Those outside the art world may remember Asher Edelman as the cutthroat 1980s corporate raider who served as a model—with Carl Icahnfor the ruthless Gordon Gecko character in the film Wall Street. Inside the art world, Edelman is best known for his shrewd collecting instincts. He began buying art in his late teens, then backed such galleries as Mary Boone and Leo Castelli in the ‘80s and, for five years in the ‘90s, ran a museum in Lausanne, Switzerland, where he mounted retrospectives of Basquiat and Mapplethorpe, among others, before returning to New York to launch his career as a private dealer. This past June, he opened Edelman Arts Inc. in an elegant town house on East 63rd Street with an inaugural show of the conceptual artist Dennis Oppenheim. While exhibiting contemporary talents like Oppenheim and the painter Christopher Winters in the front room, Edelman continues to do backroom secondary-market deals involving blue-chip postwar works. During his financier days, Edelman taught a course at Columbia’s business school called Corporate Raiding: The Art of War, in which, until the university intervened, he offered students a $100,000 finder’s fee for spotting takeover targets. Edelman the art dealer may be less brash, but he’s no less ambitious. He says that while his gallery isn’t a carbon copy of anyone else’s, figures like Castelli and Ileanna Sonnabend are role models.

You’ve said that the market is showing scattered signs of weakness. How so?

The amount of time people taketo make decisions about paintings has expanded immensely. I have a very major Basquiat now, and there are three interested buyers. I’m not trying to close on them; they’ll close on themselves, one or another of them. But people are much less worried that the piece might go away. They think, “I’ll find another one. “

You’ve also stated that you don’t mind opening your new gallery now, at the top of the market. What’s your strategy?

If you think the market is going down, and I do, then your next sale should probably be at some percentage under the last auction sale. Or you want to put the piece up at auction not at the last estimate and reserve but at something lower. And if the market isn’t going against you, you will get the old price. I use the auction houses a lot, and they use me a lot. I think the houses are very useful. I don’t think they do the research or the tastemaking we do, but as a market vehicle, it’s terrific that they are there.

Buyers from the world’s growing markets—Russia, China—seem to be propping up the market at the auctions.

In 1989 I sold 30 percent of my collection, by value, because I was going to need money and was opening a museum, and I thought it was the top of the market. At the time everyone talked about the new world: The Japanese were there, and the Europeans were collecting contemporary art.

But it can’t be the same now as it was with the Japanese in the ’80s.

Why? We are in exactly the situation we were in in the 1970s—which was totally predictable two years in advance, economically. The dollar is going to strengthen. It will go up 20 percent in the next 18 months, in my opinion. And if there’s been one support for the art market, it’s the reluctance of non-Americans to sell and the willingness of Europeans and others to buy, because in their currencies the prices don’t look as inflated.

But that’s an illusion, isn’t it?

Of course. People have that illusion. But it will go away, sooner rather than later. The auction houses are going to give far fewer guarantees and purchase far fewer pictures for November’s sales.

Guarantees have been their major strategy recently.

There is a new paradigm. For centuries, dealers established pricing in the art market, and auction houses related to those established prices. As new people like the Russians and the Chinese came into the market and, maybe rightly, didn’t feel comfortable in the hands of dealers and, wrongly, felt very comfortable in the hands of auction houses, people like Mitchell Zuckerman, at Sotheby’s [now chairman of financial services], who is very smart and whom I like, understood that essentially if they put their stamp on a picture, on an artist, they could then set the price.

How do you put your stamp on a picture or an artist?

Well, you guarantee it or buy it. Contrary to the past, when people were skittish about a guarantee or a picture in which the house had a financial interest, these new people were excited, because they said to themselves, “The auction house put its money there, and therefore the pricing is fair.” And so they created this whole new world of pricing, which by the way, is very dangerous, because it is much too selective, it is not necessarily correct. It makes major differentiations between periods of an artist’s work and creates a silly demand for something. Richard Prince’s “Nurses,” for example, are perfectly good pictures, but we’ve seen enough of them by now.

What about estimates?

