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Mei and Moses concluded that art trends had a low correlation with equity markets, and generally outperformed stocks. There is clearly a lack of consensus in art market historical return valuation, no doubt due to the youth of the analysis and lack of agreed-upon metrics. What we can safely conclude, though, is that art can be highly useful in a diversified portfolio due to its non-correlation with other asset classes and the obvious increase in demand for its investment potential. Below is another analytical graph developed by Mei and Moses highlighting the increased returns of portfolios that include art as a hedge:
Contemporary art investment surged after 2000 for several key reasons. The increasing sophistication of the investment community became comfortable with conceptualizing complicated financial vehicles such as derivatives and credit default swaps, that eventually accepted art as another commodity that could be valued and traded in a specialist market. The availability of capital increased, with wealthy private and institutional investors having more money at their disposal after the market boom of the late 1990s and increasingly willing to take on more risk and diversify away from traditional investment portfolio into new areas of investing, such as art. A third factor was the perception that existing portfolios were failing to keep pace with inflation, through capital appreciation or through revenue flow, and were easily seduced by the rising prices of the art market, the sustained demand, and the perception that demand would always outweigh supply. Art indices and increased coverage on prices and returns helped legitimize art as an attractive alternative investment in this regard. Finally, in an era that saw a significant increase in the number of wealthy individuals, art became an attractive means of signaling wealth and status, with buyer's preferences shifting to an emphasis on appreciation of culture in the new millennium.
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Arguments and reasoning cited directly are linked in the above text, but other works and articles drawn from include:
http://artmarketmonitor.com/2011/02/07/mei-moses-art-beat-sp-500-in-2010/
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