Masterworks: A Terrible Investment

Masterwork sponsorships have been Popping up all across YouTube over the Past few months telling people they are The smart new way to invest in the world Of Fine Art and trying to label Themselves as the future of investing However if you start peeling back the Layers of this company things start to Smell a little bit rotten now Masterworks allows you the common man to Buy fractional shares of fine art that Is worth millions of dollars with the Hopes that someday when they sell it you Can get a profit the problem with this Business model is twofold one being that The actual fine print they make you sign Can leave you with little or no profit When the sale finally happens which We'll look at shortly and the other Issue is that the Fine Art Market they Want you to invest in is arguably the Most corrupt in the world with massive Cases of money laundering fraud and even The funding of terrorism now to be fair I'm not saying Masterworks is doing Anything improper but the Fine Art Market they want you to invest in has a Long history of corruption this 60 Billion a year in annual sales Market is Primarily controlled by five main art Galleries and most of their paintings at Auction are then sold by two main Auction houses Christie's and Sotheby's These galleries are also well reported

In the past to refuse to sell to clients Outside of the elite art world one Gallery even refused to sell a Prestigious painting to actor Daniel Radcliffe because the gallery said that Daniel wasn't exactly what the gallery Was hoping for in a buyer and what this All means is that for any reason the Very few galleries who hold all the Power could decide they don't want to Let Masterworks into their exclusive Worlds and refuse to do business with Them if that were to ever happen which Galleries are known to do in the past it Could be devastating for the artwork Masterworks is trying to unload and its Clients may never see a return on their Investment it actually gets worse from There because there are documented Connections to organized crime where Criminals have used Fine Art to launder Dirty Money in the early 2000s Mexican Art galleries were selling Millions a Year with almost no regulation or Documentation as to who was buying the Arts when The Mexican government passed Strict laws in the 2010s that required More documentation the r Art Market saw A 70 percent dip in sales as the drug Cartels who many believe were using the Art to launder money could no longer do So in 2014 president of the Hobby Lobby Company bought a stone tablet known as The Gilgamesh tablet from an art dealer

Believing it to be from a decades-old Legitimate dig after U.S emigrations Looked into the tablet they determined That it had been smuggled out of Iraq in The past decade and most likely had ties To the ISIS group that controlled the Area as reported by The Wall Street Journal now if all of this doesn't make You upset you should also know that Billionaires can use these paintings for Massive tax write-offs and legally not Have to pay hundreds of millions a year In taxes for example a billionaire can Buy a painting for 10 million dollars And then ship the item to a Freeport Like the Geneva port in Switzerland These are special designated zones where Items can be stored indefinitely Tax-free the Geneva Port is estimated to Hold over 100 billion tax-exempt art now Let's say a few years later that Billionaire gets a tax bill of 40 Million the billionaire can then get an Appraiser to say his painting is now Worth 40 million instead of 10 million And donate that painting doing so would Give him a 40 million tax write-off and He would have to pay nothing in taxes Now you may think that sounds Preposterous but it happens quite Frequently as the Art Market is so small And appraisers can really say a painting Is worth whatever they determine now why Did I tell you about all this corruption

In the art world do I have evidence that Masterworks is participating in these Frauds no Masterworks has done an Excellent job of Crossing all their eyes And dotting all their T's and from what I've seen they don't appear to be doing Anything illegal the point is that Masterworks now wants you to participate In the most corrupt Market in the world That is controlled by a select few Billionaires and their friends the Corruption in the Fine Art Market makes The corruption in the nft market look Like a Boy Scout meeting from there Let's take a closer look at the fine Print on Masterworks website at first Glance it looks like a promising Investment showing several paintings Making large returns to an investors However once you start to dig into the Fine print things start to take a sour Note as noted before Masterwork sells Fractional shares of multi-million Dollar pieces of art now what is Actually happening that some investors Don't know is that each individual piece Of art Masterworks buys is bought by a Different LLC that Masterworks forms and Then fractional shares of that LLC are Sold off so in reality you aren't really Buying Arts you're buying a tiny piece Of a company that owns a piece of art That may sound just like a technicality But by doing it this way this allows

Masterworks to structure the llc's in Ways that benefits them and future LLCs They form for later pieces of art could Have different fine print than makes the Deal even worse as of right now when Masterworks forms an LLC that buys a Piece of art their fine print States Each piece will be held for three to ten Years before the art sells at the Auction there really is no easy way to Get your money out if need be Masterworks does have a secondary Market Where users can buy and sell shares at The LLC however if you talk talk to a Representative with the company they Will tell you that it's very difficult To sell your shares this way and very Few people are actually doing that Taking a look at the structure of the LLC we can see the Masterworks charges Some Hefty fees with a 1.5 annual Management fee just to hold and secure The painting and then 20 percent of Future profits if the painting ever Sells now I did use the word if and That's because there is a very real Chance Masterworks won't be able to sell The art as they state in the fine print Art is a highly illiquid asset and a Significant percentage of objects go Unsold when sent to auction they also State that investors should be prepared To hold their class A shares for an Indefinite period as there can be no

Assurance that the class A shares can Ever be tradable or sold yikes that is Some pretty damning wording and Masterworks knows for many of the Paintings they hold they may never be Able to sell and if they're never able To sell them that means investors in Those pieces never see a return plus Masterworks is charging fees just for Holding the painting every year which The longer they hold means the less Profit you will get of the total sell if It ever does sell now like I mentioned Earlier the Art Market is mostly Controlled by five large Galleries and Two auction houses at any time they can Decide they don't want to work with Masterworks and shut them out like they Have been known to do in the past Ultimately you're the whim of Billionaires who get to decide if Masterworks gets to participate in their Closed Market at this point I would like To think most people realize this isn't Such a great deal but if you're still Not convinced you should also be aware That Masterworks is not registered as an Investment company with the SEC now to Me that's a huge red flag the company That wants you to invest with them is Not a registered Investment Company any Company you deal with in the stock Market including the much hated Robinhood is going to have sec

Regulations yet Masterworks doesn't why Would any self-respecting businessman Agree to put their money in such a risky Company after all that the fees and the Possibilities of never selling their Artwork Masterworks has the audacity to Add even more fees stating additional Expenses associated with acquiring Sources securitizing and selling the Painting are paid by the issuer the Issuer being the LLC meaning investors Have to pay more unspecified fees at Masterworks discretion the insane amount Of hidden fees this company has packed Into the fine print would make any Sleazy used car salesman cream himself Enjoy at how well Masterworks is Screwing its investors out of potential Profit now to end off let's take a look At possibly the scariest statement in Masterworks fine print the investment is Suitable only for persons who can afford To lose their entire investment now that Is a frightening statement to see the Company knows that they are in uncharted Waters with no one having ever tried Anything like this before at any moment It could all come crashing down now to Finish off I just want to say that I'm Not a financial advisor just a guy Locked in an old Warehouse ultimately It's up to you to decide if this is a Company you want to invest in but I'm Curious after what I've gone over today

With how corrupt and exclusive the fine Art it is on top of the very dubious Fine print written into Masterworks Documentation is this something you Would be willing to invest in I would Love to hear your thoughts Down Below in The comments

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