The Ethics of Investing in the Art Market – The Catalyst

February 10, 2023 | OPINION | By Saigopal Rangaraj

So, your life savings are in the dumps after the crypto crash, and the bear market currently plaguing your 401(k) means that you probably won’t retire anytime soon. If you are in Colorado College’s investment club or are another Crypto Bro, you are probably looking for somewhere to invest your daddy’s money. Fear not: I shall take you down the rabbit hole of investing in art, an arena that was once the playground of the rich and famous but is now open to more people due to the propagation of fractionalized art trading.

The art market was worth over $65 billion in 2022. For the most part, this market is dominated by large auction houses that sell pieces to wealthy clientele who are looking for another way to blow their cash. At least, that’s what it looks like from the outside.

The rich have consistently used the art market to find new ways to store their wealth, write off taxes through donations, and engage in all forms of shady financial manipulation. This market has largely been off-limits to all but the upper echelons of society due to the high unit prices of individual art pieces, but one man had a vision to change that in his pursuit of profit.

In 2017, Scott Lynn founded a company called Masterworks, an art investment platform that allows people to invest in fractional shares of investment-grade artworks by various artists such as Banksy, Basquiat, and Picasso – yes, Pablo Picasso. In essence, instead of having to cough up $20 million or so for one of these masterpieces, the average investor can buy shares of various paintings in much more palatable $500 chunks and then reap the rewards when the artwork appreciates in value and is later sold.

The fractionalization of art into shares has democratized the art market in a similar fashion to how Robinhood and other startups allowed retail investors to take over the stock market. It is now much easier to invest in art than ever before… but should you?

This past Thanksgiving, Zoraiz Zafar ’25 and I took a trip to Los Angeles to explore this question. We set out to understand what the ramifications of widespread art investment would mean for different communities that find themselves producing, consuming, and studying art.

Our journey took us to art museums, auction houses, and public murals, where we asked people what that art meant to them. What we found were opposite worlds that highlighted both the ruthless precision of art trading, as well as the symbolic power that art has to unite and empower communities in public spaces.

On one hand, being able to trade art empowers artists to create a revenue stream from their passions and to earn a stable income. Many have looked down on art as a profession due to its limited earning potential, and the ability to widely trade art could address this shortcoming in the way we compensate creative professions. Moreover, art oftentimes expresses real emotions of individuals and communities. Being able to invest in art allows more people to empower the artists who they support and value, helping underrepresented creators to see the limelight.

Unfortunately, ruthlessly trading art oftentimes strips pieces of meaning and value. Many works of art highlight moments of collective trauma such as the Black Lives Matter protests, or showcase works of underrepresented communities whose works have long been underappreciated. Trying to place a monetary value on these pieces of art risks disconnecting symbolic works from the communities that attach the most meaning to the art.

A lot of symbolic art pieces have been bought by private collectors and taken out of galleries and other public spaces to instead adorn the walls of mansions. This worsening trend represents a loss for communities and art enthusiasts alike with fractional art trading only compounding the problem further.

As with any investment, it is crucial to do research into the financial viability of the asset you are investing in. However, assessing the feasibility of art must also include deeper research into the downstream impacts of that investment. Investing in art is an exciting new frontier that can empower artists, rebuild your net worth, and revitalize underrepresented communities. However, it also risks robbing those very communities of their art, stripping it of emotion in the pursuit of profit.