Elroy Dimson

The UK regained its position as the second-largest market with 18%, while China, including mainland China and Hong Kong, fell by 4% to third place with 15%.

So, is art a good investment? Well, according to research from Elroy Dimson, who has researched the returns on global stock markets and other asset classes using 125 years of often hand-collected data, over the period from 1900 to 2012, art, stamps, and rare violins have appreciated at an average annual rate of 6.4% to 6.9% in nominal terms, or 2.4 to 2.8% in real terms, meaning that they've achieved higher average returns than government bonds, bills, and gold.

However, he points out that it's important to recognize the importance of transaction costs in collectibles markets, which can often wipe out all of the excess returns.

Art auction fees are not officially published and are frequently negotiated by both buyers and sellers, but often the seller pays a fee which can be as high as 10% for lower priced works and as low as 2% for higher priced works.

You use the US historical risk, you carry it all over the world.

So in two thousand and one or two thousand and two, you know, we had, uh, two, two professors at the London Business School, Elroy Dimson and Paul Marsh say, "Hey, why don't we compute historical risk premiums for other markets as well?" Do you see what, why they do that? Because to get some sense of what would you have made investing in the Polish market, the Swiss market, the Austrian market.

So in a sense, they were playing the game of in nineteen oh one, if you did not know what the most successful market for the next hundred years would be, and you put your money in twenty-five different equity markets- What would your premium across those markets have been? So you can see the numbers for, for the markets that they track, but go to the bottom.

See this world market? The geometric average equity risk premium across global markets from nineteen hundred through today is about three point two percent.

They say, well, you're looking at the U.S. markets.

And a couple of our chapters are written by particularly Elroy Dimson, and Dimson, Marsh, and Stanton actually looked at 125 years of data, and their chapter in the book.

But they look at global data.

over this similar period of time.