There has been a lot of discussion and debate about the quick run up in short letter and number domains. There is a lot of back and forth on Namepros and a great discussion on TheDomains.com.
There is talk of hype, bubbles, unrealistic valuation…There is talk about someone will get left holding the bag. Of course there will be someone left holding the bag, since the beginning of time someone has been left holding the bag, if there was not that would mean an infinite move to the upside with no correction, no innovation rendering the previous obsolete.
If you were running a successful buggy whip company you have plenty of time to make money, if you continued in that business and did not expand into new business, such as the automobile, eventually you were left holding the bag. You became obsolete.
There were plenty of people who opened video rental stores in the 80’s, those who did not embrace the Internet were left holding the bag as no one came in anymore to rent a movie.
I once sold Von Dutch tshirts on Ebay and made a pretty nice R.O.I. then one day Von Dutch went out of style and I was left holding the bag or box in this case of the last order sitting on my living room floor. I made money overall, but the last batch I could not even give away after sitting there in my apartment.
Domaining has changed and maybe it will be temporary and maybe it will last for a decade, people are trading domains like Forex. The metrics like search volume don’t matter, a list of end users doesn’t matter. These things are moving and you need to be paying attention every day, for those who don’t have that kind of time to commit they should probably stay out or make only a small investment they are comfortable with.
Is there going to be someone holding the bag on XQJZ.com at a certain price ? You betcha, that is how markets work. Everyone doesn’t get a trophy or an orange slice, participating is not enough, you need to be smart, lucky and accurate.
There is a flipside to not believing the hype
The flipside of the coin is those who missed out by listening to those that said it was hype. I had someone come to me about a week ago who was on the verge of committing suicide, he owned several 5N.com and 4L.com that he dropped because as he describes it, those who supposedly know more than him told him they were pigeon shit, so he dropped them, at conservative whole prices, he missed out on close to $350,000.
So now he has a wife berating him, asking him how he could be such a failure in life ?
Now don’t get me wrong seems there are other issues there as well, but the money is certainly one part of that, so he missed out on making a big chunk of money because he listened to those that told him “Don’t believe the hype ?” Well that advice cost him a lot of money and probably his marriage.
This is serious business and serious risk if you decide to play domain names as a short term trader, you can make a lot of money and you can lose a lot of money. It is about managing risk, proper bankroll management and knowing ahead of time what you would like your exit strategy to be.
There is always going to be hype, that is not what is important, it is how you read the hype and that you are never over extended financially or emotionally.