A recession will eventually come. What will you do when it hits?
I have an iron-clad prediction to make: a recession is coming.
By not putting a date on this prediction, it’s 100% correct. A recession will come. Pundits will debate when it will happen, but we can be assured that it will happen at some point.
The last recession was particularly rough. Historians say it was the worst since the Great Depression, hence the term Great Recession. And with that as the most recent recession experience, people will be cautious when the downturn comes.
I consider my adult life to have started in the year 2000. I graduated college and went to work for a tech company. I did what a good, financially responsbile person was supposed to do: I maxed out my 401k from my first day on the job.
Then the dot.com bubble burst. My company and portfolio imploded. The best investment I made back then was in savings bonds. Yes, savings bonds. They’re still paying about 6% interest to this day.
The dot.com bust colored my experience. I kept a lot of cash on the sidelines and was very conservative in my investments. Then when the Great Recession hit, I piled into the markets. I invested all the way as the market dropped.
The market doubled in value in short order and I felt smart. But I realized that the market’s gyrations were tied in lock step to government decisions and pronouncements, not the reality of the underlying companies in the stock market. This gave me an uneasy feeling and I became a conservative investor again. I thought Dow 14,000 was way to high and pulled off my stock investments.
In hindsight, this was a stupid thing to do. I learned another lesson: the government will do all that it can to prop up the markets. Since then, the government has done more than just backstop against wild drops and recession; it has propped up the market with both fiscal and monetary stimulus.
So after nearly 20 years as an “adult”, I now realize that the government is more powerful than the markets.
As for domain investing, what can you do as a domain investor when recession hits?
I recently sat down with a financial advisor to look at how I should prudently invest my money. How I should look at the long term. We talked about investing in the stock and bond markets, but also alternative investments.
She cautioned against going to heavy into alts. It dawned on me that I’m actually very heavy in alts even when you exclude things like real estate investments. Domain names are an alternative investment.
We’ve seen a lot of good domain sales lately for premium, one-word domains. Startups are snapping these up. What happens when startup funding pulls back? Will this significantly impact these sales?
If they do, it might be a buying opportunity for domain investors. The ones who have cash available.
On the other hand, with recession comes layoffs. People who lose their jobs often start their own business and buy a domain name to do it. But these aren’t the people that will spend hundreds of thousands on domain names.
While you don’t want to hold onto cash forever, you should think about how you want to deploy it when times are frothy.
Don’t fight the FED. The most valuable piece of advice of my adult life. Recessions and downturns come and go. They’re part of each credit cycle. I bought domains during the .com bust in 2000, I bought domains in 2008 and I will be a buyer when the next cycle hits..
It’s already started in Germany 4th largest economy. 0% and negative rates could fuel people to invest in other options, silver, gold, domain names. Over 80% of tax cuts in US went to 1% so that did not help. Just have to worry about a depression as opposed to recession. 🙁
Drink a beer and pay my renewals aaaaahhhh life is good.
I can buy more cheap houses at 100K and resell at 2 million USD.
I bought mine in 90s and worth 10000% now.
I have trouble imagining the name which value depends on the startup industry. If a domain is good, it can be good for multiple types of buyers. At this point in time it is unlikely that any valuable names are being held by clueless investors (compared to the early 00s). The opportunity based on someone being in need of money ASAP exists in any state of economy. Otherwise who and why would lower their price expectations just because suddenly there are less startups and/or recession?
Quote – “a recession is coming.”
You can also say – ‘death is coming’.
That is also a guaranteed prediction.
No one knows WHEN the next recession is coming.
2020, 2021, 2024, ???
Also, a recession can happen in 2020 if the U.S. consumers think it will happen.
If U.S. consumers and business owners believe the media who want people to keep turning in to watch today, tomorrow and next year for an answer. Everyone is guessing.
I can also guarantee that a ‘dot com bust is coming’
When 2020, 2024, 2028, 2030. ?? who knows.
But, it is a solid business strategy to have a diverse investment portfolio.
6 -8 months that is how long. Germany is in one right now. Italy, mexcio, brazil, uk in 3 months. Germany went backwards on growth every heard of that happening. Why do you think oil and cooper has crashed. Global slow down on mass scale! US will be last to get hit. Does not mean the domain market will go down though. If anything it will thrive.
It takes 2 consecutive negative quarters to be considered as in a technical recession. Germany’s Q1 was positive, Q2 was -0.1%. So not in a recession yet.
The only certainty is death and taxes
and for sure the economy will go up and down . Just look at Japan
Andrew we’re similar in timeline (graduation and age). As a public school teacher we have a TDA option (tax deferred annuity) that we can put up to 25% of salary in pre tax and it compounds at ~8% fixed (or other funds variable/socially conscious etc. with varying rates).
This has been my dilemma so far. Should I throw more money at it. So far I have a small % going into the fixed at 8% because I believe my domains are giving a better return but of course constant compounding at 8% guaranteed is so attractive!
Who knows what the next recession will bring? Opportunities? More affordable housing or other domain/website opportunities?
