An embittered Sotheby's (NYSE: BID) has turned in its first quarterly profit in a year, showing signs that the worst of the art market slump may be over. The company, which has seen contemporary art auction prices fall 76.2% from May 2008 to today, reported a decline of 87% in earnings for the second quarter, but company CFO William Sheridan says that the worst of this market is behind us. Sell-through rates are up, with more inventory moving likely to help with sagging revenues.

But commission revenue seems to be headed in the wrong direction. For Q2, Sotheby's reported commission revenues at 21.3%, up from 41% year-over-year. Unfortunately, this isn't the measure you want to go up. Lower-priced pieces tend to have higher commission rates, meaning that the auction house's Q2 performance was dragged down by less desirable inventory.

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.

Picasso's Le Reve, which a casino mogul accidentally elbowed a hole in earlier this
year.

The art market has been heating up of late, and according to Elizabeth von Habsburg, "Art is being looked at as the newest asset class." Should retail investors be taking notice? Probably not.

In collecting art, the carrying costs are often extremely high. Insurance premium run about $1.20 for every thousand dollars in value, and the market has been so volatile that an increasing number of collectors are having their work reappraised for insurance coverage twice a year. But with an increasing number of wealthy collectors from the Far East, hedge fund managers, and entrepreneurs from the recently market-based economy in Russia all buying art, there may be a number of catalysts for escalating art prices.

How can ordinary investors make money from this trend? I think our best bet may be to look for publicly traded companies that will benefit from a strong art market. The most obvious choice is Sotheby's (NYSE:BID), the largest auctioneer in the world. While not an art stock per se, Escala Group (NASDAQ:ESCL) is a major player in the collectibles market, which tends to move in the same cycles. Of course, do look into the scandal surrounding the company. The shares are up big after the board announced that they had found no fraud, but the Motley Fool has a more pessimistic take on that.

Of course, owning art has its own pleasures. But rather than looking at it as an investment, consider buying some nice prints from allposters.com. And leave art as an investment to the big-money collectors.