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The next crash will be…

Sometimes we tell people with unrealistic expectations that they live in a bubble, disconnected from the real world and only able to see it through a distorted film. Over the last ten to fifteen years or so most of us have lived in successive bubbles. Will we ever learn? Somehow I doubt it because the next bubble is already upon us.

What bubble is that, I hear you say? Well, there are very few asset classes left to create a bubble out of. In the 1990s we had the stock market dot com bubble. When this burst money poured into real estate property and house prices went through the roof. When this crashed it also hit the stockmarket again which had grown on top of another bubble, the commodity price bubble which crashed last year – but this time the bond market crashed too because so called safe investments turned out not to be so safe after all. 

Meanwhile, the art market was rapidly inflating a bubble all of its own. Just think of the ridiculous prices that have been paid for paintings, antique furniture, sculpture and even “performance art” that lasted for but a moment. We moved from a time in which the work of an artist was always affordable while they were alive but rocketed after their death to a time when Damien Hirst could sell a skull encrusted with diamonds for a reputed £50 million! Not so long ago he broke some more price records. Wikipedia:

In September 2008, he took an unprecedented move for an artist of his status by selling a complete show, Beautiful Inside My Head Forever, at Sotheby’s by auction and by-passing his long-standing galleries. The auction exceeded all predictions, raising £111 million ($198 million), breaking the record for a one-artist auction as well as Hirst’s own record with £10.3 million for The Golden Calf, an animal with 18-carat gold horns and hooves, preserved in formaldehyde.

Trust me, this sort of largesse always appears before a crash, so if you have made good profits from Art in the last five years, cash in now because prices are due for a fall.

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