It depends on if you’re investing or gambling.
I was reading a blog post on The Hill this morning about a guy trying to sell Romney-Perry2012.com and Perry-Romney2012.com for $50,000.
You read stories about this all the time as people try to bankroll on current events.
But here’s what I found interesting:
He has bought other domains in the past, but without much luck.
“I have lost a bundle actually, and they’re the worst investment I’ve ever gotten into,†Jeffreys said. But he said it is hard to resist the temptation to buy more addresses for the chance to score a big payout.
The practice is “essentially gambling,†he said.
This is interesting because it sheds light on two different mentalities when it comes to domain investing: investing vs. gambling.
Here’s how I’d define these:
Domain Investing: You buy domains that mostly have existing value that you think will increase over time. Only a small percentage of your portfolio is hand registered these days. Many of your domains get type-in traffic. The majority of your portfolio is relatively liquid, with a smaller portion dedicated to opportunistic and hand-registered domains. You turn over 2%+ of your portfolio a year through sales. Although 2% is low, it’s not that low for domains.
Domain Gambling: Most of your portfolio is recently hand registered. You try to take advantage of event-driven domains. You never price your domains and ask for big sums if someone is interested in buying them. You register lots of domains in alternative extensions. Basically, you’re counting on that one big domain sale to make or break you. You sell fewer than 2% of your domains a year.
What do you think. Do you agree with these definitions?
bubbles says
This reminds me of the Get Rich Click guy, he lost how many ten’s of millions of dollars for IREIT? He then writes a book about making money on domains. I love it.
Now this guy buys horrible domains with terrible return expectations and assumes the domains are the bad investment, not the investor.
He should now turn around and write a book about how to invest in domains.
Larry says
Probably another category. Where you purchase something that you read about with the hope that in future years the word becomes ubiquitous and the name has value. An example would be an emerging technology.
For example qrcodes appear to have started to have press in the late 90’s. qrcode.com was registered in 2000 (or it dropped before there were drop pools so you could have gotten it reasonably.) Now the name is valuable. Ignore whether these facts are correct the concept is important.
Event driven names generally don’t go up in value. Names known but no ubiquity might.
Don’t ignore also buying in a TLD that you feel might have future value. (I don’t do this btw). When I bought many 3 letter names in the 90’s nobody thought they had potential. You couldn’t even buy all the 3 letters that were out there. It was a gamble at the time but a gamble with little downside.
Andrew Allemann says
@ Larry – true, I’ve registered a number of those future domains. I’d say it comes down to if it’s a lot of your portfolio or just a small percentage.
Joe A says
With all the possible variants on his idea, especially with dashes that can go in any of three places and names/year that can be expressed in various order… He surely is on the losing end of a gamble.
That guy will never sell those names at anything near his asking prices.
He’s right that speculation is always tempting. But if I was going to speculate, I’d rather speculate on ideas rather than people’s names.
Stephen says
Spot on Andrew, you nailed it on the head! 🙂
melodramatic says
Investing is a gamble.
Josh says
One analog would be a casino.
The house is the investor, and in the long run with proper management, they always win as long as they have patrons. The pro gambler is the speculator/gambler, and they have to know odds, psychology, and the games to play in which any edge is possible, e.g., poker and not roulette. Then you have the tourist who sits down at the poker table. If he plays just a few hands and uses common sense, he may be able to walk out ahead. Or maybe he just plays a few hands for fun, and walks out only having lost a little money but having had a lot of fun. However, if you see the tourist visit the ATM machine at any point, it’s probably not going to be a good night for him.
TBC says
I hand reg’d LasVegas.vc & Vegas.vc for $32 each eight months ago. Both were pushed to auction at $250 each this past weekend. There are tons of opportunity in hand-reg’d domains, and ccTLD’s for that matter. Head-in-the-sand .com maniacs will disagree with me, of course.
TBC says
Another hand-reg’ last December for me: Together.TV.
I turned down a $5,000 offer last month for this domain. Another hand-reg’ ccTLD…
Ramiro Canales says
Domains are long-term investments. As Warren Buffet says, “If you don’t feel comfortable owning something for 10 years, then don’t own it for 10 minutes.” The same rule applies to domains.
Steve Jones says
That guy is basically playing the lottery with what he’s doing – pretty silly.
The fact that a mainstream blog would not only publish a story about it but would even talk to the guy and get his comment is what worries me. For one thing, this isn’t a story…this sort of thing happens every single election. Secondly, it gives a bad name to our industry. Lastly, this guy clearly doesn’t know what he’s doing and based on his comments, people reading it might jump to the conclusion that domains are a bad investment.
This is part of the reason why domains are the Ron Paul of the investment world – still seen as “out there” vs. being a widely respected industry.
Eddie says
Agree with your definition. May I add that domain gambling is done out of compulsion. Domain investing is done with a lot of research.
patrick says
@Ramiro Canales.you are spot on even oilwells take ten years to develop i have only registered one trend domain and that was yousuckboa(dot com) lots of traffic during wikileaks but nothing since only own generic keyword product service domains i have to wait as most are dot ca domains and Canada is a little slow to get started.Some future trend dot com domains that are just starting to get traffic.
DR.DOMAIN says
@ Ramiro Canales:
You really did nail it.I’ve been in this game since ’06.I made a coupla’ “beginners luck” sales that year…and then had to learn what what was worth buying and KEEPING.I’m just now starting to make consistent sales and inquiries.
Samit Madan says
Actually if you must use the casino analogy, the registry is the house. $10 x 200 million domains = $2 Billion.
Aftermarket sales would comprise of maybe $50 million a year at most, only 5% of the primary market.
But it’s true, a large percentage of domainers treat this business just like gambling, mostly because they don’t know what SLDs will actually make money and why.