Industry may be facing tough times, but less volatile than stock market.
U.S. stock market investors had a wild ride this week. The Dow Jones Industrial Average shot up 286 points Monday after the rescue of Freddie Mac and Fannie Mae. Those gains were erased Tuesday as the market plunged 284 points. On Thursday the market rocketed up 169 points.
And that’s just one week.
Which is one more reason I’m glad much of my money is tied up in the domain name market rather than the stock market. Sure, I have a lot in the stock market and have lost lots of money this year. The U.S. markets are down 20% or so. Overseas markets are down 30%-70%.
But whereas the stock market seems to swing wildly each day, the domain market holds somewhat stable. The price of oil doesn’t make our domains drop in value overnight. A couple months ago if oil went up the stock market dropped because people thought high oil prices would slow the economy. Now if the price of oil drops the stock market drops because people think it’s a sign of a slow economy.
To be sure, if online advertising growth slows we can face some difficult times in the short run. But I have no doubt that online advertising will grow over the long run. If you’re a long term investor with a strong stomach, now might be a good time to get into the stock market. And it’s probably a good time for long term investors to be in the domain market, too.
Robert Haastrup-Timmi says
Sorry mate!…bute it’s still the wrong time to get into the market. To put it mildly, there is a school of thought without going into detail that see’s the gold prices breaking resistance at $1000 an ounce, scaling to $1500 to $2000. These pundits are some of the most sophisticated minds I have access to. They have been right thus far with the credit crunch and property prices. Also Lehman is just about to go belly up! maybe even by monday if they don’t get bailed out. IMO its not a matter of if, but when gold breaks above $1000 to find new levels, do your sums, its bad news for the dollar and the markets. The world has changed, the best alternative investment is gold, silver or…DOMAINS!
8 stock portfolio says
While the indexes are down 20% or so, many individual US stocks have been absolutely crushed. Down 50%, 60%, 70%. It’s not just financial stocks, but through all sectors.
About a month back, I started getting into some selective crushed stocks. The portfolio is up so far.
On the other hand, I’ve recently had a lot of domain deals fall apart and have been getting less offers.
The past few years, we’ve seen every investment class taken down- real estate, stocks, commodities… It’s not a stretch to think that domains will have a pull back too.
Andrew says
8stock – domains have had a pullback. But it’s not as bipolar as the stock market. Of course, the market has been going up and down…if the domain market just has a slow and eternal decline, that wouldn’t be good.
Shane says
Domains have been a better investment than the stock market over the past 5 or 10 years, but as they say in stocks: history is no guarantee of future performance 🙂 This was a very unique period in the life of domain name investment, and I don’t see it being repeated.
Until there’s an active, liquid, more transparent market for domain names, stocks are still the safer bet. I wouldn’t put my retirement into domains right now.
Snoopy says
The domain market isn’t less volatile than the the stock market. The reason why daily changes aren’t apparent there is no reliably daily service tracking price changes because of the uniqueness of domains. It isn’t until a couple of “shock sales” come in like the lll.com that got $5002 a few weeks ago come in that people realise what has happened.
Robert Haastrup-Timmi says
Shane! let me briefly explain why Domains are set to provide much better returns over the next 3 to 10 years. Bear in mind, after 10 years my analysis may no longer apply.
Ok, its partly social-psychology at play here, why domain names are going to be extremely valuable to investors that are “ALREADY IN” the domain market now. Even if you have not been accumulating domains over the last 5 years, there is still an aftermarket window of opportunity for about the next 3 to 5 years, but it does get a little riskier.
Why do I feel and suspect this? I’m going to ask everyone reading this piece, to assume you are now doing a Doctorate Research on the “Future of Domain Investments” and its impact on the Global Social Economy, live, work, business and play.
You will first diagnose what has happened over the last 14 years since the inception of the web uptil now, its impact on conventional business and human attitudes & behaviour towards the web, then you will now have to extrapolate where the next 10 to 15 years is taking the entire global ecomnomy.
Microsoft is very desperate to buy Yahoo and I listened to this on a BBC Podcast recently, because they earnestly believe in the next 10 years, every thing you see, think and do, will be online at the great expense of conventional media turned upside down.
Steve Balmer suggests there simply will no longer be “print deliverables” such as news papers magazines etc.. at least metaphorically. So therefore, if it is the case that New York Times one day says we are folding our print to go exclusively online, where do you now think all those businesses advertising in print media are going to advertise??
