Elon Musk's Diverse Investments: The Billionaire's Secret Weapon

Elon Musk’s financial success has been nothing short of extraordinary, especially as he thrives while other sectors of the economy struggle. What’s his secret weapon?

Musk hasn’t kept this secret to himself; he’s been hinting at it since late last year. However, amid the chaos of the Ukraine conflict, rising fuel prices and soaring inflation, many overlooked his advice. In an X post, Musk urged, “Buy physical things.”

It’s not just Musk; other notable figures have made similar moves. The Rothschilds sold a specific physical asset for over $197 million to the Dutch government, while Oprah Winfrey fetched $150 million (netting $62 million) and Jeff Bezos acquired $70 million worth of the same asset. What is this mysterious asset? It’s not gold or real estate; it’s fine art.

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At first glance, it might seem odd that these billionaires are flocking to an asset most people can’t access. Yet, there are compelling reasons why 85% of wealth managers, according to a Deloitte survey, believe in including art in their clients’ wealth offerings:

• Blue-chip art has outpaced S&P 500 returns by 136% (1995-2022).
• Blue-chip art sales surpassed prepandemic highs in 2023.
• Art and collectibles form an estimated $2.174 trillion asset class projected to grow by 58% in five years.
• The Wall Street Journal has dubbed art “among the hottest markets on earth.”

Many believe investing in fine art from renowned artists like Pablo Picasso or Jean-Michel Basquiat requires millions. However, that’s no longer the case. Platforms like Masterworks, the largest dedicated blue-chip art investment platform, allow investors to buy shares representing investments in artworks. This opens the door for investors to tap into this overlooked asset, which celebrities such as Beyoncé, Brad Pitt and Leonardo DiCaprio have also embraced but at a fraction of the cost of owning an entire piece.

Masterworks.com: The $1 Billion Art Investment Platform

Founded in 2017 by art investor and tech entrepreneur Scott Lynn, Masterworks.com is a $1 billion art investment startup that democratizes contemporary art investing. Thanks to the 2012 Jumpstart Our Business Startups (JOBS) Act, nonaccredited investors can now purchase shares in famous artworks like those from Banksy, Basquiat and Andy Warhol.

With over 810,345 users, Masterworks.com has become popular among everyday investors looking to invest in renowned artworks without hefty price tags. The platform’s success lies in offering shares of multimillion-dollar masterpieces typically collected by the ultra-wealthy for as little as $20.

Why The Surge In Art Investment?

Art’s appeal lies in its low average correlation to the stock market, meaning blue-chip contemporary art prices don’t necessarily follow equity market trends. During high inflation periods (3% or higher), blue-chip art has outperformed other asset classes such as real estate investment trusts (REITs), S&P 500 equities and gold.

The only downside? Masterworks.com closes offerings to new investors once certain goals for each artwork are met. For instance, a Banksy painting named “Exit Through the Gift Shop” sold out in less than three hours on the platform.

Investing In Billionaire Art With Ease

Masterworks’ team of over 200 employees includes art industry experts and professionals from major investment firms like Bank of America Corp. and Goldman Sachs. They have amassed transactional records dating to the 1960s, comprising over 5 million auction records and 50 million data points on 60,000 artists.

Since its inception, Masterworks has completed 16 sales (“exits”), all yielding positive returns. Investors have collectively shared millions in profits (net of fees). Of those 16 exits, 15 or 94%, have outperformed the SPDR S&P 500 ETF, Wall Street’s premier benchmark, over their holding periods.

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