Wednesday, December 27, 2017

Ang Larawan: Can investing in art be a valid retirement plan?

The MMFF entry "Ang Larawan," (Dir. Loy Arcenas, 2017) which was based on the musical, which in turn was based on the play by Nick Joaquin and translated by Rolando Tinio,  poses quite a financial situation still relevant to a lot of Filipino families. How does one prepare for retirement and old age, particularly if one is (a) an artist and (b) a single and unmarried female dependent on other family members. Of course, there is also the question of how Pinoy society values art. But at the moment, I'm interested in how can art be a vehicle for retirement. 

The painting in contention was created by Don Lorenzo El Magnifico, supposedly a contemporary of Juan Luna. He crafted an obra maestra in his old age, and mostly everyone observed that The Portrait of the Artist as Filipino did not appear to be Pinoy at all in terms of imagery. It showed a scene from Virgil’s Aeneid: Aeneas carrying his aged father Anchises away from the burning city of Troy. The painting was said to be a self-portrait: it was effectively a young Don Lorenzo carrying his old self away from destruction.

After painting this obra, he suffered an accident—fell from a second storey window and down into the courtyard. He was checked by all the doctors and nothing was wrong with him, and yet he refused to leave his room. 

The painting got people interested in an old master that they thought was already dead. A Frenchman raved about it; an endless stream of students, journalists, photographers and critics trooped to the Marasigan house to view the painting—much to the consternation of his two old maid daughters Candida and Paula, to whom he has bequeathed this masterpiece. 

Similar subject by Italian painter Pietro Testa. 

The daughters face a difficult situation: they are dependent on padala of their two elder siblings Manolo and Pepang for their expenses and the house’s upkeep. Candida and Paula have even taken in a boarder whom they despise: Tony Javier was a vaudeville piano player. Unschooled but ambitious, rakish and brings home rowdy women, drinks chocolate lecherously from someone else’s cup. But his rent brings them money, so they tolerate him. 

But even that doesn’t seem to be enough as Candida and Paula do not have enough to pay the bills from the kuryente, the tubig. The sisters have a plan: Candida considered a newspaper ad where one would get paid to catch and kill rats just so they could pay bills. Paula could put up a signs outside the house announcing that she could tutor females how to play the piano, and males on how to speak Spanish—frankly a skill that was disappearing in 1941, on the edge of a war and a Philippines that has been under American rule for decades. Manolo and Pepang didn’t like this plan: they asked the sisters to take down the signages outside the house (Nakakahiya!). They planned to sell the house, take the furniture for their own children who are about to get married and start families of their own. What’s worse is they planned to separate the women, take one each to care for their own households. Such is the fate of dependent elder unmarried women at the time. 

The one thing that could save Candida and Paula from financial ruin was The Painting which their father told them to do as they pleased. Tony Javier has a ready buyer, an American willing to pay $10,000 plus his commission for convincing the sisters to sell. The sisters are unwilling, but Tony lists all the things even he could do with his own commission: go wherever he wanted, to go to Europe, to South America, finally formally study the piano, breathe in some culture. It would buy him decency away from his very precarious situation. 

Tony Javier enticed the sisters with this possibility of financial freedom, of no longer worrying about the bills, what the neighbors would say, doing whatever he wanted without fear. All this for ten thousand dolares in exchange for a painting done by their dear old dad. So a question: How much was Don Lorenzo El Magnifico's painting worth? Can art be a valid nest egg for retirement and financial freedom? 

In the movie, the price of the painting was $10,000 in 1941, which was something like Php20,000 at the time. So there was a 1:2 ratio in the exchange rate. I tried to find out what the painting could cost now. computes for inflation using US CPI data. I plugged in $10k in 1941 and that amounts to $172,216.04 in 2017. At the current exchange rate of Php49.94:US1, it means that $172,216.04 (49.94) = Php8,600,469.04. 

Ronald Ventura's "Grayground" was sold for nearly Php47M.

Php8Million for the work of an old Philippine master seems like peanuts. It should cost more, specially taking into account that even relatively young Philippine artists are topping out at USD1Million per work. There’s Ronald Ventura’s “Grayground” for Php46.9M or Geraldine Javier’s “For She Loved Fiercely” which sold for HKD 1.46M or Php8.8M. A Fernando Amorsolo painting done in his prime sold for Php20M at an auction. National Artist BenCab’s “Sabel” fetched Php20M. The biggest “Sabel” was priced at Php46.7M.

For comparison, I looked up the price of a Juan Luna painting in the market. That same article which sold the “Sabel” mentioned an “untitled Luna” featuring a lady dressed in the fashion of the time sold for Php14M. Perhaps the most controversial Luna piece in recent memory was “Parisian Life,” which was purchased by the GSIS at an auction in 2002 for Php40M. It caused an uproar at the time, and for which the GSIS caught flak for “wasting the public’s money” for an artwork. But the painting is now valued at Php300M, which was 650% higher. 

Juan Luna's "Parisian Life," bought by GSIS for Php40M in 2002.

In the film, Manolo and Pepang brought in the women’s godfather, a senator of the republic, to convince them to sell the painting to the government. It seemed like an echo of the government trying to buy the painting to preserve culture and memory, and at the same time, the sisters could have funds to care for themselves.

Juan Luna's "Espana y Filipinas" was worth Php156M. 

