By Katya Kazakina
Bloomberg News
As postwar and contemporary art auctions begin in New York this week, 66 Andy Warhol lots will test the market's appetite for one of its biggest stars. What's the best buy?

"As an investor, you'd be better off putting the money into a mid-tier category," said Anders Petterson, founder of London-based art-market research firm ArtTactic Ltd., speaking at a recent conference in New York. "There's still a sense of rarity in this segment, but at the same time more liquidity than at the high end."

Art is a tricky investment, its value influenced by economic cycles, clandestine deals, irregular supply and demand, plus sudden shifts in taste.

Warhol prices this week range from a simple black-and-white photo-booth strip estimated at $10,000 to $15,000 to a stark red self-portrait with spiky hair on black background for $30 million to $40 million.

The mid-tier market falls between $500,000 and $5 million. In 2010, buyers in this category snapped up works from the "Mona Lisa" series, smaller Mao paintings, dollar signs, 24- inch flower paintings and 1963 "Jackie" portraits.

This price bracket accounted for 29% of all Warhol lots sold in 2010, versus 8% that fetched $5 million or more.

Highlights include a somber round 1964 "Jackie" silkscreen painting from the estate of San Francisco art patron Dodie Rosekrans with an estimate range of $3 million to $4 million at Sotheby's.

Small Mao

Phillips de Pury has a small 1973 Mao silkscreen painting with an estimated range of $3.5 million to $4.5 million. Depicted in a green frock on blue background, this Mao was part of a batch of Warhols from the Sonnabend Collection acquired by Larry Gagosian in 2008.

Christie's has a 90-by-70-inch canvas "Diamond Dust Shoes" (1980-81) in which high-heeled sandals are sprinkled with diamond dust, for $1 million to $1.5 million.

"If you can buy a 90-by-70 Warhol shoe painting for $1 million, it's better than owning Google, Microsoft and Facebook together," said Alberto Mugrabi, New York-based collector and dealer in Warhol. "I am not involved in selling this work, but I will be involved in the buying."

So let the Russian oligarchs and Arab sheiks compete for Steven Cohen's aquamarine "Liz" that has a $20 million to $30 million estimate range at Phillips de Pury on May 12.

'Trophy Element'

"The top is not driven by pure rational investment decisions," said Petterson. "There's a trophy element of wanting that piece that you paid the largest amount in the world for."

Masterpieces tend to underperform the rest of the market, and postwar and contemporary art is no exception, according to research by economists Michael Moses and Jianping Mei.

"The returns on works that were purchased for seven figures and up are half of the returns on works purchased for five figures," said Moses, co-founder of www.artasanasset.com, which calculates financial returns of art transactions.

"That's not to say that people should stop buying masterpieces; it just means that they don't make the best financial investment."

(Katya Kazakina is a reporter for Muse, the arts and leisure section of Bloomberg News. The opinions expressed are her own.)