THE DA VINCI FACTOR

By Teeka Tiwari

HOW TO BEAT THE STOCK MARKET BY 3X WITH “UNTOUCHABLE” COLLECTIBLES

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As you may have noticed, the collectibles market is booming right now…

Recently, a LeBron James rookie basketball card sold for $5.2 million…

A $5 (yes, $5) 1822 half-eagle gold coin was snatched by a collector for $8.4 million…

And, get this…

A new form of collectible – 100% digital – just sold at an auction for a staggering $69 million.

Forbes reports the market for these digital collectibles has absolutely exploded 1,785% since January.

But despite this new boom, few people know about a special category of “Untouchable” collectibles that the super-rich are pouring their money into.

They’ve been tucking away a good chunk of their wealth – 5% on average – in a place that’s traditionally been way out of reach for regular folks…

I’m talking about rare fine art.

For centuries, in fact, the rich have used art to grow their fortunes and increase their status.

For example, did you know wealthy investors in Renaissance Italy were the driving force behind some of history’s most iconic masterpieces?

Take Da Vinci’s Savior of the World (pictured at right)…

This painting – once sold at an auction in 1958 for just $72 – was recently snatched up by a Saudi billionaire for a staggering $450 million, according to Bloomberg.

From $72 to $450 million. That translates into a 624,999,900% gain.

Of course, not every painting is a Da Vinci or a Van Gogh… and that increase happened over a very long period of time… so you can’t expect these kinds of numbers every time.

However, over the last 25 years, fine art from famous contemporary painters has consistently beaten the stock market by nearly three-fold.

That’s a huge difference. Three times better than stocks. Even in a record bull market.

THE DA VINCI FACTORHOW TO BEAT THE STOCK MARKET BY 3X WITH “UNTOUCHABLE” COLLECTIBLES

By Teeka Tiwari and Nilus Mattive

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But art can also act as another way to bulletproof your portfolio. Since 1995, it’s trounced other conventional “safety hedge” investments like gold and real estate, which have returned 366% and 195%, respectively.

And it’s done so with very little risk.

As the BBC put it:

Paintings can go up in value even when the stock market crashes, making it a good diversification for an investment portfolio.

Do you see now why adding a bit of art to your portfolio makes sense – especially in today’s volatile market?

That’s why the super-rich are flocking to art today in droves.

But because of how pricey art is, for decades ordinary Americans have been locked out of this lucrative opportunity.

However…

We recently found a little-known… but incredibly smart way… for everyday Americans to invest in fine art starting with very little money.

It’s all thanks to the JOBS Act, which was signed into law in 2012.

Essentially, the JOBS Act tore down the wall between the super-rich and ordinary folks… And opened up investment opportunities that were previously reserved only for the upper crust… including the specific opportunity we want to tell you about today.

For instance, it includes a provision that created an exemption under federal law allowing

companies to sell securities to the public via crowdfunding.

Crowdfunding is a way for organizations to raise funds online for a specific cause from hundreds… thousands… even millions of people.

With crowdfunding, ordinary people can also pool their money and invest in everything from classic cars to real estate projects (or fine art) – just as the heavy-hitters have been doing for years.

In the past, you’d need to be a millionaire to get in on these kinds of opportunities. But thanks to the JOBS Act, everyday investors can invest in collectibles and rare art just like the wealthy. And it’s as simple as buying stocks.

Let me explain...

In the stock market, when you buy shares of a company like Apple… Coca Cola… or Tesla, you own a piece of that company.

On the platform we’re recommending, you can buy a “share” of art by someone like Andy Warhol or Claude Monet.

And you can get started from your phone or computer with as little as $20.

Art vs. S&P 500Returns

5x

0

25x

20x

15x

10x

Over the past 25 years, post-war and contemporary art have nearly tripled the S&P 500's returns

Source: Masterworks

Post-War & Contemporary Art

S&P 500 (includes dividends)

1995 2005 20102000 2015 2020

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Early investors have already been cashing in… including a booked annualized return of 32% in one year from a Banksy painting called Mona Lisa (pictured below).

That profit was twice the return from the S&P 500 over the same time period.

Obviously, you can’t go back and participate in that deal now.

And there’s never a guarantee that the same type of opportunity will happen again.

But we believe putting a small portion of your investment portfolio into these opportunities – just like the super-rich – will go a long way in the coming months and years.

This report will show you exactly how to use this unique platform to get fractional ownership in some of the world’s most desirable paintings with as little as $20.

Better yet, as you’ll see, it isn’t just a buy-and-hold arrangement. This special platform also gives you the ability to trade fractional positions at any time you like (and without paying any commissions).

Best of all, through a special arrangement, we’ve managed to secure guaranteed access for you

through an exclusive “head of the line pass.”

It allows you to skip ahead of the 30,000-plus people currently waiting to sign up for the platform.

