By: Raymond Hackney
Is There an Optimal Portfolio Size ?
There is a very good thread on Namepros today that should prove helpful for those new to domain investing and pondering their optimal portfolio size.
The best post so far imo is from Kate from Sds Inc:
"It's difficult to answer your question, because there are different business models. People like Federer move inventory fast. Others hold out for the best end user offer. Some buy domains for resale, others make money from PPC.
The very large domain portfolios like Frank or Buydomains may be viable only because of their critical mass. The overall quality may be average or low, but they make enough end user sales to sustain their operations.
As for the so-called successful, full-time domainers, I think we may be surprised if we knew the actual figures. I'm sure some are not that successful
The majority of domainers are individuals, not businesses. Individuals are not subject to the same pressure as corporations and tend to be less realistic and more laid back when it comes to decision making…
There are many ways to skin a cat, and the ability to make good decisions is more important than the size of the portfolio. Answer: that depends "
There are many other good posts and the thread is just getting started with over 30 posts. This question goes back to something I have written about before, you cannot define the indefinable.
There is no perfect formula because everyone will have different levels of:
- start up capital
- risk tolerance
- niches they want to register in
- ROI demands
I think the thread starter had a very insightful line that affects many new domainers and some with some experience as well. Thread starter Havela said, "I still don't understand why some domains sell for such a high price at Sedo. As far as I can tell they have no commercial value. As long as I don't understand this, I won't take the chance on buying really expensive domains."
This sentiment is strong with many new domain investors imo, they will not buy one domain in the secondary market for say, $1500. They would rather buy 150 domains for $8 each. Even though the batting average for 150 handregs is probably going to be very low, many still would rather chance that then to make a big purchase they are afraid to get stuck with.
That's why experience, sticking to niches you know and doing a lot of research are very important for everyone, but especially new domain investors.
Domaining is a unique endeavor and it is very hard to model your portfolio size after someone else, no matter how successful they are.