This is partly why the idea has been thrown around that Google could one day become a Trillion Dollar Capitalized company….their ad inventory will have to go up and competition will be fierce with far higher PPC pricing getting closer to what it costs to advertise in print. Now that is just one small part of my theisis.
The other part is GREEN TECHNOLOGY! Look guys, silicon valley believes GreenTech will be bigger than the web itself with the fate of human kind at stake, and Business Week believe people will be forced to work locally and socialize more online through social networks because “Peak Oil” changes everything including massive job losses!
So therefore, all of this massive online gravitation means that land online will become a big big battle and extremely competitive! Don’t forget, that is why mankind waged wars for centuries “LAND”…it is about to happen online in economic competitive terms.
So in closing, you can see my perspective is not just based on emotional domain psychology because they are trendy assets or something. Anyone who cares to decipher the acturial forecasts will come up with very similar findings.
A lot of very unkind people are going to be coming after the land you own online, so be very guarded indeed…its again what Rick Schwartz has been saying, it will get very very ugly, when they realize you hold all the cards and they have to have it! Most will pay you a fortune for it, but some will use cruder malicious methods to obtain it!
As for stocks, be very very careful indeed…the baby boomer generation is getting very scared and they about to retire within the next 5 to 10 years…they will sell big time!!
Stelladora says
Fluctuations in the stock markets are more pronounced and visible because of the liquidity in those markets compared to markets for domain names, where liquidity remains an issue.
Once the domain industry has gained more infrastructure elements similar to the stock markets, we could see increased volatility but also increased valuations overall because of the increased liquidity that such infrastructure will bring.
LeaseThis, DomainCapital, DigiPawn and wholesale buyers are all contributing to increased liquidity in domain markets.
If more investors diversify away from the stock market, some of their focus will hopefully extend to the domain market.
In August, 2007 at a domain conference run by the organization that is now part of ThoughtConvergence, an informal poll of participants showed that respondents were looking for the domain market to take off at the end of 2008. Does that forecast still appear likely?
Stephen Douglas says
STELLADORA: Your comments are logically sound, and have much merit regarding domain “liquidity”. Although I have seen a drop in prices in some quality domains (most likely based on people who own these domains needing money to recover from stock market losses), the “basic” value of a good domain name has not dropped.
Snoopy, forever the optimist, worries about a LLL.com domain that sold for under $10k. That means nothing but a reflection of the SELLER accepting an unexpected lower price because of their own financial strategies. I will sell a good domain for cheap if I want to grab quick cash to cover renewing 200 domains. I will also hold onto a domain name I know will be worth a lot when the time is right. I also know 20+ lowkey domainers who buy these domains from cash-hungry sellers and flip them as quickly as 10 days for huge profits.
As for the domain conference that Stelladora refers to, it was the conference I produced, the Domain Roundtable 2007. One of the questions in the electronic poll I devised was about whether the domain market would show more growth by the end of 2008. The nTag technology I implemented at the show, along with other networking benefits, allowed the attendees to see, real time, what other domainers felt about the important issues of domain investing. The majority of domainers, of course, were bullish.
From my personal experience, I go with Andrew’s assessment of investing in domains over the stock market. The stock market makes me nervous. Even mutual funds aren’t safe anymore, and my wife loves those… but not lately. So I continue to sell domains at 1000-10,000% returns on my dollar. Show me a stock that achieves that in less than a year.
NOTE: Andrew was there at the DRT 2007, causing trouble with his entourage of bodyguards and Vegas showgirls. I asked him to “tone it down”, but TMZ was also there, and I was knocked down by the onrush of paparazzi trying to get video and comments from “AA”. Andrew just looked at me sprawled on the ground and laughed. He dropped a few $100 bills on me, saying “Douglas, you moron. You’re lucky I’m here. Now go get yourself a room and wash up.” He then hopped into a limo with Brad and Angelina and disappeared into the night.
I got a room and took a bath for the first time in 73 days. It changed my life! Andrew gives great advice!
Thanks Andy!
😉
kerry-stock market investing says
your are logically correct.There are a lot of risks coming with the stock market,than the domain market.But surely no doubt that online advertising will grow over the long run for long term investors.
led says
well, domains will stay to be great asset, simply because of the virtual dimension that they create. The advertising model of the web is better thn that of the print media, and with the boom of the interent tv, remember what bill gates said – that the new media will be the internet.