It’s hard enough to know exactly when the broader economy has entered bubble territory, let alone when the art world has, with its endless vicissitudes, drama and flamboyant personalities.

So it could be just a coincidence that just as indexes from the NASDAQ to the S&P 500 are trading at historic levels and a select few startups known as unicorns are getting peak valuations, art auction house Christie’s also announced its own high-water mark. Last Wednesday, it had breached a historic $1 billion mark in sales for the week, with competitor Sotheby’s fast on its heels, notching three quarters of a billion in sales in the last few days.

And for a small club of modern masters, such as Picasso, whose "Women of Algiers (Version 0)” sold for a record $179 million last Monday, and Alberto Giacometti, whose sculpture "Pointing Man" sold for a record $141 million, valuations are also being driven up. 

There has long been at least a tenuous link between sky-high art prices and stock market frothiness. While not everyone agrees with why that is, for the last 40 years, the two have seemed to move in tandem--making recent events all the more perplexing, particularly for those in the startup world whose fortunes can kindle or fizzle along with a company's.

“This is a bubble in terms of prices and valuation of artwork,” says Thomai Serdari, an adjunct professor of marketing, and a modern art historian at New York University.

Some History

Certainly, the news from Christie’s and Sotheby’s sounds awfully reminiscent of economic cycles that have seen art values rise as indexes climbed in the past. The showy decade of the 1980s, with its fabled Wall Street excesses, also minted new art millionaires in the U.S. and elsewhere. Jeff Koons, Matthew Barney, and Julian Schnabel, among others, sold new works for astronomical sums, which came to define the decade’s art extravagances. That all came to a screeching halt, when the U.S. stock market crashed in 1987. 

Similarly in the late 1980s, when the Japanese Nikkei reached record levels, hundreds of millions of dollars worth of Japanese money flooded into impressionist artworks at auction. That market reached its frothy height when the chairman of Daishowa Paper Manufacturing bought a van Gogh painting entitled “Portrait of Dr. Gachet,” for $82.5 million, also from Christie’s in May of 1990, shortly before the Nikkei collapsed.

Although art prices remained somewhat depressed throughout the 1990s, including during the stock market heights of the Dotcom era, they started climibing again in 2003, experts say. And then art prices began to increase with gusto, basking in the free money years that led to the collapse of the mortgage bubble in 2008. Over the period, the excess of cash bid up contemporary art works by artists to extraordinary levels, including works by Andy Warhol, Damien Hirst, and Mark Rothko, which sold at auction for tens of millions of dollars.

That all collapsed along with Lehman Brothers, with numerous contemporary art pieces losing as much as 75 percent of their value.

What's Different This Time

Stock indexes are again trading at historic levels, and generally speaking money is looking for a place to go and grow. This time around, however, demand for marquee art names is being driven by a broader array of international buyers, primarily from Asia, Latin America, and Russia, experts say, not just the U.S., Europe and Japan.

Naturally, the purchase of masterworks has always been a game played by the super wealthy. Today’s mega-art sales are being engineered by the ultra ultra rich, whose incomes have increased disproportionately compared to the rest of the globe since the economic recovery began in 2009. In fact, the buying and bidding at auction today is coming not from the so-called one percent, but something more like the one percent of the one percent says Kathryn Graddy, a professor of economics at Brandeis University, and co-editor of the Journal of Cultural Economics.

To that degree, if the record art sales are signs of a bubble, it’s not a very broad-based one, as the mortgage bubble was a few years ago, art experts say. Instead, it's one that involves people with tens of millions of dollars to invest in a single work of art, perhaps with no eye at all to making a quick buck.

“The person who bought the $179 million Picasso is not looking to turn a profit on it, he understands the cultural significance of the painting,” Graddy says. She adds that there is not generally a lot of correlation between stock market indexes and art indexes, and that it's hard to say with any certainty that today's top-end art sales environment represents a bubble. 

Not an Equal Opportunity Bubble

Certainly the hyper-excitement at the very top of the market for modern and contemporary art doesn’t seem to be trickling down to other areas, say, to the secondary market for old masters, which also tend to be among the most valuable in the world.

“From my perspective, the market is operating in a very predictable way,” says Christopher Apostle, senior vice president and head of the old masters department at Sotheby’s.

Whereas paintings by Picasso or Matisse emerge from private collections for sale at auction houses with some regularity, there aren’t that many Rembrandts floating around that aren’t known, or that don’t already hang in museums. And it can take generations for less-famous old masters, which have hung in European estates for centuries, to wind up at auction.

“We are seeing strong prices when something is good, or it’s been off the market for a while,” Apostle adds.

Similarly, contemporary art gallery owners say they don’t see signs of a bubble in their own businesses. Sales have increased steadily in the 10 percent to 15 percent range for the past three years at Porter Contemporary of New York, compared to steep drop off of 30 percent during the recession. But Jessica Porter, the gallery’s founder and owner, notes that today's art prices themselves aren’t going up by much.

Porter, who started the gallery in 2005, represents new and emerging artists including Johnny Romeo, Jason Bryant and Jeff Huntington, whose sale prices top out at around $35,000--a far cry from the multiple millions paid by the platinum-plaited collectors at Christie's.

“My business has been bouncing back in the last two to three years, buyers are coming back and clients we had 10 years ago are also returning,” says Porter, who has two employees.

In the end, it could be simply that as the economy recovers, more dollars are also flowing to luxury items like art, and not only necessities. And at the highest end for art sales it could be that, as some like NYU’s Serdari speculate, the super rich are bored behaving themselves in public and feeling remorseful for how they emerged even wealthier than before from the financial crisis.

What’s more, unlike a unicorn, which could go out of business and have no value to investors in the end, a Picasso is unlikely ever to be worth zilch, experts say. And there could be a much simpler factor driving up prices at the high end of the market as well.

“Buying art is an exciting and interesting thing to do,” Apostle says.