It’s the same for estimates, but estimates are less influential than guarantees and purchases. So you have this whole new game being played out there, and it has been very successful—not a game, a business strategy, and there’s nothing wrong with having a business strategy. The auction houses are in business, after all. They are not in art.

And where do you think that business strategy leads?

What happens is the auction houses cannot shy away from this procedure. Because if you’ve had 10 auctions where you’ve guaranteed $500 million and your guarantees have earned you an extra $100 million per auction—I’m just using numbers—and the 11th fails, maybe you’ll lose $30 million or $40 million in total, but in the meantime, you’ve made an extra $500 million. If the 11th works, then you’ve got the 12th where you can lose some back. You can’t afford to stop playing. You can’t afford to step off the merry-go-round, because the other guy might stay on. Or maybe he won’t stay on, but there might be a lot of money to make that you didn’t make. So you have to keep playing the guarantee and the purchase game until it’s over, and you are going to get hurt once. And both auction houses know that. But most people haven’t thought through that strategy.

In 1987 you compared the atmosphere at Christie’s and Sotheby’s to that in the Chicago hog pits.

I owned the biggest stockyard company in America then, so I was qualified to make that comparison.

By which you meant that art was being treated as a raw commodity.

But it is for them! That’s the business they’re in.

How much buying and selling do you do at auction these days?

I do more selling and placing with the houses. If I consider a picture to be a good auction picture, I will go back to my client and say, “You might do better at auction than otherwise. And I think I can get you excellent placement in the catalogue and exhibition hall and can get us the kind of sponsorship we want from the department.”

If a collector buys a painting from you—one by a living artist whom you represent—do you demand a resale agreement so that it won’t be flipped at auction?

I say, “Do whatever you want with it. It’s your picture.” And any artist who has complaints about that is just silly. He restricts his potential. There is a market. You have to face it.

I assume that in your early years as a collector, you weren’t buying art as an investment.

I bought a Jasper Johns in 1961 for $800, and I assure you I couldn’t sell it for $1 the next day. The idea of art having value didn’t occur to me until the late 1970s, and by then I had a lot of art—500 works or more. In the process of insuring it, I learned that it was worth quite a bit. That was the first time I really thought about art and money.

What do you make of today’s art-investment funds?

I don’t think there are any funds—with the exception of Bob Mnuchin’s, which he runs with his own hand, or maybe I have something quiet too—that don’t put on layers and layers of conflict and advisers and relationships with auction houses. Structurally, I don’t think we have an art market yet that warrants thinking much about investment. So then there’s only the individual who has enough money and is willing to commit to a totally—in bad times—illiquid investment. I can tell you that in the 1970s you could not sell a picture. You’ll have investors who commit to a totally illiquid business, and you’ll have varying levels of speculative investing, which is great fun. Certainly you can make money at it. But I don’t think there’s yet a structure in place for someone to say, “I’m not interested in the art. I just want it as an asset class.”

What about indexes used to measure the art market and predict investment outcomes?

I was in the arbitrage business, and the economist Harry Markowitz worked for me while he was developing beta theory, which is considered the premier method of measuring risk in equity securities, but we also developed hedging techniques. So I know something about the valuation of options and bonds and so forth. And I remember when I was living in Switzerland, the private-banking division of Chase in Geneva would come to me and say, “Here’s something terrific for you, because you can own this currency, and this is the band where you’ll have some risk, and all you have to do is pay this.” Let’s say “this” was 4 percent. Then I would open my newspaper and see that if I bought this option, it would cost me only 1 percent to have the same thing. And Chase knew that! It was putting the structure over on people.

Have you been asked to consult for an art-investment fund?

Many times. But, again, I don’t think they’re structurally correct. I’d love to value what they haven’t sold.

Do you think your art dealings have ever been mischaracterized because of your past in finance?

Possibly. There’s a different characterization that annoys me: that I’m a dilettante. I was the first to win the Niolargue boating race in St.-Tropez three times. I ran a good museum. I know about the paintings I’m selling. So I resent people who say, “He has to be shallow.” I’m not.

"The Wise Men: Asher Edelman" originally appeared in the August 2008 issue of Art+Auction. For a complete list of articles from this issue available on ARTINFO, see Art+Auction's August 2008 Table of Contents.