Economist Nouriel Roubini believes it's time for investors to consider art an asset class, just like stocks, bonds and commodities.
However, the renowned "Dr. Doom" issues a warning with that consideration: There's reason to believe that there's so much interest in what he calls an "extremely large" market with a possible valuation of $70 billion that a bubble is forming.
In a report the head of Roubini Global Economics sent to clients, he cautions that while there is potential for "significant" returns, the nature of the business—in which "art fairs have become big business," and "private banks and financial institutions" are offering art-related services—is that it's ripe for overheating:
There is a lack of a fundamental pricing model for art.
This lack of a fundamental pricing model means that art is subject to fads, fashions, manias—and potentially bubbles. (Markets sometimes run into major challenges even when assets have fundamental pricing models—let alone without them.)