Art buyers: beware of so-called 'masterpieces'

Here is the story of an unusual art collector. He was active in New York some years back when he bought paintings by not-quite-successful artists in their late 30s and early 40s. He visited the artists in their studios, bought a dozen or so paintings from each at reduced prices, and then stored these pictures in vaults pending a hoped-for boom in their value.

A year ago, while going over his list of the roughly 500 paintings he had acquired this way, he noticed that the current prices of two of his artists had risen by almost 2,000 percent in one case and by almost as much in the other. Satisfied that these jumps in price were artificial and the result of high-pressure selling rather than of serious critical attention, he decided to sell these artists' work before their prices dropped to more realistic levels.

With very little effort he sold the two dozen paintings to private collectors for 17 times what he had paid for them less than 10 years before.

While it is unlikely that his profit will be as high on his other paintings, he will almost certainly realize at least a dollar for every dime spent on some of them and will at least double his investment on the rest.

This collector is a special case. Few investors have the time or inclination to research the field as he did, and even fewer have the money. Most have to make do with judicious gallery purchases and bargains picked up at out-of-the-way shops, antique stores, or country auctions.

Looking for undiscovered masterpieces, however, is a very popular activity these days. That lovely little "Renoir" with the $95 price tag hanging so invitingly in the corner secondhand store has probably had three ecstatic and then crestfallen owners in the past year.

The beginning art collector's worst enemies are greed and the wish to gloat over an exceptional discovery. Sure that a nondescript watercolor of palm trees selling for $75 is really a Winslow Homer worth $45,000, such collectors often ignore cautionary advice in order to preserve their fantasy of sudden wealth.

Even friendly help from known professionals is sometimes rudely brushed aside as was recently the case when an art appraiser was rebuffed by a young couple while trying to warn them that the Rembrandt etching for which they were bidding framed.

In both cases relatively little was lost, but there have been instances where considerable sums were thrown away because the buyer wasn't wary enough of the stranger insisting he had to sell his Matisse immediately, or because the buyer didn't insist that the Picasso drawing obscured by dirty glass be removed from its frame before purchase.

And it is unfortunately true that a little knowledge can be worse than none at all, for it is the little bit of art history picked up as a student which can turn every painting of a lily pond into a Monet, and every study of a somber clown into a Rouault.

So how does one go about buying and investing in art?

First, stop looking for miracles. No matter how lucky one feels, it is best to deal with known factors, with reputable dealers who handle up-and-coming artists, and with auction houses whose turnover includes every sort of art. The profit eventually realized may not be as spectacular as that made otherwise, but neither will the losses be as devastating should an error in judgment be made.

A potential investor should find out if he can trust his own judgment or if he needs expert help and advice. He should familiarize himself with as many galleries and auction houses as possible, ask questions, look carefully, compare , test himself against the experts -- anything to give himself a clearer insight into his ability to choose wisely. Only when he feels secure should he begin spending money.

In art, as in most areas, it takes money to make money, and that is particularly true if one is thinking in terms of spectacular profits. But if one has more modest goals in mind, a great deal can be done with relatively little money.

Prints are the best investment for collectors of modest means. While $500 won't buy much in the way of a painting, it is still a tidy sum where prints are concerned. Two major New York auction houses recently sold dozens of prints by artists of major reputations for that sum or under. For $5,000 one can start a solid print collection with a Durer engraving or a Picasso etching and still have enough left over for a nice Whistler or Jim Dine.

But beware of flashy reproductions by so-called artists who made their initial reputations as illustrators or as celebrities outside the field of art. Their names may be on everyone's lips, their signed and numbered reproductive prints may be selling at rapidly increasing prices, but their reputations were shaped more by publicity than by art and won't survive their own promotional material.

Keep in mind also that selling art is not as easy as buying it. A dealer will keep at least one-third of the price he can get for you, and auction houses charge between 10 and 15 percent.

One final piece of advice: Buy only what you like. That way you can't go wrong because enjoyment is profit too.