Physical art is different. (hang with me here, but..)
"Investing" in a Picasso is an investment in a long-term store of cultural value that you speculate will appreciate more quickly than the S&P. Probably because you bet that the 1% will see outsized gains compared to the 99%. Maybe you also like the art and want to be the only person in the world who can display it. Also it can be very useful as a tax dodge.
"Investing" in a new and unknown artist is several things: a) speculation that they will become more famous and that you are tasteful enough to know it early (see: angel investing), b) patronage and participation (see: friends & family rounds), c) conspicuous consumption (see: conspicuous consumption), and finally d) purchase of an expression of art that you enjoy, which may or may not have resale value in the future if your priorities change.
NFTs are confusing because any persistent value is completely dependent on the continued agreement that exclusivity of relationship is valuable and transferable. What's it like to be the eleventh owner of an NFT? Presumably, it'd be pretty meh.
But to your point -- it's psychology not logic. Today's buyers are not looking for a store of value. It's just an exercise in one of two things: vanity or speculation. These are powerful things!
> Physical art is different. (hang with me here, but..)
No, it is not. Picasso died dirt poor, he never beneficiated in large sums from his paintings. It just happen he was crazy enough to make a name and now people brag about him.
"Investing" in a Picasso is an investment in a long-term store of cultural value that you speculate will appreciate more quickly than the S&P. Probably because you bet that the 1% will see outsized gains compared to the 99%. Maybe you also like the art and want to be the only person in the world who can display it. Also it can be very useful as a tax dodge.
"Investing" in a new and unknown artist is several things: a) speculation that they will become more famous and that you are tasteful enough to know it early (see: angel investing), b) patronage and participation (see: friends & family rounds), c) conspicuous consumption (see: conspicuous consumption), and finally d) purchase of an expression of art that you enjoy, which may or may not have resale value in the future if your priorities change.
NFTs are confusing because any persistent value is completely dependent on the continued agreement that exclusivity of relationship is valuable and transferable. What's it like to be the eleventh owner of an NFT? Presumably, it'd be pretty meh.
But to your point -- it's psychology not logic. Today's buyers are not looking for a store of value. It's just an exercise in one of two things: vanity or speculation. These are powerful things!