In a former life, I was a stock trader. We used to joke on the desk that trading was the emotionless making money off of emotions. When news came out, or statistics shifted rapidly, we were there to make a quick-buck off of shifting trends. The soul of trading is rooted in speed – get in, and get out. The same can be said of the domain trade, but often Domainers are stuck in a buy and hold pattern believing an $8 domain purchase will miraculously transform into the next million dollar Apple development. (Perhaps this is a little dogmatic, but we’ve all passed on reasonable offers!)
Like some of you, I have been victim of this thinking. It causes us to purchase 50 names with a similar root (e.g. 3D) in hopes that either the subject matter will become relevant, or someone will come along recognizing the value you convinced yourself was worth spending 500 bucks for. These acts are the emotions.
“Investing” in domains takes some restraint because it requires you to take a long term risk. You’ve heard about the “Greats” that purchased single word names (we’d trade our entire portfolio for), and have never sold a single one. They bought low, and are still waiting to sell high. I assure you, those days are over. In order to make money as an Investor, you must be willing to take greater risk, in the hopes of generating greater reward. If you want to make $10 grand on a name, you should be willing to spend $20 grand.
No doubt I’ll get the comments of nonbelievers who started with a great flip that turned $10 into $1000. And this is precisely my point. Few are able to restrain themselves to buy one $10 domain and sit waiting for the $1000 offer. So until then, you must build your coffers as a Trader, if you don’t have the money to be an investor. It may be a $69 purchase, sold for $200. Or a $10 name purchase, sold for $50. Trading is difficult and requires liquidity, and happens to be the subject of my next post. Until then, have a solid Thursday.