The Gray Market is a twice-weekly newsletter mapping the forces shaping the business of contemporary art, from inside and out. If you like this post, consider forwarding it to someone else who might too. And for inquiries about my consulting work, advertising on TGM, or any other comments/questions, email me here: tim@thegraymarket.xyz. If Warhol is “investment-grade,” so is PikachuJustify one “alternative asset class” and the floodgates fly open
Welcome back to The Gray Market! In today’s edition, I once again strafe the financialization of art, this time by taking a semi-whimsical, semi-trollish Japanese side route. One reminder before the main event: TGM takes even more time, effort, and borderline mania to produce independently week after week as it did when I had the comparative safety of a staff salary and employer-sponsored healthcare. If you’d like to help prove writing and reporting with a unique perspective on art and culture can thrive outside traditional media outlets, consider upgrading your subscription for $7/month or $60/year. Every paid subscriber gets TGM one step closer to sustainability on its own terms—and one step further away from the ignominy of being beaten in Substack’s “rising in culture” rankings by Rosie O’Donnell.
OK, pop quiz... I’m thinking of a tangible, rectangular object with an image that a niche but real audience of connoisseurs and self-described investors will pay hundreds, thousands, or even millions of dollars for depending on its scarcity, condition, provenance, past price history, and current demand. Reputable auction houses have sold examples from this alleged asset class numerous times. Proponents consider it just as legitimate a part of their investment portfolios as stocks or bonds, despite the total absence of balance-sheet fundamentals or category-specific regulations over its sale. Specialty analytics companies have even created indexes and data visualizations to track the purported asset class’s performance, with these quantitative insights considered valuable enough that serious players in the market pay a premium to access them. What am I thinking of? Since anyone who read this far also undoubtedly read the subject line of this newsletter (duh), we both know the correct answer is either a flat artwork—say, a painting, drawing, or limited-edition print—or a Pokémon trading card. The real point is that you’ll never know for sure which of them it actually was, because every description I typed above applies equally to both kinds of object. More importantly, comparing the supposed investment markets around each lays bare just how slippery the entire concept of an alternative asset class is. The following is a paid ad. If you’re interested in advertising in TGM, email me at tim@thegraymarket.xyz.
The 3,000% alarmWhat activated this thought exercise was a recent Wall Street Journal story headlined The Hot Investment With a 3,000% Return? Pokémon Cards. In it, finance journalist Krystal Hur marshals resale data and on-the-ground reporting to paint a picture of a collectibles market whose believers see it as no less promising a source of investment returns than anything they can acquire through a traditional broker. Hur opens with an anecdote about a 27-year-old Ohio man who was able to buy a 3.5-carat custom engagement ring for his partner and partially fund their upcoming wedding by strategically divesting some of his Pokémon card holdings. She then hits readers with this numerical blast:
As a veteran monitor of the art-as-investment salt mines, I can’t read any reference to a purported 3,000% return without hearing echoes of this 2014 Bloomberg story by my former Artnet News colleague Katya Kazakina, in which she chronicled what was probably the top of the resale market for the so-called Zombie Formalists, a loose cohort of process-based abstract painters whose prices soared to Kilimanjaro heights before (mostly) crashing into the ocean within five years or so. Here’s the key passage:
Although the specter of the (now-infamous in art circles) 3,000% return hangs over both, there are a couple of important differences between Card Ladder’s valuation data for Pokémon cards and Kazakina’s calculations on resale prices for ultra-contemporary artworks.¹ The former quantifies the entire category of a particular type of collectibles over more than 21 years; the latter strictly refers to a (very) small subset of pieces within the larger art market over a much shorter time frame. For a more apples-to-apples macro take on art’s supposed dominance over typical Wall Street returns, then, look no further than Masterworks, the best known platform for trading fractionalized shares in art and, as far as I can tell, the global leader in finding anyone with a data profile indicative of upper-middle-class-or-higher wealth and spamming them with an unending stream of marketing materials about the alleged wisdom of art as an investment. You don’t have to go beyond the Masterworks landing page to find bombastic claims like “blue-chip art has outpaced the S&P by 32% from 1995-2014,” and “from 2001-2023, contemporary art outperformed nearly all other alternative assets,” including private debt, private real assets (see: real estate, infrastructure, natural resources), gold, and REITs. Obviously, “blue-chip” and “contemporary” art—however the company chooses to define them—are only subsets of the larger art trade, too. But both cover a much larger share of it than just the few dozen artists circa 2014 who were being flipped faster than the ingredients in a Benihana hibachi, bringing art in line with the broad claims of stock-market outperformance being made by Pokémon card “investors”—not to mention their counterparts in wine, classic cars, and more. All of which locks the first piece in this comparative puzzle into place: no matter the alternative “asset class” in question, its champions (like this guy 👇🏻) can and will eagerly argue that its returns obliterate the ones you’d get from traditional investing.  