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It's Not Easy Diversifying a Portfolio with Antiques


Some investors prefer to put their money into an investment that they can enjoy while they hold it, such as art. However, while buying, learning about and exhibiting antiques can be pleasurable, making a profit can be problematic.

Being a Chinese antique is not all it’s cracked up to be.

There can be unexpected vicissitudes along the way, including total rejection. This is what happened to my seemingly very worthwhile 16th/17th century Chinese cinnabar lacquer container. I was assured somebody would desire it, which was true. Except he or she didn’t want to pay for it.

A large carved red lacquer globular box and cover. Ming Dynasty (Late 16th/early 17th century). It sold for 43% less in 2013 than the year before. In 2012, the Chinese buyer who bought it at auction did not pay for it.

I was left holding the bag. This is the story. I first sold the object at Christie’s New York at its March 22, 2012, sale for a very respectable price. However, my elation turned to confusion, and even sadness, when the Chinese buyer did not pay the auction house. This means Christie’s didn’t reimburse me. Instead, they held the box to resell it at their 2013 Spring Asian sale.

Of course, buyers do not know why the box is back on the market so quickly — they feel it is tainted. Its value was diminished. Though the box sold (again) in 2013, its sale price was 43% less than in 2012. Of course, I still had to pay the 12.37% seller’s fee and the $750 for “marketing,” which was really photography.

The good news is that the buyer did pay this time. I made about a 7.3x return from 1984 to 2013. During that time the S&P increased by more than nine times. Of course, if the first buyer had paid, my profit would have been 12.45x — better than the S&P.

Though it is true, that buying, learning about and exhibiting antiques can be pleasurable, buying them solely to make a profit, as some people do, may be more problematic.

Luck is one factor that no one can control.

Read more:

The Chinese are Buying! (Lacquer Box I — the excitement and anticipation of a sale)

The Chinese are Buying (They’re Just Not Paying!) (Lacquer Box II — the box is sold but the buyer doesn’t pay)

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Victor J. Dzau, MD, gives expert advice
Victor J. Dzau, MD, gives expert advice