Don Lorenzo’s self-portrait was smaller than Luna’s “Spolarium" but bigger than “Parisian Life.” It should be priced similar to a rare Luna "¿A Do...Va la Nave?” that sold also at a bidding for Php46.7M or to a version of "Espana y Filipinas," which was auctioned off for HK$25.88 million or Php156.52 million. 

At its bare minimum, the work of an old master who was Luna’s contemporary should be priced in the vicinity of a “rare Luna” at Php8M minimum, to an intermediate price of USD1M similar to a young contemporary auction star. Or if we follow the auction for old masters, a major work should fetch anywhere from Php46M maximum or Php156M.

So anywhere from Php8M, 46M or 156M. 

Even if “devalue” it by saying Don Marasigan was *not* Luna and slash the price by half, that would still be a decent Php4 to 20M, that should buy Paula and Candida a modest but secure retirement in their old age. But at 46M or 156M or even “Parisian Life” levels at 300M could buy them and their family financial security for generations. 


So is art a valuable and valid piece of investment for retirement? If it’s the work of an established master, yes. Just going by the appreciation of Luna’s “Parisian Life” from Php40M to 300M in 15 years is proof of that. Even a minor and rare Luna that sells for Php8 million is a godsend. But how many obras of old masters do we have lying around? 

If you are young and can go “speculative,” I would probably get a major work by a relatively young and upcoming artist and hope he does well in the future so that the value of my purchase could appreciate in the decades ahead. Better if he becomes a National Artist. 


All the hypothetical pricing seems wasted as Paula decided to destroy the painting so they could be “free.” As in start from scratch.  I could imagine Paulo Avelino's Tony Javier quaking in desolation as his future was destroyed just like that. But it wasn't his painting.  

Wednesday, December 20, 2017

How Wealthy Are You?

Here’s a stealth wealth/net worth revealing challenge if ever there is one: 

If you were to lose your job tomorrow, how long can you survive? 

I came across this from J. Money of BudgetsAreSexy, who picked it up from LifeAndMyFinances

This is a question that will be recognizable to those who work part time or are on perpetual “casual” employment contracts that get renewed on a term-to-term basis. I realize that I’ve been in this situation almost my entire working life: from the media job that subsists on getting projects lined up one after the other, to the government job that needs you to write a “renewal” letter at the end of each year, to the part time or adjunct academy circuit where people juggle at least two jobs at a time. 

Two words that are the source of unspeakable horrors: Lean years. This is something we all have to live with for the next 3 years at least. Where I’m at, there’s nothing that makes you more aware of your precarious work situation when the end of the term comes and you have not yet received your assignment or “load” for the next and will only learn about it on the day before you start. And even then, it’ll be a surprise as to how much load you’ll be carrying. In some places it’s not so bad, where planning starts in the middle of the term and you more or less know if you have to take on more gigs.

I think if you throw this question at most part timers, there’s going to be much agony and much scrambling to apply in other places. 

As for me, if I got called to the boss’ office and got told that there’s nothing for me come January, I don’t think I’ll panic. 


There are several things working to my advantage: 
  • I’m single and have no kids. 
  • I don’t pay rent. But I pay for household bills and expenses. 
  • I’m relatively healthy. 
  • I live frugally. 
  • I’ve built an emergency fund.
This last item I owe to a series of lucky breaks: 

Some years back, when all the talk about K-12 came up, the Posh School designed a plan where they will “front load” all the part timers—meaning give every one of their contractuals the full allowable work load as a way to save up for the lean years. That meant I had a few terms where I was getting double the usual work I had. 

Then I discovered that they’ve been computing my pay rate wrong. The accounting office used the entry level rate where I should be at another rate. So I received wage adjustments for a full year’s work. The bad part was that accounting gave it at one go so that’s a whopping 30%++ in taxes. That’s when I put that money in a brokerage account. 

Then I started at the Big School which allowed me to rack up some more savings. Then this year I let go of that original Posh School. 

But I recognize how lucky I was about those “front loading” terms and the miscalculation of wages which lead to me accidentally building an emergency fund. 

Plus, my entire work life I’ve been used to this boom and bust cycle. After getting paid for a project, I tend to hoard it because I know that the next pay cycle is going to be a long ways down the road. Setting up a new project or getting a new gig takes time, and one must allocate her resources a bit more sparingly. 

To answer the question, just how long will I last if I lost my job tomorrow? 

From Budgets Are Sexy

Provided that I maintain my frugal ways and don’t have to pay rent, then I can live 6-9 months on emergency funds. 

If it’s really really tough and I have to rely on my entire net worth, then it could be upwards of three years. 

It's not much. As someone who knows what it's like to be really poor, it is a whole lot better. 

I suppose my only regret is that no one told me that money shouldn't really be sitting in a savings account. Otherwise, maybe I have a shot at joining the super elite ultra-wealthy category. But as they say, there's no better time to start investing than today. 

From those other blogs, that qualifies me under the “wealthy” category, although I can assure me that I don’t really feel wealthy. I don’t really own a lot of material things, save for a few gadgets like a laptop, a tablet and a phone—things I need to work. Other than that, I don’t really “own” anything.  If a thief broke into my house, I think they’ll be very disappointed to see boxes of books, some clothes, a ton of paper and not much else. 

Doing this exercise somehow reassures me that I don’t have to run and pimp myself out as the world's worst hooker, or sell a kidney or two. But still, in these highly precarious times, we all need to have a Plan C. I’m already on my Plan B so I need a back up on my back up plan.