Asset Trip with Masha Golovina: How Masterworks' Head of Art Acquisitions Chooses Paintings to Invest In
Published Oct 28, 2021•Updated Feb 22, 2022
So let's kick it off with what you do at Masterworks and how you got into the world of fine art investing.
I head up acquisitions for Masterworks. So, I head up the team that sources the paintings that actually make it onto the platform and become available for investors to participate in. And prior to this, I was at Christie's for four years. Prior to that, I was at Citigroup, and I've always just been interested in the intersection of art and finance. I double majored in art history and econ. And it's a great place to be for people who love art but are also quantitatively minded.
Positions Prior to Masterworks:
Christie's Auction House and Citigroup
First Investing Platform:
Rothko's No. 14
Other Alternatives She Invests In:
What was it that sparked your interest in those things? Was it when you were in college?
No, I mean, I've been interested in art since I was a child. I came from a family that really appreciated art. They didn't collect or anything, but yeah. I grew up going to museums and such.
And what do you look for when you're sourcing artwork for Masterworks? What is it that makes you believe "oh, this is going to hold value or appreciate in value"?
Well, we really just focus on the blue chip segment. So in terms of holding value, that's where we look, to paintings by artists with an established track record. And then within an artist's body of work, we look for paintings that are really representative of what we consider their mature style—the one that they're most recognized for, or what makes them unique and important, historically speaking.
It's a great place to be for people who love art but are also quantitatively minded.
And what kind of value do you see art providing as an asset class that people can add to their investment portfolio?
So, art is really interesting because it's uncorrelated with just about every major asset class, including the S&P —very light correlation there. And from an investment perspective, that's interesting because at the same time in the last 20 years, it's outpaced growth in the S&P. So this is really why we find it to be one of the most interesting, basically unsecuritized (up to this point) assets.
From a broader macro economic standpoint, what we see blue chip art prices influenced by on a grander scale is the wealth creation, the top 1%. As highlighted by the pandemic, we have seen a tremendous amount of wealth creation over the last two years, and we also see art prices continuing to move up. And from a long-term economics perspective, it seems that this is part of a larger trend, and it's not just isolated to these last two years. So, generally speaking from an investment thesis standpoint on art, that's really where we're coming from.
And do you see art as a good investment for just about anyone or for a particular type of investor?
I mean, you have to remember that these are illiquid. We advise 3 to 10 year holds, so I would say that for each person, their portfolio should reflect their personal risk tolerance and financial goals. Art could be right for someone that wants to focus on really long-term, uncorrelated gains versus somebody who needs more assured liquidity in the near to medium term. [The latter] should probably think very carefully before investing in an illiquid asset, whether that'd be art or something else.
Do you think it's worth it for investors investing fairly small amounts of money to branch into art investing or is it more for larger investors?
I mean, that's really hard to say because for each industry it's so individual. It really depends on someone's goals. If they're just interested in branching out into alternatives broadly speaking, then art should definitely be on their radar. But I can't speak to how much the broader public can invest without actually knowing somebody's personal goals. It's difficult to put this in a one size fits all recommendation.
For investors who are branching out into alternatives and considering art as a possibility, do you have any advice for getting started in this asset class?
Do your research. You know, we've done a number of reports with Citigroup and other banks. So I would say you should definitely be reading, doing some of your own research, and just figure out, long-term, what your goals are and how art can fit into that.
I know Masterworks acquires blue chip art. Do you see any value for investors in investing outside of blue chip art?
I mean, that's a little bit harder because you get into the range of more speculative investments, right? I like to make the analogy: There's investing in art that's more like blue chip art, and then there's investing in art that's more like investing as a VC [venture capitalist] where if you're going out and looking for young artists, or the hot new thing, I'd say you're playing the numbers. Most of the paintings you buy won't be worth very much in 5 or 10 years. Whereas if you're buying blue chip art, you're limiting your downside risk, much like you would if you're buying blue chip Fortune 500 stock or buying into a company that has a proven track record.
The proliferation of all these new investment platforms, and especially ones that allow things like fractional ownership, opened up access to a lot of asset classes for so many more investors. How are you seeing these platforms change the investing landscape?
All of these platforms are really democratizing investments and making them available to a broader public. I think that's really the number one effect that all of these platforms are having.
To talk a little about your personal history with investing, I'm curious if you remember when you got started investing and what your very first investment was.
It would've been something on E-Trade, probably like Apple. You know, outside of a 401(k) that's automatically invested, I think that's probably the first thing I bought in the stock market, like a decade ago.
Do you remember how old you were when you first started investing?
Like in my mid twenties.
Do you invest in any alternatives outside of art? Are there any alternatives that you've thought about investing in?
As an employee, we're not allowed to invest in paintings on the platform, unfortunately. But I personally am more traditional in how I invest. You know, I think everyone has a little bit of money in crypto now, and that's not very niche these days. But that's probably the most alternative type of investment I own.
What are your own personal goals for investing? Are you looking strictly at the long-term? Are you looking to make passive income?
Long-term. That's the goal.
If you could go back to age 18 and give yourself investing advice, what would you say?
I would say just start investing as soon as possible. And then, read the literature. And I've read a lot of it, from economics classes and finance classes. And it's funny because you read it and then you don't always take it to heart until you've made a couple of mistakes. So, do things in a tax efficient manner—in other words, you don't need to really sell anything until you need to get liquid, or unless you see an opportunity that will give you better returns. And then the other part is that you have to really take to heart what you learned in high school and college about compounding returns. That's really what drives long-term success in investing.
Great advice. To close things off, do you happen to have a favorite work of art or a favorite painting?
I grew up going to the SF MoMA [San Francisco Museum of Modern Art], and they have this amazing Rothko. This isn't a painting on the [Masterworks] platform to be clear. But they have this amazing Mark Rothko painting that is in their permanent collection titled No. 14 from 1960. And I just love coming back to it over and over again. And I feel like I've lived with it my whole life, even though it's obviously in a museum, but I've been going there since I was six or seven. So it's just something that always feels like home.
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- Masterworks: Invest in paintings by the best-selling artists of all time. Masterworks is the first company that lets you buy shares in great masterpieces by artists like Banksy, Warhol, and more.
- Gemini: Gemini is a simple, elegant, and secure platform to build your crypto portfolio, whether you’re an experienced trader or just getting started.
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