Sotheby's (BID)

millionairefools (99.54) Submitted: 11/12/07 12:53 AM : Start Price: $33.57 BID Score: -26.33

This stock might be heading for doldrums after the stunning retreat of the price to what it was an year back, but I believe that is rather unlikely.
Two big reasons why the price fell...
(1) The notched "Impressionist and Modern art auction" auction
(2) The shudder that if banks clamps down on salaries, no one will be there to buy such art.

Counter arguments...
(1) 3rd quarter historically contributes to about 10% of sales and this was ONE botched auction.
(2) Bankers whose salaries will be impacted don't go to make profits for Sotheby's. For example, the poster-child of the botched sale was Paul Gauguin's oil on canvas "Te Poipoi (The Morning)," but it still sold for $35 million. Even bankers don't have that kind of dough sitting around to spend on oil streaks on canvas. The ultra-rich help Sotheby's make the profits, whose lifestyle doesn't change based on the market.

Also, with the stunning spread of globalisation, more than 30% of the bidders dial-in at Sotheby's. Another 25% of buyers who are present, no one even knows about. So, the landscape has changed dramatically. With no-namers buying art, they almost give the art a tag of cheap chic because the tag of exclusivity is diluted. This will only send the art prices to the sky, not to the bottom - as Wynns of the world will pay ridiculous prices to call the coveted art pieces their own.

Another push will be nationalistic. Businessmen from foreign countries will buy art from their countries which is moving around in US and Europe to bring it back to the nation. An example of this happened just a few weeks back with the sale of art by Mstislav Rostropovich - a Russian billionaire bought it all (http://news.bbc.co.uk/2/hi/entertainment/6999330.stm).

All in all, I think even if I end up catching the proverbial falling knife, I'll catch the deadwood which won't go anywhere as opposed to the blade which will bleed me to death.

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