This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

The Digital Skeptic: What If the Art Market Was the Model for All Markets?

Stock quotes in this article: BID

NEW YORK ( TheStreet) -- Ariane Lelong-Mainaud knows an artful way to teach our dysfunctional financial markets the difference between a bogus tweet and a real ticking bomb: Buy and sell stock the way we buy and sell art.

"The way art is bought and sold has not changed for centuries, maybe thousands of years," Lelong-Mainaud told me over a luxuriously slow Japanese meal. "There is nothing electronic. The auction house is in the middle. There is a buyer. There is a seller. There is a price. It's done."


Lelong-Mainaud has art in her blood. She's not only the president of the Paris-based Association Pour la Defense de L'Oeuvre of Joan Miro, she grew up in a family of gallery owners in a world of modern masters such as David Hockney, Francis Bacon and Louise Bourgeois as well as Miro himself.

In fact, she knew the artist well as a child; so well that -- without much exaggeration -- she can spot a fake Miro a mile away.

"People who own Miro bring me in to confirm they are real before they are bought or sold," Lelong-Mainaud said. "Twentieth-century art is much harder than older art to make a forgery. So it's very simple to tell if it is not real."

I asked what happens when she spots a fake: "I tear it up," she said flatly. "People cry. The picture may have been paid for with millions. But if it is a forgery, I destroy it."

This stone-cold sense of the real from the fake makes Lelong-Mainaud the go-to woman for authenticating Miro at the world's heavy-hitting art auction houses, including New York's Sotheby's (BID) and London's Christie's.

She will not comment on specific pricing, buyers and sellers. But my talks with her over the past several months revealed a rare, inner glimpse of the dark world of how prices are set, buyers are found and information is distributed in the roughly $50-billion-a-year worldwide art market -- which, by the by is as absurd as absurd gets by contemporary, digital information-based financial market standards.

Think about it: There is no underlying cash flow or enterprise value to price with art. No product revenues to factor in. In fact, there are really no products at all.


"Art's value does not come from an underlying asset or income stream. It's all about what the next person will pay for it," Marion Maneker, publisher at New York-based trend-tracker Art Market Monitor, explained to me over the phone. "That makes a large portion of the market private and unknowable. Yet it's interesting how many people are drawn into it."

1 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,804.71 -238.19 -1.40%
S&P 500 1,946.16 -26.13 -1.32%
NASDAQ 4,422.0850 -71.3050 -1.59%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs