Researchers at the University of Luxembourg are warning of an overheating art market, one of the fastest-growing investment sectors of the past decade, after applying a new bubble detection method analysing millions of auction records.
Few sectors of the market have rebounded as robustly as art – particularly contemporary art, which has doubled in value since the beginning of the financial recovery following the 2008/09 financial market crisis.
Pundits on the side-lines have commented that such market growth is unsustainable, warning there is a bubble in the making that is sure to burst, as seen in the early 1990s and in 2008/09. Headline-grabbing sales of post-war and contemporary works for over $100 million appear to support this argument. But is a bubble really forming?
Market bubbles are generally defined as a dramatic escalation in the volume of trading in assets at prices that exceed their fundamental value, followed by a sudden collapse. Rational expectations put the fundamental value of an asset as equal to its expected discounted cash flow.
For most assets it is relatively easy to project this value – for example through dividends on stocks or rent on real estate. In the case of art, however, returns can rarely be correlated to costs of production.
To overcome this fundamental issue, Dr Roman Kräussl, Prof. Thorsten Lehnert and Dr Nicolas Martelin, all from the Luxembourg School of Finance at the University of Luxembourg, have used a new and direct statistical method of bubble detection.
They analysed more than one million auction records from the past 36 years, examining six major art styles.
They were thereby able to identify two historical speculative bubbles and find an explosive movement in today’s “Impressionist and Modern”, “Post-War and Contemporary”, “American” and “Old Masters” fine art market segments. In their research, published in the Journal of Empirical Finance, they conclude that today’s art market shows sign of overheating, raising the potential of a severe correction in the foreseeable future.
http://www.sciencedirect.com/science/article/pii/S0927539815001085 - Link to the publication
http://wwwen.uni.lu/recherche/fdef/luxembourg_school_of_finance_research_in_fina... - Personal page of Prof. Roman Kräussl
Britta Schlüter | idw - Informationsdienst Wissenschaft
Microtechnology industry is hiring – positive developments of past years continue
09.04.2018 | IVAM Fachverband für Mikrotechnik
RWI/ISL-Container Throughput Index with minor decline on a high overall level
20.03.2018 | RWI – Leibniz-Institut für Wirtschaftsforschung
Scientists at the University Würzburg and University Hospital of Würzburg found that megakaryocytes act as “bouncers” and thus modulate bone marrow niche properties and cell migration dynamics. The study was published in July in the Journal “Haematologica”.
Hematopoiesis is the process of forming blood cells, which occurs predominantly in the bone marrow. The bone marrow produces all types of blood cells: red...
For some phenomena in quantum many-body physics several competing theories exist. But which of them describes a quantum phenomenon best? A team of researchers from the Technical University of Munich (TUM) and Harvard University in the United States has now successfully deployed artificial neural networks for image analysis of quantum systems.
Is that a dog or a cat? Such a classification is a prime example of machine learning: artificial neural networks can be trained to analyze images by looking...
An international research group led by scientists from the University of Bayreuth has produced a previously unknown material: Rhenium nitride pernitride. Thanks to combining properties that were previously considered incompatible, it looks set to become highly attractive for technological applications. Indeed, it is a super-hard metallic conductor that can withstand extremely high pressures like a diamond. A process now developed in Bayreuth opens up the possibility of producing rhenium nitride pernitride and other technologically interesting materials in sufficiently large quantity for their properties characterisation. The new findings are presented in "Nature Communications".
The possibility of finding a compound that was metallically conductive, super-hard, and ultra-incompressible was long considered unlikely in science. It was...
An interdisciplinary research team at the Technical University of Munich (TUM) has built platinum nanoparticles for catalysis in fuel cells: The new size-optimized catalysts are twice as good as the best process commercially available today.
Fuel cells may well replace batteries as the power source for electric cars. They consume hydrogen, a gas which could be produced for example using surplus...
The fly agaric with its red hat is perhaps the most evocative of the diverse and variously colored mushroom species. Hitherto, the purpose of these colors was...
24.06.2019 | Event News
29.04.2019 | Event News
17.04.2019 | Event News
16.07.2019 | Physics and Astronomy
16.07.2019 | Power and Electrical Engineering
16.07.2019 | Information Technology