Before we get into the specifics…

Why You Should Add Some High-End Artwork to Your Portfolio Right Now

According to Sotheby’s Institute of Art, “In the 1960s, the idea of ‘art as investment’ took hold and prospered into the $64 billion art market of today.”

That number represents the total value of high-end art changing hands on an annual basis. About half of those transactions happen publicly through auctions.

Meanwhile, if you look at the total value of all the high-end art in the world – essentially, the market cap of the art market – the number swells to roughly $1.7 trillion.

The chart below shows how that stacks up against other private asset classes.

As you can see, the fine art market is roughly half the size of the private equity market.

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Ultra-high-net worth individuals are already taking advantage, allocating an average of 5% of their money to the category.

In fact, according to the Knight Frank Global Wealth Report, 37% of individuals worth at least $30 million actively collect or own fine art.

Meanwhile, the CEO of BlackRock, the world’s largest asset manager, says contemporary art is one of the greatest stores of wealth right now.

And for good reason…

High-end art isn’t just a separate asset class from more traditional investment categories like stocks, bonds, and real estate... it is superior in some ways.

Here are just some of the advantages it can bring to your portfolio…

• Outperformance: As mentioned earlier, post-war and contemporary art have outperformed the S&P 500 almost three times over since 1995.

That alone makes it a compelling addition to any investor’s portfolio. But that’s not the only advantage...

• Stable returns: Art’s worst stretch was in 2008–2009. While the S&P fell 57% peak to trough, auction prices on art declined only 27%.

According to the Deloitte and ArtTactic 2016 Art & Finance Report, art has historically been 40% less volatile than the S&P 500.

Deutsche Bank reported 2018 was the worst year for asset classes since 1920. Ninety percent of the 70 asset classes tracked by the investment bank were down. Per The Wall Street Journal, art was the top-performing asset class, up 10.6%.

• Low correlations: Over the last four

decades, art has had almost no correlation to other asset classes. That means its performance doesn’t mirror the performance of other types of investments.

A correlation of 1 means two different assets move in lockstep. Art’s low correlations to other popular investments, like the 10-year Treasury (0.03), the S&P 500 (-0.01), gold (0.03), private equity (0.01), and real estate (0.02), make it a good tool for diversification.

• Scarcity: When it comes to fine art, the total supply is extremely limited. Especially if you start talking about a particular artist’s body of work. What’s more, as more of these paintings find their way into the permanent collections of museums and other public entities, the supply continues to decline.

• Tangible, mobile, and international: A painting is a real, tangible asset like a piece of prime real estate. However, unlike a house or land, you can transport art... and you can sell it anywhere in the world in any currency. Roughly, 64% of fine art assets are outside of the United States right now.

Given all of these advantages, it isn’t surprising that art continued to outperform during the COVID pandemic.

According to Citibank’s “Global Art Market and COVID-19” report, contemporary art outperformed the 10 major asset classes during the first seven months of 2020 with a 6.7% gain versus losses in most other categories. The larger art category also delivered a positive return of 5.5%.

In a world of unprecedented money-printing and ultra-low interest rates, it is extremely likely that wealthy investors will continue to put more of their money into “trophy assets” like the world’s best paintings.

And now, after centuries of remaining exclusively

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for the filthy rich, you can finally get access to the very same artwork and all of the related investment benefits…

Masterworks: Making Blue-Chip Art Accessible to Everyone

In 2017, Scott Lynn launched the Masterworks platform to make blue-chip artwork investable for everyone. It’s the first company to take blue-chip paintings public by filing them with the SEC.

Lynn’s personal Abstract Expressionism collection had realized gains of 19.5% per year. He launched Masterworks as a way of giving other investors the chance to earn outsized profits from art as well.

As he told us, “The goal is to bring investment-grade paintings to the platform that drive superior returns.”

It concentrates on post-war, contemporary, and impressionist paintings.

And there is a tremendous team – along with a treasure trove of data – behind this platform.

To give you an idea of Masterworks’ acquisition process and all the research underpinning the platform, consider this…

Masterworks has a library of auction catalogs, including full collections from Christies and Sotheby’s going back to the 1970s. That gives it more than 300,000 auction transactions totaling more than 3 million unique data points to work with.

Its team has pored through this information and linked together transactional data for the same pieces of art, giving them profit and loss information on more than 60,000 repeat sales going as far back as 1960.

From there, the team built several different indexes and developed proprietary tools that help

them analyze evolving trends.

And while some institutions pay handsomely for this information, the platform gives its investors free access to these same individual data points.

You can search artist names and discern larger trends on not just individual paintings, but also artists, cycles, and different market segments.

Of course, that’s precisely what the Masterworks team does before it acquires any individual painting. Specifically, some of the things they look for:

• Artists with price appreciation trending faster than peers, preferably with less volatility

• Cultural relevance of an artist, overall marketplace recognition, and appeal to an international audience

• Institutional support from museums and public collections

• Condition of the painting and its embodiment of an artist’s larger body of work

Overall, the Masterworks team says valuing an individual painting is very much like valuing a piece of real estate. Comparable sales can help provide a good framework for how any individual piece might perform going forward.

