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

Learning to slow down.
So how does the art market work when financial markets don't? Easy. Insiders confirm there is no digital-age attempt to nickel and dime the trading system with illusory, data-driven efficiencies.

Rather, the art market functions as any market really should: one deal at a time.

"The system works because the major galleries behave like market makers of the old New York Stock Exchange," Maneker explained. "They go out and buy work of artists they believe in. That gives investors the confidence that art will have value."

That process of actively protecting each trade slows trading down and lets participants separate the noise, such as fake tweets and flash crashes, from the value.

"The process moves slowly. Everyone can get in touch with their emotion for the art," Lelong-Mainaud said. "That way, the passion can come out in the price."

Considering the upside lurking in the art market, and the nightmare our financial trading systems has devolved into, how much worse would asset pricing and execution really be if equity trading aped art trading? That is, if stocks were exchanged in transparent trading servers supported by private market makers -- probably the issuing companies themselves?

In a world where Apple (AAPL) can make its own market in its own stock, what on earth do we need larger stock markets far?
This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.
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