8% guaranteed is hard to pass up. I guess the only question is if your state will actually be able to make good on its promise when you retire. I doubt their investments are making that much in the long run, so they have to tap taxpayers to make good on it.
8% is the long term stock market return approx . stay with it as right now It looks like stocks will stall for at least two years.
Good article. I was in Austin same time and experienced similar hard knocks circa 2000-01. Very hard to avoid.
Yes there will be another recession. Next time around could be inflationary given all the fiat money printing last decade.
Domain name are risk assets that will not fare well regardless of what type of recession hits next, whenever that may be. One word .coms with no real, commercial meaning are perhaps the riskiest of all during a recession. Domains that have obvious purpose/commercial meaning hold up better.
I would caution people about taking investment advice from an investment advisor. They usually don’t have 2 cents to rub together themselves and do not speak from experience. They will give boilerplate advice based on the advice they are legally obligated to give or whatever pays them a high commission.
I wonder if you went in and said I run a restaurant, would they say, it seems you have large investment in alternative assets (kitchen equipment), it is really a bad idea to be holding a lot kitchen equipment rather than stocks and bonds. Nobody in this world will make money for you other than yourself.
If there is a recession yes domain values will fall, that is a given, so will everything else except safe haven investments that do badly the rest of the time (gold, cash etc).
I would say domain prices fell 60%+ during the last recession, dot com bust was far far worse. Nobody knows when it is coming and everyone’s theories are likely BS.
Only use fee-only advisors.
“Nobody in this world will make money for you other than yourself”. I couldn’t have said it better.
my best investment was myself 10,000 % return compared to stock 200% negative.
It’s a testament of the strength of the union (UFT). Must be a loss for the state unless teacher retention is worth it. However, I think the benefits have weakened for newer tiers in the pension (teachers who joined within the last 8 years or so).
Teachers still pay into a pension but most are retiring with 60% of their last 3 years average salary as ongoing income, their TDA (in many cases $300-500k+) plus SS benefits. A solid plan for many, but definitely not as exciting as domain names!
Once Donald Duck leaves office, market will then come down. Him and his goonies have been illegally propping up the market for way too long.
Invest in Bitcoin and Gold for the market downturn and buy Put Options to protect your stocks.
As far as domains, buy only premium dot com domains LLL.com, pronounceable LLLL.com, and OneWord.com
Good Luck!!!
I will never believe that the government of a nation saves the stock market from a great recession, all help not to fall the finances of banks where they have their business and family economies.
We have evidence of what he dropped in his US and EU country as well as the rest of the world, in this we must not forget United Kingdom.
The maximum problem that Brexit can have with Sterling and the Bank of England the official of this country give very bad news and other financial markets alike.
Your financial advisor warns for your sake that stock market savings values are falling and there will be no benefits for any of us, markets will plummet, do not expect to do business in domains. If what you read later goes as planned for the most important financial analysts.
The Bank of England forecasts together with other major financial companies that if Brexit win and leave the EU, the United Kingdom would go back 34 years in its economy with Sterling.
Now read this very disturbing news here I leave the link is from September 3, 2019 https://www.telegraph.co.uk/business/2019/09/03/markets-live-latest-news-pound-euro-ftse -1001 /
When you have read think for a single moment if Starling fall earlier than expected to the Bank of England how many years to sink the Sterling to win Brexit, this according to financial analysts discuss many more years than the 1985 Bank of England forecast in the 2016 year.
Let us pray that the madness of Brexit is not possible since if it is it will not be the great recession of the 20s it will be the destruction of the world economy of each country in the world, this is not a prophecy is the reality of the end of the economic world that it would take more than 20 years to recover this world economy, all because of madness and arrogance, a lie of the most arrogant and ruthless conservative policy of the United Kingdom, which would be its total decline as a country.
Brexit – a farce of a common market – did very little to open real competition of manufacturers or farmers – all protection. The real reason England doesnt want it is the unfettered immigration into their country. . England should drop the bomb and just make a date and give NOTHING to Common Market .
Andrew, you write months ago of the recession, and I write that if we continue writing and speaking it will come.
There is a widespread fear of this recession, I do not doubt the markets remain the same a few days down and other days up, the economy in your country is healthier than ever in other countries is halfway and the third world is bad for human consumption, because governments appropriate all the money from IMF funds, and rich countries, this has lasted for centuries and will remain the same.
I have the deepest fear to have, is the madness of Brexit and that your current President of the United States defends but today he says on a Twitter if after 24 hours he answers no to Brexit, here is the evil of the whole world of the future worse prison than the US in the 20s with the prohibition of alcohol then began what would happen worldwide now we would go back in time we would have an economy and a money market of the year 1980 that is to say going back 39 years is a brutality for all of us, except for capitalism, finance, and large distribution companies are those that are prepared to multiply by 10,000 each dollar down in currencies so that we could eat 50% of the population of planet earth, the other 50% already there are no diseases, etc, etc, imagine as if we were in a quarry of a minefield and they serve you a dish of bean stew with brown water just like in World War II, I am not catastrophic ico, I am mentally foresight of what can happen with Brexit and if we don’t all do the same this will be the end.