If the economy heads south, be ready with cash on the sidelines.
The S&P 500 total return (including dividend reinvestment) was negative last year. That’s the first time this has happened since the bottom fell out in 2008.
We can’t predict the future but people tend to use the recent past as guidance. This means 2019 could be a challenging year.
I’ve talked to several friends recently who said, “Well, it looks more and more likely we’re heading into a recession soon”. It’s true that the stock market isn’t the economy and the job market is great, but people see all sorts of challenges ahead: whipsawing asset prices, a dysfunctional and unpredictable government, tapering of fiscal and monetary expansion, etc.
And when perceptions go negative, people pull back, bringing the economy with them.
Broader economic conditions play a role in the domain name business. Some can be countercyclical, such as people starting a new online business when they lose their job. Others, such as reduced VC funding, can lead to fewer big domain purchases.
When a domain investor’s fortune wanes, this can present a buying opportunity. Cash is king in downturns.
I have no idea if 2019 will be a tough year, one where we tread water, or maybe the good times return. But the old adage is always true: buy low, sell high.