Letter from the Director

Looking at the results of the November Latin American auctions at Christie's and Sotheby's there doesn't seem to be too much that happened that wasn't foretold in this column in our last mam/fa newsletter. It was really just a matter of when the prices would come down and howmuch.

The May, 1995 auctions went pretty well and certainly the record breaking dispersal of the IBM collection which included some masterpieces of Mexican art (a rare Frida Kahlo Self Portrait, a famous Diego Rivera, Dance in Tehuantepec) had the effect of masking the real problem, which is that many of the biggest Mexican buyers are ­ at least for now ­ big sellers. Both Sotheby's and Christie's had in their vaults a number of Mexican paintings sent up to collateralize cash loans in the first quarter of 1995, when the biggest devaluation occurred. Many of the owners of these paintings hoped to pay off these advances when things got better and retrieve their pictures. Unfortunately things did not get better, and although most of these pictures did not come up for auction in May, they did indeed hit the block in November. The result was predictable; a glut of blue chip Mexican paintings, expecially by internationally saleable artists like Tamayo, Rivera and Gerzso, flooded the market and the buyers selected out the ones that interested them and left the others begging. Many of these good but not great paintings bore estimates that reflected the market a year ago, but the buyers who contributed to those high prices a year ago were out of the market. Now it is not the case that Mexicans are the only buyers for Mexican pictures (although in good times they are the backbone of the market) but what occurred in those auction sales was a refusal by the other buyers ­ Americans, Latin Americans and Europeans ­ to pay prices that largely represented the reserve (or seller's idea of the right price). After the first ten or so works went unsold at Christie's auction (Christie's went first this time) buyers simply sat on their hands when they thought something was overestimated and competed only when they felt a work was of high quality and the estimate was realistic. Sotheby's had an advantage in going second, since their experts had 24 hours to telephone sellers who had high reserves and try to get their minimums down. Still, many lots went unsold, some of them high quality works with overly ambitious estimates (the late Diego Rivera Maternidad is a case in point, and also the 1956 Vendedoras de Flores by Tamayo), and other good, but not exceptional, paintings which bore 1994 style estimates. Factor in to this that there were at both houses combined at least twenty five works by Tamayo, a count that would put a strain on an artist's market in the best of times.

One thing that I observed ­ as pictures that had been bought four years ago were in many cases being resold for 30 to 40 percent less than their cost ­ was that many of the auction goers in the room were witnessing a down market for the first time. Many collectors of Latin American art, both American and Latin American, have come into this marketin the last seven years. Many non-Mexican new buyers of Mexican pictures have witnessed the extraordinary rise of interest in works by such artists as Rivera, Tamayo, Kahlo and Gerzso, and have started collecting these works without ever having seen a correction in the market. I found that the effect of this realization on the collectors was not to discourage them but to excite them. Many people called me after the auctions and spoke to me of the opportunites they felt were opening up to them because of the "failure" of the sales. In my own gallery we were busier in a ten day period than we had been in the past ten months and we sold extremely well in all price ranges. It was as if a dam had burst! Collectors perceived that it wasa buyer's market and they started buying! But they were only interested in good quality, at the correct price. What can we learn from all this?

First, rumors of the death of the Latin American market are premature. The market is alive and well but it is just that, a market, and it goes down as well as up.

Second, it is not true that the Mexicans are not buying. They are, and I personally executed bids in behalf of Mexican clients in amounts of hundreds of thousands of dollars. They are not, however, buying mediocre paintings at inflated prices, and this should be good in the long run, because auction estimates next spring will undoubtedly be much more conservative, as both auction experts and prospective sellers adjust to the reality of lower prices.

As always the same advice pertains: Buy good quality. Pay correct prices. But be aware that just because something is cheap doesn't mean it's a bargain.

M.A.M., winter 1996