2020 | Words | Recession | A Good Time to Start or Expand Your Art Business? | Part 2

2020 May 29

What we do know, however, is that occasional outbreaks of those two super-contagious diseases, fear and greed, will forever occur in the investment community. The timing of these epidemics will be unpredictable. And the market aberrations produced by them will be equally unpredictable, both as to duration and degree. Therefore, we never try to anticipate the arrival or departure of either disease. Our goal is more modest: we simply attempt to be fearful when others are greedy and to be greedy only when others are fearful. [Emphasis added]

 –Warren Buffett, 1986 letter to shareholders of Berkshire Hathaway.

In Part 1 of this series, I researched the question of starting or expanding your art business during a recession from the perspective of how the historical stock market and employment performed going into and out of major recessions.

Recession | 1972 Inflation/Vietnam/Watergate

Continuing with my historical analysis, here are five examples of companies that started during the 1972 recession and are currently part of the S&P 500 (S&P 500 rating methodology: Click HERE to download PDF file from Standard & Poors).

Note:

• • Company stock performance vs. the S&P 500 illustrations in this article forms a part of the research I conducted. I also conducted business analysis including historical financial performance (Example: Enterprise Value/Earnings Before Interest, Taxes, Depreciation & Amortization financial analysis: EV/EBITDA) and key business developments for individual companies, as well as noting key historical economic drivers and global events.
  • All companies reviewed were founded between 1972 and 1979 and are currently part of the S&P 500. Examples of some of the companies are shown in this article.

Apple

• • Start date | 1976
  • Went public | 1980
  • Added to S&P 500 | 1982 November 30
  • “Apple designs a wide variety of consumer electronic devices, including smartphones (iPhone), tablets (iPad), PCs (Mac), smartwatches (Apple Watch), and TV boxes (Apple TV), among others.” — Morningstar.

Expeditors International

• • Start date | 1979
  • Went public | 1984
  • Added to S&P 500 | 2007 October 10
  • “Expeditors International of Washington is a non-asset-based third-party logistics provider, mainly focused on international freight forwarding.” — Morningstar.

Jack Henry

• • Start date | 1976
  • Went public | 1985
  • Added to S&P 500 | 2018 November 13
  • “Jack Henry & Associates is one of the leading providers of core processing systems to domestic banks and credit unions.” — Morningstar.

KLA Corporation

• • Start date | 1975
  • Went public | 1980
  • “KLA designs and manufactures yield-management and process-monitoring and control systems for the semiconductor industry.” — Morningstar.

Microsoft

• • Start date | 1975
  • Went public | 1986
  • Added to S&P 500 | 1994 June 01
  • “Microsoft develops and licenses consumer and enterprise software.” — Morningstar.

 What Happened?

After the stock market portion of the 1972 W Trend recession ended in 1980, KLA and Apple went public and promptly declined by 40% to 50%. It took two years for them to return to parity. As the unemployment portion of the recession continued, KLA’s and Apple’s performance diverged with KLA rocketing above the S&P 500. On the other hand, Apple briefly surged and then declined into negative territory for another three years.

Beginning four years after the stock market portion of the recession ended, companies including Expeditors International, Jack Henry, and Microsoft went public with Expeditors and Microsoft taking off and Jack Henry plummeting into negative territory.

For the stocks used in the article as illustrations, 1986 was a turning point: by then, all had gone public and were performing above or equal to the S&P 500 with the exception of Jack Henry which did not recover during the recession.

Finally, in 1989, the unemployment portion of the recession ended.

Correlation?

There appears to be little to no correlation between the business performance of these examples and the continuation of the unemployment portion of the recession prior to 1986 (3 years prior to the end of the W Trend unemployment recession). Expediters, KLA, and Microsoft performed extremely well during the recession while Apple and Jack Henry did the opposite.

Why?

• • Expediters, KLA, and Microsoft clearly identified their key customer’s needs and developed solutions to address their needs.
  • Similar to Microsoft, Jack Henry was also a software company but focused on the financial industry niche. Their growth trajectory was slow due to the historically conservative nature of technology solution adoption by the financial industry. That all changed in 1992 (16 years after their founding) when they went on an acquisition spree that effectively expanded their outsourcing business. The positive results can be seen in their stock’s rapid return to parity and substantial outperformance of the S&P 500 beginning in the second half of 1991.

