A 'Dow Jones' index pegs running values in art

Jeremy Eckstein looks at everything from English silver to Chinese ceramic plates and tries to find a bottom line.

As an art market analyst at Sotheby, Park, Bernet, the world's oldest and largest fine arts auction house, he's in charge of the company's latest attempt to peg art values onto an index.

It's not an easy job, considering the fuzzy nature of art prices. Even in the fast shuffle of an auction house like Sotheby's -- which moves about 400,000 pieces of art a year -- it's hard to say exactly what a single piece is worth at any moment.

Mr. Eckstein likes to compare the art index to the Dow Jones averages of Wall Street trading, but he admits it doesn't give the kind of information investors can deal on.

''You can't say, as you can of the Dow Jones, it's up 10 points, so I'll phone up the broker and tell him to buy or to sell,'' Mr. Eckstein says. ''It's no more than a good, reliable general indicator.''

He says the purpose of the index is to prod investors who might otherwise shy away from buying art -- by giving some idea of what is or isn't a good deal. In addition, the index is meant to remind collectors of the need to treat their art as an asset.

''We've found that far too many people, even though they may have an enormous amount of business acumen in other respects, don't appreciate the changing value of their collection,'' Mr. Eckstein says.

To tackle the task, he sliced the art market into 12 categories, such as American furniture, English silver, and Old Master, Modern, Impressionist, and Post-Impressionist paintings. Within each of these groupings, Sotheby experts in New York and London selected a typical market basket of artworks, done by a variety of artists.

The number of pieces in a basket depends on the complexity of the category. Old masters, for instance, include 65 paintings in five subgroupings. But for ceramics from the Continent, only 25 pieces were picked.

Every week, the going rate for each piece in a category is updated by the experts and a price tag for the basket tallied. Sometimes, when action in the art markets is slow, there may be no change.

The index, Mr. Eckstein explains, changes whenever something happens in the art world which might alter the value of a piece of art in the market basket, ''be it an auction sale, known dealers' prices, or known private sales.''

Prices in all 12 categories are also pulled together into an aggregate index. This combined index uses 1975 as a base year and assigns weight to each category according to its importance in overall trading.

The index has been published in Barron's, a weekly financial paper published by Dow Jones & Co., since November. By having the index appear in Barron's, Mr. Eckstein says, it's aimed toward the United States and ''helping to bring works of art into the overall business consciousness -- it's a prompter, a reminder.''

But some experts question the value of the index. ''Inevitably, their judgment must be colored by the fact that they're in the business,'' says Conor Fahy, a stockbroker with the London firm of Teather & Greenwood and specialist in the fine art trade.

The trouble with any kind of art index, Mr. Fahy says, is that no two pieces of art are the same. So measuring relative value from one week to the next is sure to have pitfalls. Still, he admits the Sotheby index is ''useful, because it's the only thing we've got and certainly the best so far.''