While other assets are currently overvalued, domain names aren’t.
Asset prices have been quite frothy for a long time. They were high a year ago and then they shot much higher over the past year.
Sure, sentiment might be positive. Asset prices might continue to go up. But when you look at historical valuation metrics of certain assets such as stocks, they are trading at very high prices even when you bake in tax breaks and a rosy outlook. Then there is a virtual currency created as a joke that is valued at a billion dollars.
Regardless of where you think asset prices are headed from here (and which assets will outperform), I feel very comfortable with where domain name prices are. The irrational betting that took place during the Chinese boom has more or less subsided, leaving us with investor prices that are below what end users are willing to pay. The domain market still has the important characteristic of having an investor market and an end user market, with the latter willing to pay more than how much it costs to invest in domains.
This isn’t to say that all domain bets will pay off. Even if you’re selling domains for more than you bought them for you need to consider your holding time and the domains you don’t sell.
But I believe that domain names have an underlying use and value, and I don’t think they are overvalued right now. There have been times I’ve scratched my head at domain valuations but that’s not the case at the beginning of 2018.
I’m bullish on domain names.