Tom on Japan
Japanese Prints for Investment? – Part I
Should you buy Japanese prints for investment? The answer almost invariably is—don’t do it. If you buy Japanese prints because you love them rather than expect to make money, it’s hard to see how you can lose—assuming you’ve done at least a little research before buying. Hopefully these articles will help on that score.
Even assuming you buy prints in reasonably good condition with both interesting subject matter and a good print impression taken from the inked woodblock—and you work exclusively with reputable dealers—the odds of making a profit are poor. That’s true even if you have the means and dealer relationships often necessary to purchase high–quality, hard-to-find prints—although here the odds improve from awful to merely not great. There are meaningful exceptions to this viewpoint to be sure, and we’ll discuss them, but first let’s look at the main reason for doing your investing in some other sphere.
The Dealer Markup Hurdle
That reason can be expressed in two words— dealer markup. If you buy stocks, bonds, or non-numismatic gold or silver coins, the difference between what you pay for the investment and what you get if you turn around and sell it back to the dealer typically is a few percentage points at most. You can easily overcome that cost differential if the trend runs your way and you don’t need to sell tomorrow. But purchasing collectibles is a very different story.
Dealers in collectibles like Japanese prints—or rare books antique furniture, old clocks—bear special risks which don’t normally apply to commodity items like blue-chip stocks or American Eagle gold coins. For one thing dealers may have to hold onto any particular item for a while before it sells. That entails risk which can’t always be mitigated with insurance. Physical deterioration of objects with the passage of time, handling–related accidents within the shop, changing taste in the marketplace, market oversupply due to liquidation of a large estate—particularly with respect to somewhat rare or unusual items—must be factored into dealer prices.
Then there are the financial costs of holding print inventory—such as insurance, interest on financed inventory, and rent on office or other space necessary to keep sufficient supplies of inventory on hand. Not to mention all the other costs required to run a business. And of course let’s not forget dealer profit margin, which makes staying in business worthwhile and puts bread on the table. Clearly dealer prices must reflect a whole lot more than the prints’ purely intrinsic value.
To put it in practical terms, every dollar spent on prints may return only twenty-five to forty cents or less if they’re turned around for resale to a dealer shortly after purchase. By way of contrast a dollar invested in stocks or bonds may return ninety-eight or ninety-nine cents if immediately sold back to the dealer firm. Of course you’re not going to do this, but we mention it to demonstrate the illiquid nature of collectible markets.
Another thing. Reputable dealers have a huge contact network which assures first look at highly desirable prints. They’re invited to bid at substantial estate auctions you’ll never hear about.
Your Investment Risks
And if all this isn’t enough consider your own risks, which in some cases are the same as the dealers’. Prints you own also are subject to risk of physical deterioration with passage of time, insurance costs, and changing market fashions. Plus, and a lot more so than with dealers, you’re going to look at and handle your prints as well as show them to family and friends. So depending on how often you do this, they’ll be exposed to excessive light if you’re not careful—and to rubbing, soiling, creasing and tearing risks. (Read our articles on “Protecting and Displaying Prints.”)
So you can see what you’re up against if you hope to make a profit investing in prints.
But now let’s take a contrary view and see if we can poke some holes in the foregoing’s overall conclusion. First, please understand that what’s written here is general commentary only, none of which is intended as formal investment advice. For that you’ll need a professional investment advisor to look at your own personal situation and help you determine your own financial capabilities and capacity for risk taking, or you’ll need to take those burdens upon yourself.
At least in theory, and despite everything we’ve said so far, it is possible to make money investing in prints. Problem is, any gain is unlikely to happen quickly, and may need to wait for future generations if it ever happens at all. This in fact is mostly due to the factors discussed above. But it is possible that the dealer markup might be overcome given enough time.
Key Investment Considerations with Prints
If you’re going to have even a remote chance at eventual investment success consider these points:
Inexpensive, abundantly available reprints from the post-World War II era are unlikely to appreciate much, if at all. (NOTE: sometimes you’ll see the term “re-strikes” instead of “reprints.” In common parlance the two terms are used interchangeably.)
- Prints in poor condition or with poor impressions from the inked woodblock are not very good bets.
- Prints by the best-known, most loved artists are the safest bets. Gambling that particular lesser known artists will become market favorites at some future time is just that—a gamble.
- Quality reprints from the Meiji and Taisho eras (mostly late 19th Century through the mid-1920s) are a good place to look if long-term investment is a goal. By “quality” we mean well known or interesting subject matter, good condition and good impression.
- Trimmed margins detract from value, especially if the trimming went beyond the margins into the subject matter itself.
- On the other hand wider margins—especially those which contain seals of one kind or another such as a censor’s seal—are a definite plus factor.
- Quality reprints by the original publishers—such as Hoeido descendants or Uo-ya Eikichi—both Hiroshige publishers—are good bets for the long term.
- Quality lifetime prints from original blocks—most especially first edition prints which can be documented as such—are very good bets for the long term.
- Original 18th Century prints in “decent” condition, as well as reasonable-quality originals by 19th Century superstars like Hokusai and Hiroshige, also are very good long–term bets. But prices on fine condition prints here can be stratospheric.
- Quality reprints by 20th Century portrait masters Hashiguchi Goyo and Torii Kotondo have appreciation potential, although these reprints aren’t widely available in the Japanese print marketplace. When you do see them, you’ll find prices generally in the $500-$1200 range, depending largely on particular subject and condition. Each of these masters produced a very limited number of designs, with limited print runs in limited quantities. Particularly rare or highly desirable design originals in relatively good condition easily can sell in the tens of thousands of dollars.
FULL DISCLOSURE: The writer owns prints of each artist mentioned in this list, and owns both investment-grade and non-investment-grade prints.
In the next article we’ll continue this discussion. We’ll weigh the pluses of Japanese print investment against the minuses we’ve discussed here in Part I, and reach a conclusion. Stay tuned.
© 2014 Tom Silver