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09|19|2008 02:22 am EDT

Domain Names as Investment Hedge

by M. Fiol in Categories: Featured

Recent Financial Collapse May Benefit Domainers

In the spring of 2001, I came across an eBay auction for the domain Inbox.com, listed with no reserve at $4,000. Now, in a clear sign of the times, the auction ended without any bids or bidders, including myself. After the auction, I emailed the seller and offered him $2,000 for the name. He accepted my offer.

Sixteen months later, I sold the domain name for a high six-figure price to an end-user.

Point is that 2008 is looking, in many ways, like 2001-2002 except this time the crisis is larger, global and based in excessive debt.

People are moving money into no-interest T-Bills or simply holding tight to their cash and hoping their bank stays afloat and if not, the FDIC doesn’t crumble under the weight of its insurance pledge. Some are even looking at their mattresses as the bastions of ‘safety’.

So what is an individual to do? If our money is not safe in banks, then where do we put it? One possible answer is, again, domain names. For several reasons:

  • Domains are a global commodity
  • Domain names are not based in debt.
  • Unlike Lehman Brothers or Mac and Mae, the Internet is not going anywhere but up – especially with the next item as consideration.
  • Energy issues/prices and depleted discretionary income will drive more usage of the Internet as entertainment, news source, global connective.
  • The normal ‘hedge’ in these times is ‘gold’ but at nearly $900 per ounce, it is a prohibitive investment vehicle. And note, during the Great Depression, the government seized precious metals from its citizenry.

That is not to say that drops in domain value will not continue for awhile – it is a natural devaluation based on economic conditions outside the industry. No, it is to say that once and if this all shakes out, people will notice how well the Internet and domains weathered the storm and the idea of domains as an investment hedge, a place to put your money for tough times, may grow.

Now, the key of course, is to buy on the low side like inbox.com. In down times, like 2002, the opportunities and deals were all around us. After all, who survived the ‘dot-com’ crash? In fact, those that did survive, now make up a large chunk of the upper echelon of our industry.

After reviewing all the upcoming T.R.A.F.F.I.C. auctions, DomainConsultant has decided to update its market recommendation to its clients from ‘HOLD’ to ‘BUY’. We made this change for many of the above reasons – and in no small part, based in current events. Unless it ALL collapses, we see domains as one of the most reliable, secure ‘safe harbors’ – IF the name is quality, bought at a proper price.

We’ve noticed in the submission and auction lists a distinct rise in quality and drop in pricing. If one could conjure a symphony of elements to produce deals in the marketplace, this would be the result, exemplified by offerings great and small. In short, time to buy.

Besides, you’re only other real, viable alternative may be to stick it under your Serta.


M. Fiol is a long-time domainer, regular DNN contributor and Domain Consultant analyst. He also owns and runs HappyBirthday.com among others.

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21 Comments

Jamie Parks

September 19, 2008 @ 4:16 am EDT

Well put. Agree wholeheartedly. Contacting domain owners directly and making reasonable offers are one of today’s safest and smartest hedge investment opportunities. Those who choose to buy into Gold now are doing so only based upon fear – way too shaky place to put your chips IMO. Domains really do provide global liquidity and I believe good deals can be made by those willing to reach out to dormant domain holders and make them professional, realistic ‘wire$now’ offers. There’s lots and lots of innovation to come (globally.)

chris

September 19, 2008 @ 4:23 am EDT

Domains will save the bricks and mortar industry …. the world isn’t what it used to be anymore!

Drew

September 19, 2008 @ 12:09 pm EDT

Those who choose to buy into Gold now are doing so only based upon fear – way too shaky place to put your chips IMO.

Well, it’s not an either-or choice. Gold AND domains makes more sense.

And as for governments seizing gold, buy some and store it in Switzerland… http://www.bullionvault.com/#oroplata

Drew

September 19, 2008 @ 12:49 pm EDT

And a further recommendation would be to have your domain portfolio 50% ASCII English names, and 50% other languages – including Russian, Chinese, Japanese, Korean, Thai, Arabic and Hebrew IDN’s.

Chad Kettner

September 19, 2008 @ 3:02 pm EDT

Great article – even though I think very highly of the domain industry, I have never quite thought of it this way.

free wallpapers

September 19, 2008 @ 9:21 pm EDT

I agree with your oppinion, but if we go into a crisis people will not be able to buy them.

Troy

September 19, 2008 @ 9:58 pm EDT

Wow! Coming from a domain collector, inbox.com for $2000! Amazing, I wish I have been observant enough back in the “beginning” to pick up a truly premium domain or two.

I own a lot now, and am continually buying more but now days if you want a real premium domain you have to pay a premium price. I still like picking them up for the reg fee.

Troy

[…] Domain Names asInvestmentHedge […]

[…] Domain Names asInvestmentHedge […]

Babymelody

September 20, 2008 @ 10:09 am EDT

IMO, times are tough and investors are more careful before buying anything! For example I have WallStHedgeFund.com/.biz and WallStHedgefundAccount.com for sale and maybe 2 years ago I could’ve made a nice profit, but now since the stock market has been nothing but a roller coaster ride, it has been more difficult for me to sell these names.

They are still for sale by the way if anyone is interested =).

They are registered with namecheap.com and they are parked with afternic.com and sedo.com.

I also have other great names for sale with reasonable prices and of course in my book, everything is negotiable!

IloveDomains

September 20, 2008 @ 1:56 pm EDT

Domains is the cheapest form to maintain.
Got about 1000 high pure domains and making $$$.

Good post.

Domains are here to stay.

J.R. Jackson

September 20, 2008 @ 5:19 pm EDT

Excellent post. I have been investing in domains for around 10-years and I’m very excited with the future of the domain market.

J.R.

Trendicator

September 22, 2008 @ 8:06 am EDT

great read. i agree with you and i think if one’s got the cash, he should just go for it. it’s a buyers’ market,and take advantage of it while you can

Shuwix

September 22, 2008 @ 12:26 pm EDT

Congrats on huge profit You “smartass” :)
Hope I’ll grow as successful domainer.

Pat

September 22, 2008 @ 3:25 pm EDT

I currently own MarketConcerns.com, in my opinion a perfect domain for the times. However, I am not sure the best way to market it. Thoughts?

AhmedF

September 22, 2008 @ 4:04 pm EDT

Well Pat – how about just randomly throwing in a comment about your domain in the hopes of selling it while not contributing to the discussion at hand really?

O wait, one self-serving post already there!

Harv

September 24, 2008 @ 1:38 pm EDT

marketconcerns.com belongs in the domain shitpile.
All you have done is make the registrar hapy..

Andreas Brekken

September 28, 2008 @ 11:19 am EDT

Agreed. Any investment you understand is a good one. If you understand domaining better than the stock market or the housing market – why not?

Andreas Brekken
How do you present your domains to potential buyers? http://www.nsym.com : Domain Portfolios & Showcasing

[…] noted in a previous article, Domain Names as Investment Hedge, this down time is a great opportunity to entice new buyers into the market by introducing the idea […]

[…] noted in a previous article, Domain Names as Investment Hedge, this down time is a great opportunity to entice new buyers into the market by introducing the idea […]

Jim

January 10, 2016 @ 4:28 am EDT

I am thinking about buying some domains and wait to sell.

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