"If you're an equity manager today, and you own XYZ company, and you've done all the research and spoken with the management team, the first question you ask is 'who else owns this stock?'" Hill explained. "Is it index funds or part of a company's quant strategy? If you don't know who owns the stock and if it's part of a momentum play or index, the stock can go up and then go down just as quickly."
Hill said buying art should be the same. New databases and research allows buyers to better determine who else owns an artist they want to collect. If the other buyers of the artist are speculators, short-term art traders or flippers, you should avoid them.
"You should ask 'who else has collected that particular artist? What museums is that artist in? What curators like the art? Who are their dealers and who else is buying?'" he said. "A while ago there were all these people who went long on (Martin) Kippenberger, and then they tried to juice the market They loaded up and then tried to sell. That happens in the art world."
And even if you can't afford the multi-million-dollar pieces Hill buys, you can see them for free. Selections from his collection — which features the likes of Christopher Wool, Francis Bacon, Cy Tombly and Willem de Kooning — will be visible to the public when the Hill Art Foundation opens next month in New York.
Hill should know. He serves on the board of the Metropolitan Museum of Art, is chairman emeritus of the Hirshhorn Museum and Sculpture Garden in Washington, D.C. and serves on the investment committee of the Smithsonian Institution.