The Flinchum File
Thoughtful Economic Analysis and Existential Opinions

We’ll Never Know . . .


Most market watchers are familiar with the old rule-of-thumb that the stock market changes directions about 6 months or so before the overall economy, based on the assumption that investors study the economy more closely than most people.  There is a lesser known rule-of-thumb that the art market changes directions about 3 months or so before the stock market, based on the assumption that art collectors are more heavily invested than most people.

Yesterday, I listened to a webinar about the impact of pandemic on the art market (which is hard to measure) and was not surprised to hear that art prices have been falling rapidly.  What did surprise me was that they started falling last December, well before anybody was aware of the coronavirus.

One could jump-to-conclusion by suggesting the really wealthy investors knew a pandemic was imminent, but that’s ridiculous.  However, I do think it raises an interesting question.

Were the bears already stalking the stock market in January?  In other words, would we have experienced a normal bear market even without the pandemic?  The virus could have turned a normal bear market into a really nasty recession/depression.

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