Add a Splash of Color to Your Portfolio

Shirley M. Mueller, M.D.

Physician's Money Digest, March31 2005, Volume 12, Issue 6

Herb Fitzgibbon serves pastriesfrom his 1918 French artdeco sideboard at a smallManhattan diner in 2003. Ayear later, he sells the buffet for$70,750—a gain of $54,750 over hiscost. He earned 7.3% per year on a piecehe used every day. Though not as generousas the S&P 500 index (10.12%), hewas able to enjoy his asset.

Useful Investments

Making money on objects we utilize isa novel idea to most financial managers.Investors want their dollars to increase invalue, but forget that "use assets,"a specialinvestment category, usually costtwice what you can sell them for 1 dayafter you buy them.

For example, a beloved Baker diningroom set loses one half or more of itsvalue the moment it leaves the showroom. A carefully selected aged tableand chair set, on the other hand, can easilyaccrue in price, as well as be enjoyed.

It seems the only reason not to proceedin this direction is taste, immediatelack of funds for the older, more costlyobjects, or the presence of small childrenin the home, who can't yet respectelderly fragile pieces.

Artsy Diversification

Vintage furniture prices in Britain arebased on data from the Antique CollectorsClub. Between 1969 and 2004,prices outpaced the Financial TimesStock Exchange 250, an index that representssome of the largest companies onthe London Stock Exchange.

In the United States, we don't have acomparable guide, but we do have a fineart index. Finance professor Jianping Meiand management professor MichaelMoses created the database. Their findingsare based on painting sales atSotheby's and Christie's between 1953and 2003. The index has kept up with theS&P 500 over the past 50 years.

People have strong differing opinionswhen it comes to this subject.Bessemer Trust, a high-end managementfirm, asked Stephen Lash, chairmanof Christie's, to speak about thisissue at a conference several years ago.Lash explained that artwork should bepurchased because someone loves it,not as an investment.

Of course, there are many whoacquire art as a small part of their investmentportfolio. But this group is also welldiversified in stocks and bonds. They buypieces they love, let them accrue in value,and sell them at a profit, repeating theprocess again and again.

is a board

certified physician in neurology

and psychiatry, as well as an

investment advisor. She welcomes

questions or comments from readers

at mymoneymd@aol.com.

Shirley M. Mueller