 

• • Apple was the outlier. Unlike the other companies, Steve Wozniak’s Apple I computer was a solution in search of a problem. Apple’s stock rapidly declined after going public during 1980 and stayed that way until 1986, despite a brief respite in 1983. While it appears that Apple was affected by the ongoing unemployment portion of the 1972 recession, the real problem was that IBM quickly introduced the PC after Apple’s success with the Apple I and Apple II computers; the irony being that Apple had the first killer app for businesses: VisiCalc, the world’s first spreadsheet.

Lessons Learned From These Businesses

• • Keep an eye on your competitors through the use of periodic competitive intelligence while ensuring that your company retains or hires a small team of visionaries. Apple failed at the first part and succeeded at the second part.
  • Ensure that you’re serving your present clients well and have identified your future clients without devolving into a customer relationship. Over the long-term, Apple has done this well.

Artists Who Began Their Practice During the 1972 Recession

Continuing my historical analysis, here are examples of artists who began developing their mature work between 1972 and 1979 and went on to achieve lasting recognition and success.

Cindy Sherman

• • Start of key body of work: 1977 (Untitled Film Stills series)
  • First major recognition: Late 1970s and early 1980s through group exhibitions and critical attention
  • Breakthrough: Solo shows and widespread acclaim in the 1980s

Jean-Michel Basquiat

• • Start of significant activity: 1977 to 1978 (SAMO graffiti and early paintings)
  • First major gallery recognition: Early 1980s
  • Breakthrough: Rapid rise in the mid-1980s with solo exhibitions and international attention

Keith Haring

• • • Start of significant activity: 1978 (subway drawings and street work)
    • First major recognition: Early 1980s through public installations and gallery shows
    • Breakthrough: Widespread popularity and commercial success by the mid-1980s

Jeff Koons

• • Start of professional practice: Late 1970s
  • First major recognition: Early 1980s with conceptual and object-based work
  • Breakthrough: Significant market and critical attention in the late 1980s and beyond

These artists began building their distinctive practices during the 1972 recession period. Their paths show how individual careers can unfold relative to broader economic recovery patterns.

What Happened to Their Careers?

After the stock market portion of the 1972 recession ended around 1980, several of these artists gained early traction through exhibitions and critical notice. Some experienced initial challenges or slower starts, similar to how certain companies struggled right after going public.

As the longer unemployment and spending recovery continued through the 1980s, trajectories diverged. Artists who connected strongly with cultural conversations and built networks tended to gain momentum. Others faced periods of adjustment before finding sustained direction.

By the mid to late 1980s, most of these artists had established significant recognition. Their careers continued to develop even as the full effects of the recession on employment and consumer confidence lingered until around 1989.

Why Did Some Succeed More Than Others?

There was little direct correlation between the ongoing unemployment portion of the recession and the artistic success of these examples before the mid-1980s. Some artists thrived while others faced more difficulty.

The artists who performed strongly tended to:

• • Create work that responded to real cultural questions or personal experiences people cared about
  • Move from street or personal practice into gallery and public contexts at the right moments
  • Build relationships with curators, peers, and early supporters

Artists who faced slower starts often dealt with shifting tastes, competition from new movements, or the challenge of turning early ideas into a sustainable body of work. One notable pattern was the importance of adapting while staying true to a clear vision. For example, some artists succeeded by refining their approach over time rather than relying on initial hype.

Lessons from these paths include:

• • Observe what is happening in the wider culture and in your field while protecting time for your own vision.
  • Serve your current audience or collectors well while thinking about who might connect with your work in the future.
  • Balance bold experimentation with practical steps to keep your practice sustainable.

Key Takeaways: Fear and Greed in the Art World

Successful artistic growth is always challenging and often involves setbacks, regardless of economic conditions. To give yourself the best chance during uncertain times, consider these steps:

1. 1. Identify a direction or body of work that has genuine potential to resonate with others.
   2. Understand who your potential audience, collectors, or curators are. Reach out, listen to what matters to them, and note the real problems or questions they are willing to engage with through art.
   3. Develop a clear, focused artistic direction or series.
   4. Secure enough financial runway to develop your work properly, often requiring several years of support.
   5. Create work that addresses the strongest themes or needs that emerged from your conversations and observations.
   6. Keep your overhead and expenses low.
   7. Maintain genuine relationships with supporters and peers throughout the development process.

Bottom Line: Is a Recession a Good Time to Start or Expand Your Art Practice?

Yes.

A recession is not the time to be fearful. When fear is widespread in the art world, many artists pull back. This can create space for those who continue creating with intention, build authentic connections, and stay focused on meaningful work. The artists who treat downturns as periods to develop quietly and strategically are often the ones positioned to move forward when conditions improve.

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