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A recent story by Marketwatch.com indicates that art prices maybe headed south. here's the story below. What do you think about this story and art prices in general.

rices around the world for fine art are starting to falter, sending fears through brazen collectors who normally pay millions of dollars for collectible pieces.

Some people such as Dana Cohen, an analyst at Banc of America, say the fallout in the subprime mortgage market has made art investors more conservative, either because they are experiencing losses, are concerned about volatility or are worried about a large decline in the capital markets.

At a recent Sotheby's auction in New York, a Van Gogh landscape expected to sell for between $28 million to $35 million failed to attract a buyer. A Paul Gauguin work at the same auction sold for well below its expected price: "Te Poipoi (The Morning)" sold for $39.24 million; it had been expected to fetch between $40 million and $60 million.

Art experts say the market may indeed be tapering off after a period of outstanding performance. Art prices have bested the stock market over the past decade.

The links are being felt around the world. In a cover story for Businessworld India it's noted that there has been a general slowdown for Indian art prices for the last nine months. The ET-Osian's Art Index, which tracks prices in Asia and India, shows a 30% fall after having posted 100% returns for the past three years.

Given how active Asian investors in particular have been in purchasing art, that's a big indicator of prices softening worldwide. Also, the Indian art market is and has been considered "hot" with local artists en vogue in international art-buying circles.

To be sure, some see the latest price dips as buying opportunities. Certainly, Pablo Picasso's sculpture of Dora Maar is an indication of buyers still paying up where they see value.

Maar was Picasso's muse, and the sculpture -- less than three feet high -- sold for $29.16 million, at the high end of its expected price range at the Sotheby's New York auction. The work had been expected to sell for between $20 million and $30 million.

If anything prices reflect investors diversifying their art portfolio. As Businessworld India observes, "Instead of acquiring one expensive work by a well-known name, they are buying multiple works of lesser known artists, or are picking up lithographs and serigraphs of established artists."

Diverse artworks

The trend is evident in the U.S., where "living artists" whose works are less expensive are garnering more attention as well as a hike in prices. It should be noted that these prices are well below the eight- or nine-figure prices commanded by more well-known artists who are no longer living.

Art itself is known to be an interesting way to diversify a portfolio so investors don't have too much exposure to stocks, bonds, commodities or real estate. Art behaves in its own way, too, not necessarily correlated to how those other asset prices move.

But when people are fearful of investing in the stock market they aren't too quick to buy an expensive piece of art. More over, many investors work in the financial

Caution is the word being used most in the art market these days. That brings with it slowing markets -- but also opportunities to buy at the right price.

There are active art buyers -- Sotheby's spins its auction results as bullish, citing it as the third highest take overall. But that isn't a new high, something the art market had been getting used to at each new auction it holds.