Like the share market, many factors can affect the price of an investment: a retrospective exhibition, biography, major art prize and death (which caps the stock available) inflate an artist's prices, while auction or gallery disappointments deflate them. So too does a general perception that prices have gone too far too fast or the work has become formulaic.
SHAREMARKET jargon isn't out of order when you are talking about art. In fact, Geoffrey Cassidy of Sotheby's has been known to speak about "blue-chip artists".
The art market is like any other, driven by supply and demand and the first thing to remember when buying art is "past performance is no guarantee of future performance", which is why you should always buy pieces you like.
When share and property markets are buoyant, the "feel rich" factor boosts the whole art market. At the top end it may get another boost when other markets falter, since astute profit takers need somewhere to park their gains.
Even when the art market falls, prices generally recover, with each peak usually higher than the one before.
Like the share market, many factors can affect the price of an investment: a retrospective exhibition, biography, major art prize and death (which caps the stock available) inflate an artist's prices, while auction or gallery disappointments deflate them. So too does a general perception that prices have gone too far too fast or the work has become formulaic.
Unlike companies, the trouble with blue-chip art is you can't buy bits of it. But you can still do well buying lesser named artists at suburban and regional auctions, fairs, op-shops and garage sales. And there's also "up-and-coming" art at small primary galleries.
Aboriginal paintings
The most exciting art movement today is Aboriginal acrylic-on-canvas "dot" paintings.
At fist glance most appear to be abstract but, like Egyptian hieroglyphics, their symbols tell a story. The valuable early ones, painted between 1971 and 1973, are deemed especially "authentic". As most of them are unsigned and fakes are not uncommon, Tim Klingender of Sotheby's says establishing a painting's provenance or history is paramount.
Traditional representational ochre-on-bark paintings, which fell into a black hole during the 1990s as the dots gained global publicity, have blossomed in the noughties if they are "of quality, importance and rarity", Klingender says, which usually means they are older works.
An interesting hybrid, enjoying the highest prices, is the ochre-on-canvas work of Rover Thomas and other Kimberley artists. Among the blue chips are early Johnny Warangkula, Mick Namarari and Clifford Possum.
Fashions change quickly lower down the scale and at the bottom there's an avalanche of inferior work. Lawson-Menzies's Kerry Williams says paintings by little-known indigenous communities are good investments, including: Irruntju Arts, Warrakurna artists, Kayili Arts and Spinifex artists.
Non-Aboriginal paintings
Recent years have seen the dominance of about 20 "hot" artists in the major auction houses (Sotheby's, Deutscher-Menzies and, until recently, Christie's). They're all Australian and mostly modern and contemporary.
Rich patrons prefer famous identifiable works such as Sidney Nolan's Ned Kellys, Charles Blackman's Alices and Arthur Boyd's Shoalhavens. Together with Brett Whiteley, Garry Shead and John Olsen, this group is what Denis Savill, a doyen of secondary art dealers, calls "first tier whose prices will hold up". In his second tier are Albert Tucker, Lloyd Rees, Fred Williams and Jeffrey Smart. Arthur Streeton and Norman Lindsay should be added to the blue chips. More knowledge, or the advice of mushrooming art consultants, has improved discrimination, and John Furphy's Australian Art Sales Digest reveals relatively modest prices for lesser works by major artists.
Familiar artists deemed ripe for rerating upwards are Lloyd Rees, William Boissevain, Rick Amor and colonial painters Ken Whisson and John Peter Russell. Other artists recommended for investment are Euan MacLeod, Noel McKenna and Jason Benjamin.
Sculpture
After prolonged neglect in Australia, sculpture - often featured among lower-profile and lower-priced decorative arts - has recently come alive. No doubt the open-plan architecture of modern homes has helped.
Cassidy ranks only Robert Klippel and Clement Meadmore as blue-chip sculptors.
Barbara Tribe, who was an Aussie icon till she went and stayed overseas, may one day make that list, as might Bertram Mackennal.
Photography
Photography has long been regarded as something that everyone does, as opposed to an art form. But in the past five years it has gained enhanced status among Australian collectors and dedicated galleries. Art photography has always been respected overseas, and the highest price paid is $US2.9 million ($3.86 million) for Edward Steichen's The Pond - Moonlight.
Opinion varies as to whether the boom will last. Lawson-Menzies's Martin Farrah doesn't think photography is important as "it's difficult to guarantee authenticity". But Damian Hackett of Deutscher-Menzies is more enthusiastic. He recommends investment in Jane Burton and Deborah Paauwe.
Art dealer Josef Lebovic says limited editions aren't important as icons such as Max Dupain, David Moore and Olive Cotton never or rarely issued them. But a dated signature helps.
Prints
If you can't afford paintings by most of the artists named above, how about their much more affordable prints? Their pencil sketches are often cheaper again. But remember there are prints and then there are prints.
Collectable prints are designed by artists and manually created on a printing surface; commercial prints are mechanically produced, as in photocopies, from existing works and are virtually worthless.
EASEL DOES IT
? John Coburn's Capricornia: $49,350 (2001); $155,100 (2006).
? Johnny Warangkula's Water Dreaming at Kalipinypa: $500 (1972); $206,000 (1997); $486,500 (2000).
? Robert Klippel's Metal Construction 201: $32,200 (1998); $204,000 (2006).
? Max Dupain's Sunbaker: $1600 (1990); $35,000 (2006).
? Brett Whiteley - average print: $1750 (1989); $20,000 (2006).