at that number.
All this market volatility has made speculators move from stocks and bonds into art and wine. I'll never understand collecting wine. Wine in my view is better or worse only when one tastes it. It's financial value is in some ways detrimental to its intrinsic value. Purchasing wine for collection purposes also has no instrumental purpose as it does not enhance the intrinsic value. If that $1,000 dollars worth of wine, say, a case of 1978 Léoville Las Cases sits only in a cellar and is never enjoyed for its intended purpose its intrinsic value is lost entirely. The buying and selling of wine for collection purposes only therefore destroys its intrinsic value and creates a purely artificial one. Artificial value is utterly meaningless, rendering wine pointless. But, I have digressed.
Art purchasing is something I understand a bit more. Fine art and fine art collectors have been around for nearly as long as each other. Generally speaking art investment is a good idea. In these financially tumultuous times, wealthy investors have turned to art as a safe haven. The contemporary art market has surged to a $1.7 Billion dollar industry this year, up 35%. Who tops this list? None other than our good friend Gerhard Richter. Richter set records at both Sotheby's and Christie's this year. Fair play Gerhard.
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