We all know what is happening in the domain market to numerics and short domains. They are moving up in price at an exponential rate. And for the last 18 months we constantly hear the word bubble or top from many different sources. And while that may be the case at some point, in my opinion, based on solid data, it’s not coming soon. Here’s why
According to Newsweek
“Chinese investors have also been looking to foreign property markets to stash their money, and the current market turmoil at home will only intensify that interest. According to the National Association of Realtors in the United States, the Chinese just became the largest foreign purchasers of residential property in the United States, accounting for 16 percent of all foreign purchases in the quarter ending March 31, compared with 14 percent purchased by Canadians, traditionally the top foreign investor in U.S. residential property.
Given the constraints on individuals moving money out of China, that’s a remarkable development. And because China is gradually easing those restrictions, the dollar figures will likely increase. Beijing is preparing to launch a pilot program later this year that would allow individuals in six of the country’s wealthiest cities to invest in stocks, bonds and property abroad. The program comes as the government is trying to crack down on the gray market that helps funnel individual wealth overseas. But the politics of going after individuals evading the $50,000 annual limit is tricky“
Anyone who deals in US investments have known this for years. The Chinese are looking to buy anything they think they can get a good return with. And domains is part of that. For the last few years Chinese have been buying domains as a way to get around the annual limits of the Chinese government. They are allowed to buy only one extra home and put only so much n foreign investment. Domains are not seen as a foreign investment. They are pretty much free to buy any approved tld and dot com is one of them. Dot .cc and .top are two other favorites. As you can see from the above, many of the Chinese are buying California property that is much more than $50K. Obviously there are ways to get around the foreign caps. Ask any realtor in the hottest property markets and they will tell you that tech and China are driving these markets. Take either one away and the market would certainly struggle. Domains are no different. All this money that is flowing in is driving the market to new highs. And China is just getting started. Only the elite and privileged have been able to buy. In domains, only the “in the know” people have been buying domains. I feel that the floodgates will be opening and tens of millions of more people will be looking to invest. And that is the big difference now. These “types” of domains are being bought as investment. With no intention of ever being used or even sold to an enduser. They are merely for trading.
This is why the five and 6 number dot coms are getting purchased. Nobody is going to put up a site. No, they are buying it like a stock. It only represents something that is limited. The quantity of numbers give it a certain level of value with individual letters or numbers within giving it a differentiating value. Chinese investors are now buying blocks of names. Names that meet their criteria, no vowels, no Vs, no 4s. They are buying them up by the tens of thousands. They are even buying the “bad” characters but they are always worth less. If you have a way to watch registrations in 6N.com and 5L.com then you can watch it happen in front of your eyes. Brian Kleiner of Afternic and Godaddy alerted a few of us last week that the 5L.com were getting registered in packs of a thousand. He was nice enough to send me a list of the last available 5L.coms with no vowels and V. I went through the entire list of everything left and bought $1500 worth of what I thought were the best letters left. Yes, for the first time ever I invested in domains like a trading stock and not because I felt they were going to be purchased by end users.
I know many people feel that this is a good example of what the end is going to look like. That this type of purchasing is going to crash and burn at some point. And at some point I do agree. But my opinion is that there is WAY too much money coming in and this won’t be for quite some time. Even then, I think the price they settle to will be way above where we are now. Again, its my opinion, but fortunately with domains I can invest in my opinion and others can choose not too. I am watching Chinese investment grow and spread. It started with 4N.com, then 5N.com, then 4L.com, moved to .top, moving to .cc, and moving to 6N.com, 7N.com and to 5L.com. All based on results from the auctions and new registrations. People that have access to the new registrations and auction results can verify. Many of them aren’t talking publicly because they are trying to get out ahead of it. I bought 200 random 5L.coms because I think there will not be one premium Chinese 5L.com to register by the end of the year.
“People like you and Brian Kleiner are only saying this publicly so you can pump and dump” Wrong. This is way bigger than anything that we can do alone. Sure we may be helping it move along in our own way, but the numbers of domains moving is in the tens of thousand and the auction purchases in the tens to hundreds of millions of dollars. Brian and I are mostly followers and researchers. I am putting my money where my ideas are and he’s trying to sell registrations for Godaddy.
And let me make myself clear. This market is entirely different than the one word dot com prices that have exploded. That truly is enduser based. Either being purchased by the end user or being resold with the anticipation of an enduser coming up and purchasing the name at some point. Yet these prices are certainly being affected by the rise in value of all the other types of domains. One, its an overall market increase. If this is worth this than this must be worth more. More importantly, domain owners are making incredible profits off their LLL.coms and numerics and reinvesting their name. In short, their flush with cash and they’re wanting to spend it.
There are trillions of dollars that are going to spent coming out of China. I think domains will will part of that spending. It already is part of that spending. Picking the type of domain that this money will flow in to is going to make you a ton of money. Is it rationale? No. Because its no rationale does that means its all gong to implode? No. Trillions of dollars will hold up a market for a long long time.