At the same time, every single painting is different. So there is room for experts with superior data to capture better-than-average returns. And that is precisely what the Masterworks team aims to do.

Because of all the analysis and other costs involved – including insurance, restoration, storage, securitization, maintenance, and compliance – Masterworks charges an annual fee of 1.5%, and a 20% fee on the profits from any painting that sells.

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However, this all comes out of the eventual sale proceeds, and given the specialized nature of investing in this type of art, we believe the costs are justified. And it’s similar to what you’d pay to invest with a hedge fund.

Here’s how to get started…

How to Invest in Initial Offerings Through Masterworks’ Platform

Masterworks’ bread and butter is acquiring blue-chip paintings and giving investors the chance to purchase shares in those works.

It has already completed more than 40 listings on its platform, and the team is looking to acquire new pieces on a weekly basis. You might expect to see at least one or two open offerings at any given time.

The sign-up process is very easy. All it requires is your basic information, including a social security number.

Once you’ve signed up for an account, click on the “offerings” tab to see which acquisitions are currently open for investment.

Each individual listing gives you detailed information, including:

• An investment thesis outlining what makes this particular painting worth purchasing along with background on the artist

• The historical price appreciation of similar works – based on past sales of the same artist’s works, and in some cases, even of the current piece itself

• The work’s appraised value (if available)

• The total value of the initial offering – i.e., how much total money the platform is raising to fund the artwork

• The amount of funding that has already been

raised expressed as a percentage (once a piece is 100% funded, it is closed to new investors)

If you want to dig deeper – and you should – you can also download a complete deal sheet with even more information about the artist and high-quality pictures of the piece.

Putting some money to work is as easy as clicking the blue “invest now” button on an active offering. You can invest in $20 increments.

You can fund your purchase through a checking account or a major credit card. Just note that the latter option can carry additional fees and American Express cards are not supported at time of writing.

Masterworks aims to hold its paintings for three to seven years. In some cases, it could even take a decade for investors to realize any potential gain on their holding.

That said, the firm is always actively looking to sell works that it has acquired. And if it sees a good opportunity to exit earlier, it will.

The Banksy Mona Lisa painting we mentioned above is a terrific example of that.

Again, there is no guarantee that type of result will be repeated in the future. But it certainly demonstrates the potential of investing in high-quality paintings through the Masterworks platform.

You may be asking, what if you need liquidity before any sale of a piece you own actually takes place?

Or what if you want to get in on a painting that is no longer being offered to initial investors?

Masterworks recently opened up a secondary market on its platform, allowing members to buy and sell shares of artwork among themselves at any time.

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This feature is currently available to U.S. citizens with U.S. bank accounts.

You can respond to existing ads, make counter offers on listings, or create new ads to sell your own shares.

You just need to create a wallet to fund transactions, which is essentially a checking account in your own name.

You can even sort through past transactions to get a sense of what other people have been buying and selling at. A quick look at some of that data shows many single- and double-digit gains, including a few between 30–50%.

The best part?

All of these transactions are considered member-to-member exchanges. So Masterworks doesn’t charge the 20% fee on these trades.

The secondary market is a great way to further diversify your art holdings or raise money from shares you’ve previously purchased. And as the platform’s user base continues to grow, the liquidity and interim profit opportunities should only continue to increase as well.

Bringing It All Together

The Masterworks platform is a great way to access the kind of art that has been the exclusive domain of ultra-wealthy investors for centuries.

Moreover, as we’ve shown you in this report, gaining access to this particular asset class is a great way to further diversify your portfolio and continue making money even when other mainstream investments are losing value.

Our current asset allocation model suggests putting up to 5% of your total portfolio into collectibles – a category that includes fine art.

And as we mentioned above, we have a special bonus for Palm Beach Letter subscribers.

Masterworks doesn’t let most clients sign up immediately. New clients are put on a waitlist. But while tens of thousands of potential investors are currently waiting to join the platform, we’ve secured a special “skip the line” pass for our readers.

All you have to do is visit this page to bypass the waitlist and activate an account to begin trading fine art.

Please note: We receive no kick-back or compensation for bringing this offer to you. This is a negotiated bonus for being a Palm Beach Letter subscriber.

Note on taxes: Investing in artwork on Masterworks carries tax implications. Make sure to consult with a tax advisor.

If you have more questions about the platform itself, or how it might fit into your current financial situation, you can email the Masterworks team at support@masterworks.io.

You can also call the Masterworks team at 203-518-5172 to learn about the asset class and go over your own financial goals, risk tolerance, and other considerations that might influence how you invest in their offerings.

Action to Take: Sign up for a Masterworks account and invest in fine art.

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To contact us, call toll free Domestic/International: 1-888-501-2598, Mon-Fri: 9am-7pm ET, or email us here.

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