The art market spent a year and a half circling the drain. Signs of life at the end of 2009, however, have become a reality, with recent auctions at Sotheby's (BID) and Christie's (CRUPF) exceeding expectations and showing triple-digit growth from comparable auctions last year.

Overall, art prices last year were off around 50%, with the contemporary art sector suffering even more severe declines of up to 70%. With prices this low and a recovery taking shape, it's time for investors to get in, and it looks like we'll see an art rally this year.

Damien Hirst has gotten to the point where the sound of his own voice isn't good enough – now he needs a record of his thoughts for the ages. He and fellow artist Richard Prince (who actually has some talent) discuss the pains of the art market in Requiem II, which is scheduled to be published by Other Criteria this fall. Of course, Hirst is one of the publishing house's founders, making one wonder if this is the only most effective way for him to get a book published.

If a recent interview with ArtNews is any indication, Requiem II will contain the insights you'd come to expect from an artist of Hirst's caliber. My personal favorite: "Yeah, we ain't gonna sell as much art, art shows are gonna get better now the focus shifts away from money."

Brilliant.

If you were planning to sell that Damien Hirst in your closet to help pay the mortgage, think again. According to a recent piece in Portfolio, "To capitalize on the past few boom years in the art market, Hirst's studio churned out works at a speed that many feared would overwhelm demand, pushing down prices further."

Daniel Komala, president and co-founder of Larasati Auctioneers tells Bloomberg that art prices could fall 40% in 2009. Bloomberg adds that "Confidence levels in the contemporary-art market have fallen 81 percent since May 2008 and may take between three and five years to recover, according to a survey released by research company ArtTactic Ltd. this week. Almost half the respondents to the survey expected auction prices would fall by 30 to 50 percent from their May 2008 highs."

What is ailing the art market seems to be the same thing that's ailing housing. For instance: Speculative buying drove up prices for hot contemporary artists (or houses), leading to a flood of new works (construction) hitting the market. Then consumer confidence took a plunge and now people are freaking out.

Prices for more artists with longer track records -- like Monet -- are not expected to be impacted nearly as much. Shares of leading auctioneer Sotheby's (NYSE: BID) have already been pulverized by concerns about the market, taking another big dive yesterday. But with its solid balance sheet and strong moat, the stock might even be interesting as the ultimate contrarian play right.

This post is part of our feature on Money Winners of 2008. See all 20.

Hedge fund managers weren't the only ones making buckets of money during the great boom of the early 21st century. So too were the artists whose work the newly rich love to buy. And no one has made more money selling paintings and sculptures to private equity bigwigs and Russian oligarchs than British artist Damien Hirst.

Until recently, Hirst was famous largely for his conceptual sculptures of dead animals floating inside glass-walled boxes. Much of his work displays an obsession with death, including a human skull encrusted with 8,000 diamonds and a box filled with flies feasting on a rotting cow's head. And his art isn't cheap. The asking price for the skull, titled "For the Love of God," was $100 million.

But like all modern visionaries, Hirst saved his greatest innovations for the marketplace itself. In the summer of 2008, Hirst organized his own art auction, neatly bypassing the dealers whose commissions typically claim a good chunk of the sale price of a piece of art. Sotheby's hosted the sale, waiving its usual fee to do so. Over 20,000 people viewed the show in just two days, and when it was over, Hirst had sold $198 million worth of art, a new record for a single-artist auction.

Hirst's profits may be puny compared to the financiers who buy his work, but $200 million in two days is a pretty good haul by most standards. And it sets the bar higher for the next generation of artists who create the shiny trophies that billionaires so love to collect.

Be sure to check out more Money Winners of 2008.