Heritage Auctions

The late George Arden made two fortunes, the second from collecting the 19th century American paintings decorating the halls of his lucrative financial planning business. George had a keen eye and massive cash flow, a rare combination. For those of us whose desires exceed our cash flow, the reasons for occasionally selling something are obvious. But there are more subtle reasons as well.

George was fond of saying that he paid his dues when he first started buying paintings. He meant that, back when he was a novice collector, art galleries could get away with selling him their mistakes, or sometimes just overcharging him. Over time, he studied and learned, and eventually became a much more shrewd buyer - perhaps more knowledgeable than the dealers with whom he continued to deal.

But not as shrewd as he could have become.

I have another friend (fortunately still living), John Zuk. Among his other interests, John collects pottery, but in a lower price range. His strategy is better than George's, though John modestly denies shrewdness, crediting instead his personal circumstances: John's income as a business consultant at IBM, while very adequate, is far more limited, and mostly earmarked for the expenses of raising a young family.

John continues to acquire aggressively for his collection, but every few months he forces himself to sell something - even if he doesn't need the money for a sudden household expense (as he often does).

John periodically chooses a least favorite item, particularly if he sees a price surge within that subsection of the market, and makes a pact with himself to get rid of it within a certain period of time, usually 3 to 6 months. Occasionally, he consigns to auction or if it's an inexpensive piece, lists it on eBay. Sometimes he will sell it outright to a dealer, or leave it on consignment at a negotiated price or commission structure. He also trades with fellow collectors.

One time John had bought a certain piece of Marblehead pottery. It was a nice piece, but hardly a prize of the collection. Then a book was published featuring similar pieces, which drove the value up significantly, allowing him to trade it for another item he wanted more. The piece he received is now a lot more valuable than the piece he traded.

John has sold Roseville pottery on eBay, or through other auctions, for multiples of what he thought they were worth. But he has also been disappointed at times. He currently owns a Grueby pot for which he paid $1950 expecting to net $2000 to $3000. So far no takers, even at a sharply reduced $1500.

John says this Grueby pot is still for sale. No reasonable offer refused.

"That experience taught me, among other lessons, not to buy any more oddball Gruebys!" John explains. "Any attempt at selling gives you insights into the market that you don't get if you only buy. When I sell - even on eBay - I get emails from buyers telling me things or asking questions that give me a real view on what they think. Or I get direct feedback from dealers, or other collectors, with whom I'm doing a trade or consignment. If you both buy and sell with them, rather than just buying, you figure out more quickly how well you can trust certain dealers and fellow collectors, both in terms of their knowledge and their honesty. More than that, you learn how to evaluate your own judgment."

For collectors, an occasional forced sale is the best reality check there is. As far as I know, George Arden never sold a painting during his lifetime. His second fortune may have been even larger if he had.