OVERVIEW

While investing in art assets can generate significant returns, it requires a "private-equity" styled approach that includes hands-on involvement. Further investments are needed after the purchase of art assets, as well as considerable focus on research, public communication and other essential steps aimed at enhancing the value of assets purchased.

Simply purchasing art and then sitting back to enjoy the acquisition will unlikely generate significant returns; in fact, ownership costs will make such investments look more expensive by the day. Furthermore, the art market's poor liquidity and exorbitant transaction costs will most likely make passive art investments loss makers in the event that one is forced to sell quickly.

For rational investors who seek exposure to the art market without actually having to buy art assets, there is an optional investment strategy to consider. This strategy focuses on investment in Art Stocks - publicly-traded companies in the art industry.

In September 2005, Skate's Art Market Research began to identify companies whose revenues and profits are generated primarily from products and services related to the art market.

As of July 30, 2010 this segment showed a combined market capitalization of only USD 2.67 billion. A single company - Sotheby's - dominates the segment, currently contributing 68% of the segment's total market capitalization. Sotheby’s can accurately be considered a good proxy for the art stocks market.

Only four of the Art Stocks covered by Skate’s - Sotheby's, artnet, Artprice and Collectors Universe - have an active market for their shares.

Art Stocks (publicly traded companies in the Art Industry)