Friend vs. fauxAt the same time, the macro figures don’t exactly leave artworks draped in glory after their face-off with Pokémon cards. To play devil’s advocate, there’s an argument that li’l cardstock paeans to Pikachu and friends are, in fact, the more stable “investment” category—and not just because they’ve been at the center of an active resale market for more than a quarter-century, i.e. longer than most ultra-contemporary artists. Critics, Hur writes, “say Pokémon card prices are inconsistent and subjective. There isn’t a standard price for the cards, and it’s unknown how many of each are in circulation.” The known-quantity issue tends to be less of a problem for artworks, particularly those made in the past few generations. (Things can get shady fast when it comes to long-dead artists.) But the card critics’ other caveats apply even more so to paintings, drawings, et al because most of them are one-of-a-kind. This means art traders, advisors, and appraisers aren’t even able to draw perfect price comps when trying to value an available work, except in the relatively rare cases where the exact same piece gets resold at auction multiple times. Worse, the carrying costs for art—stuff like insurance, framing, storage, packing/shipping, and installation—are high in general and much higher on average than those for Pokémon cards. After all, the average artwork is just plain bigger than the average trading card, and most of these expenses increase with the size and fragility of the object.² Even an artwork that goes on to generate a gross resale profit based on the original purchase price often doesn’t look like such a big winner after a finer-grained accounting backs out the carrying costs. Last but not least, Pokémon cards also have a built-in resilience that neither artworks made by, nor collectibles honoring, living humans don’t. Why? Because it would be impossible for their fictional subjects to ever behave in a way that kneecaps the value of the collectibles bearing their image. Hur notes this weird truth vis-à-vis the category’s advantage over baseball cards by throwing it to current MLB pitcher Matt Strahm, who said in a recent YouTube interview: “Pikachu’s not going to tear his ACL and miss the whole season. Charizard is not going to get a DUI driving home.” Aside from giving me one of the few bursts of uncomplicated amusement I’ve encountered during another week that confirms we all live in hell, Strahm’s general insight boomerangs back onto the art market, too. There’s an admittedly small list of things that living artists can do outside the studio to cripple or annihilate their work’s resale value. Most of it is tragic, and every example is low-probability.³ But the list exists, and “investors” in this alleged asset class remain exposed to its downsides in ways that their counterparts snapping up trading cards for cute Japanese cryptids will never be. Having said all that, I wouldn’t get too hung up on the supposed discrepancies in value-appreciation between art and Pokémon cards. If I’ve learned nothing else from working with art market data for much of the past two decades, it’s that most or all of the so-called investment figures on fine art and collectibles are at best curated and at worst an outright con.⁴ For example, remember Card Ladder’s contention that Pokémon cards posted (in Hur’s words) “a roughly 3,821% monthly cumulative return since 2004”? Or, for that matter, Masterworks’s claim that “blue-chip art has outpaced the S&P by 32% from 1995-2014”? Both are fantastical in concept and in practice. The reason? Unlike the stocks in the S&P 500, it’s literally impossible for Main Street investors to actually buy an index fund—that is, a continuously updated, diversified cross-section—that tracks the performance of either of these purported alternative assets over time.⁵ All they can do is make So, touting the alleged outperformance of all Pokémon cards or entire eras of artworks isn’t quite the same as saying, idk, the average top speed of a thoroughbred on a mile-long track is 3.2 mph slower than the average top speed of a centaur or a manticore. But it’s not as far off as the alternative-asset-class crowd would like you to believe, either. We all sound bonkersOne final point bears mentioning here. From an editorial standpoint, a publication runs a story like Hur’s to shock or entertain its readers (if not both), and I’d wager that the typical Journal subscriber was nearly knocked out of their Aeron chair by the anecdotes about the Pokémon-card maxis in her reporting. In that sense, mission accomplished. I suspect the art-as-asset crowd might have the same reaction to these dudes.