Liquidity

What is liquidity?

Liquidity is the ability to turn a work back into money — the question of to whom, when and for how much you will sell it when you want to. It is one of the most overlooked and yet most important risks in all of collecting. Put simply, you are asking how easily the painting on the wall becomes cash again.

How does liquidity work in art?

Art is not a share you can turn into cash in a second. Finding a buyer can take weeks or months, and the resulting price fluctuates in the meantime. Selling through an auction or a gallery has its timescales, its costs and the uncertainty of whether it will come off at all. Liquidity in art is therefore built with effort and cannot be taken for granted.

Why does it matter to a collector or investor?

Because a work may rise in value on paper, but if you cannot sell it at the right moment, that rise is of no use to you. It is precisely the inability to sell quickly and at a reasonable price that many new collectors underestimate. And it is exactly why it is worth thinking through how to get out of a work before you go into it.

How does Art Part Club help with liquidity?

Building liquidity, so that a share in a work can be sold easily, is one of Art Part Club's core concerns — the sale of fractions (shares in works). By dividing a work into smaller parts, a wider circle of buyers opens up, and selling a share tends to be more feasible than finding a single buyer for a whole canvas. It gives a collector the chance to enter and exit more gently, in stages.

What should you watch out for?

Do not buy on the quiet assumption that a sale will go smoothly whenever you wish. With many works that simply is not so. Ask in advance who might want the work in future and how long a sale would realistically take. And count on the price fluctuating at the point of sale, so that timing matters as much as the choice of work itself.

— Anna Pulkertová, founder of Art Part Club