Ryan Colby’s quote received some attention over at DomainInvesting back in September of last year. At the time in was pretty unanimous that he was alone in his sentiments and 6 months later the tweet has become infamous. He explained his tweet with a little more detail in the comments.
Great thread going here! Since I primarily represent the demand side (buyers) vs. the supply side (sellers), my comment reflects this particular viewpoint. When you are close to the demand side like I am, you begin to observe certain buying patterns.
Traditional investment wisdom holds that you must buy low and sell high AND that everything is cyclical in nature. While the possibility exists to buy high and sell higher, the big money typically does just the opposite. If we compare this conversation to the stock market, it’s much like “value” investing vs. “momentum” investing. While both techniques can make you money, value investing is the game of choice for those who are risk adverse.
What I’m observing now is that the liquidity of numerics are drying up a bit. Since prices are peaking, large domain investors may decide to begin moving assets into better priced alternatives. As a broker, yes I tend to take a short term view but that’s exactly what my clients expect of me. We need to be on the pulse of what’s going on NOW in order to make the best of the available opportunities at hand.
If one studies the entire history of the world you’ll realize that nothing keeps going up forever. There is always a cyclical pattern to things, and this is especially true as it relates to investing. To summarize, I believe that numeric domains are valuable assets, but there IS a point when price may exceed demand and when that happens markets begin to move. Remember that just because there is a fixed supply doesn’t mean prices will rise automatically.
Elliot felt at the time there was no reason to carry on a conversation in the comments because nobody in the comments agreed and now we know why. It was one sided in the comments and one sided in the results. In the 6 months since that tweet, NNN and NNNN.com domains have at least doubled in price. It would be hard to debate that there hasn’t been a better class of domain investment in the past 12 months. And this isn’t my opinion this is backed by results and fact. The biggest problem with the entire call was the thought that the entire domain buy side was represented by Ryan’s clients. When in reality, there were several billion people that love numerics and had money to spend.
I had a talk with Andrew Rosener of Media Options about the amazing rise in prices and we both agreed….we too sold too soon. It’s not that we weren’t buyers at the time of the the tweet. We were both searching for numerics. We just sold as soon as we doubled our investment when we could have triple or more in the future. Michael of 4.cn, who represents the Chinese market tried to tell me different. Supply certainly was drying up and but he was seeing no reluctance for Chinese buyers to pay the higher prices that the auctions were reaching. The result was a millions of dollars of sales last month for 4.cn. $5 million plus from 30 numeric names alone. The price of NNN.com went from an average of $26K to more than $40K.
This is nothing again Ryan. I don’t know him and have heard nothing but nice things about him. We all make bad calls. All domain investors and brokers have opinions about where the market is heading. Of course if you are going to advise clients, and especially put out a tweet for the world to see, you better be right. Because right gives you credit for having good vision, and being wrong leaves a ton of money on the table for you and your clients. It’s also worth noting that 6 months is short term when it comes to domain investing and things could change…but you’re not going to find me going against the Chinese market anytime soon.