⁶ I just don’t think they should. Not when it comes to the guy who said he sees his “500 cards and 100 sealed items” as “investments similar to his Roth IRA retirement and Vanguard brokerage accounts.” Not about the one who told Hur, “I like diversifying my investments. So I’ve got some stocks, I’ve got some crypto, and then, I figured I’d try starting a bit of Pokémon investing as well,” adding: “If you like risk in your portfolio, I think it’s a good way to go.” Not even about the man keeping a few curated binders of Pokémon cards “in a climate-controlled storm room alongside other Pokémon merchandise, family heirlooms, and his watch collection,” with “plans to gift the binders to his children, currently aged 9 to 20, when they reach personal milestones such as getting married or buying a home.” I understand the reflex to ridicule these guys. I’d be lying if I told you I didn’t feel it too, let alone act on it a little bit, when I first read the story. But it’s important to recognize that those of us who justify the high-end art market to almost any extent sound just as unstable to everyone outside our niche interest group as these dudes extolling the virtues of “investing” in Pokémon cards. For example, in 2022, someone paid $195m for a nearly 60-year-old silkscreen of a long-dead celebrity partly because it narrowly missed being punctured by a bullet. The most talked-about exhibition in New York’s world-leading gallery scene right now is from a living artist famous for assembling esoteric arrangements of stacked Budweiser cans, scaffolding, and elder-care equipment. Not only the defining American painter of the past century but also a swath of his canonized postwar compatriots are collected for sums of money that could buy something between a house and a private island because they used techniques that routinely lead the uninitiated to scoff “My kid/my pet could do that”: dripping paint over fabric laid on the floor, slathering their body in pigment and imprinting it onto paper, pouring thinned oil paint onto the back of a stretched canvas to let it seep wherever it seeps, and more. That a few people at some weird point in history would pay thousands or millions of dollars for this stuff looks crazy to the world at large. That enough people have been doing it consistently to sustain an entire industry over multiple centuries reads as absolutely batshit. Don’t get me wrong. Personally, I’d rather spend real money on art than Pokémon cards any day of the week. I just see that choice as a matter of personal taste, not any kind of objectively defensible measure of investment-worthiness. In the end, we’re all building our value systems in real time. Just remember that the tools we’re using are basically the same no matter which alternative asset class we want to reinforce—which means that believing in one kinda sorta leaves us no choice but to believe, however begrudgingly, in all the others too. 1 For the die-hards: by “ultra-contemporary artists,” I mean those born in 1974 or later. My former coworker Julia Halperin and I came up with the term and definition back in 2019 to nuance Artnet’s auction data on living (or tragically deceased) talent. The company still uses it today, and it has filtered out into the wider art-business infoscape as well. Some people spent their 20s and 30s building generational wealth for themselves. I have this lolololol 2 Insurance premiums are mainly based on the appraised value of the artwork or collectible in question, but they also depend partly on other factors including the relative likelihood of material damage or destruction. In other words, a sculpture made of blown glass will probably cost more to insure on average than a sculpture made of steel, even if both works are roughly equal in size and estimated worth. 3 It includes stuff like, say, dying in a freak accident just as the artist was getting real traction in the market, or going to trial (and later prison) for murdering a sex worker. I told you it’s dark! I put the specifics down here in the footnotes to keep them from undermining the cute “Pikachu will never need reconstructive knee surgery” bit! 4 To be clear, this is not an attack on art market data in general, just on quantitative snake oil like the supposed compound annual growth rates of particular artists’ work or the performance of entire categories of art relative to major stock market indexes. 5 A few firms offer shares in securities backed by loans made against a basket of different artworks, but as of last summer, their products were only available to either qualified institutional investors or individuals able to take a position worth at least five figures. 6 Yes, I recognize that the fact they are all men constitutes an absolutely dizzying plot twist. You’re currently a free subscriber to The Gray Market. For more posts, more access, and the good karma of supporting a 100% independent operation, click the button below. And for inquiries about my consulting work, advertising on TGM, or any other comments/questions, email me here: tim@thegraymarket.xyz.
© 2025 Tim Schneider
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