Would You Have Been Better Off Putting Your Domain Investment Money in the Markets?

May 17 2011

It’s not really the kind of news that people around here promote but it’s a real question.  For most domain investors would you have been better off just putting your money in the stock market for the last two years than having it sitting in a domains?

Here is some data to base your decision

One May 15 2009 the Dow Jones was at 8500.33. Today the market opened up at 12,595.75 for a return of 48%.

On May 15, 2009 Apple was at 122.50.  Today it opened at 340.50 for a return of 178%

On May 15, 2009, my favorite restaurant Chipotle stock was at 74.54.  Now it’s at 280.40 .  A return of 276 %

Did your domain investment returns beat that?  Your real returns.  Not the ones you tell everyone about.  Like all true gamblers, most domain investors only talk about their great sales.  The 10X flips, their doubling of money in one week. Nobody wants to talk about the domains collecting dust in your account.  Those thousands of dollars in renewal fees that eat at the bottom line.  My guess is that 90% of domain investors don’t really even know how much money they made because they don’t keep strong enough accounting records to actually calculate a return on investment.

I think I WILL beat the returns of the market but I have to admit that I don’t think I have in the last two years.  My Apple and Chipotle stock has killed the returns of my domain investments. While my portfolio of domains is growing every year and I did exceptionally well by essentially doubling my money on my NNNN.com flips, if you combine all the other domains sitting in my account waiting to be sold, in hindsight I would have been better keeping my money in my stock picks.  Another case for the stock market is the liquidity.  I can be out of my positions in minutes.  Of course I could be out of my domains in a day or two as well but I would have to sell the domains at a large reduction in their value in order to sell it quickly. The other problem is the scaling.  While I can turn a $70 domain into $150 often, doing it over and over, regularly seems to be more difficult.  Making a living doing this is tough.  While I do know a few people that do this, I would estimate there are less than 500 people in the world that flip domains, maybe less than 100.

Fortunately for me I did both.  I invested in the stocks I mentioned above and kept rolling my domain money over.  I, like many in this industry,  make just as much money from other aspects of domain investing.  I make money from writing about my domain investment experience.  Presently I put all that money back into domains.  If I would have put that back into the stock market instead, I would have more money than I do now. Another important aspect is the fact I bought a lot of shitty domains.  Domains I never should have purchased.  While I could have had the same problems in the stock market, the domains I purchased have no resale value while the stocks most likely would not have lost full value.

If you invested in anything other than dot com I think you have an even higher chance that you’ve done worse than the market.  For every Mike Mann and the dot co sales are another thousand people that are choking on them. What if they had put all that money in the NASDAQ?  Would they have been better off in the long run?  My opinion is yes.

I’m sure there are going to be plenty of people that chime in with their incredible returns but the point of this article is to remind you to diversify and to weigh all you investment options.  Domains can be an incredible investment but they shouldn’t be your only investment.  Like anything else you need to keep good records of your returns and figure out what is getting you the most return. Most importantly this is long term.  The last two years have been very good for the market and like anything you put your money in to, there’s risk. What is good one year is not guaranteed to be the same the next.

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Outsmarting the Dumb, Outworking the Smart

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8 comments

  1. Obama

    I could NEVER make what I do in the stock market compared to domains.

    The only close chance at that would be penny stocks.

    You can lose everything with stocks……they go out of biz or do reverse splits, etc……. But even if you don’t sell your domain(s) this year you still have your domain(s). It’s just like real estate. Real estate could fall 99% but you still have it. And, as you know, you can plant plants on it to generate cash. Domains, like land, generate PPC if bought correctly.

    I’ve never seen an investment as good as domains. I bought a domain from another domainer for $50 two weeks ago and just flipped it for 9K. He did not realize what it meant in another language….LOL. Try this in penny stocks and you are playing with fire with your cash. That 9K pays for a lot of domain renewals for sure.

    I’m selling domains like hot cakes for the last year or so…..the only slowdown was this March.

  2. Elevator

    Domainers are passionate about the domainig, no matter the obstacle; they continue to invest in the market. Those who have the knowledge of domaining are bound to make money but if you don’t, you will face hell. Every business has its own logics. Making money from both stock and domain are not easy. Cheers.

  3. Ryan

    I always seem to sell more when the stock markets are doing well, disposable cash, excess margin?

  4. Jeff Edelman

    The stock market has done great since it has bottomed out. But very few people could have or would have picked the bottom to invest. I am a big believer in the stock market, but only as a long term investor. It’s too dangerous a game to be involved in it otherwise. And your example of putting money in the NASDAQ: The NASDAQ hit 5000 on March 10, 2000. The NASDAQ is under 2800 right now, which is over 11 years later and more than 44% lower.

  5. Joel

    You make some good points. I have enjoyed and gotten back most if not all my looses from the market. However now the USD the way it is and the obstacles it has to come over. – Domains really have very little if any effect. The value of a domain crosses all currency… there is no real exchange rate per say as with stocks, etc. The dollar is in real threat of loosing everything (even its title as world reserve currency.)

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