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On NamePros, and on social media, a number of investors have mentioned that the last month or so has seen a significant downturn in the domain name aftermarket, both in terms of retail sales and in offers or inquiries.

For example, long-term investor @elmoney started the discussion Recession of Sales and Inquiries.

In this article, I report on investor polls, wholesale and retail sales data, and extract guidance about how investors might respond.

What Do People Think?

I posted a poll asking Are Things Slower In The Aftermarket?, obtaining the results shown below.

Image-NP-Poll-Results.png

About 54% of NamePros respondents reported a sharp decline in sales and offers during the past month, although nearly 14% saw an increase over the same period.

I posed a similar question on Twitter, obtaining the results shown below.

IMAGE-Twitter-Poll.png

In the Twitter poll, while slightly more than half saw a decline, only 32% would characterize it as a sharp decline.

What Does The Data Say?

While it is significant that so many are seeing a decline, I wanted to back it up with actual sales data. On May 14, 2022, I used NameBio to look at sales numbers and volumes for the preceding week, month, 3-month period, 2022 so far, and 2021.

Rather than look at all data, I only considered certain sales venues according to whether they are predominantly wholesale or retail.

For venues representative of mainly retail sales, I used sales reported from Sedo, BuyDomains, DomainMarket and individual private sellers. While a few investor acquisitions happen at these venues, most will be retail sales.

For wholesale, I included ParkIO, Sav, GoDaddy auctions, NameJet, DropCatch and Dynadot. While the division is not perfect, most sales at these venues are probably investor acquisitions.

Keep in mind that the numbers and volumes reported are by no means the entire retail and wholesale markets, but rather a representative sample based on certain sales venues.

The results for all extensions are shown on the left below. All data has been converted to weekly numbers.
Both-Table-MayDrop.png

Compared to 2021 data, retail sales numbers are off 6.1% during the past 3 months, and off 16.1% during the past month.

Average retail prices have dropped, however, so the sales dollar volumes have declined more significantly. The past 3 months are down 32.4% in retail dollar volume compared to 2021, while over the last month the retail volume is down 36.5%.

The very low dollar volume in the last week is mainly due to a low average price, rather than a low number of retail sales. It is probably simply a statistical fluctuation, since one or two high-value sales can strongly impact a weekly figure.

The picture is very different for wholesale transactions. Both numbers and dollar volumes are up compared to 2021. Over the past month wholesale sales are up 7.3% by number, and up 16.8% by dollar volume, due to slowly but steadily increasing average prices. There is no indication that investors have slowed their acquisition rate yet.

It is important to keep in mind that these are for only a small part of the total retail market. The actual market may be down more, or less. Also, 2021 was a particularly good year for domain name sales, so some decrease from those highs is perhaps to be expected.

The .com extension dominates the market, so I also looked at results for that extension only, with results shown on the right above.

The picture is not much different, although the dollar volume decrease is a bit more pronounced for .com. Over the past month .com retail sales numbers are down 16.4% compared to 2021, while retail dollar volume is down 44.2%.

On the wholesale side, the rate of .com acquisitions continues to grow slowly, as do average prices paid. As a result the wholesale .com dollar volume is up 13.8% over the past month compared to 2021, although the number of sales is up just 2.8%.

Possible Reasons For Downturn

While many sectors of the economy struggled over the last two years, the domain name aftermarket has seen excellent returns. Existing businesses saw the need for a stronger digital footprint, and many digital-only startups emerged as well. It is only natural that the strong growth rate could not extend forever, and some slowing of the elevated domain name sales of the last two years was to be expected.

But there is more to the story than that. The war shows no signs of resolution, and that has brought significant economic uncertainty and disruption and fragmentation of the global economy.

The return to near pre-pandemic commerce and social activity has lessened the need for digital solutions, and yet the pandemic continues to threaten a smooth economic and health recovery.

The stock markets, particularly technology stocks, are down well over 20%, and that has created uncertainty for both individuals and businesses.

Many who invest in startups and domain names also invest in cryptocurrencies and NFTs, both of which have seen even sharper downturns. The coupling of the markets may account for some of the domain market downturn. Certainly there are anecdotal reports of sales falling through due to significant drops in cryptocurrency valuations.

Inflation is at the highest level in decades, and businesses wary of increasing costs may be less likely to make branding upgrades at this time. Perhaps even more important for the domain market, there may be hesitation among potential startup owners as a result of both inflation and interest rates.

The rise of decentralized name systems pose some threat to the centrally regulated ICANN and country-code traditional naming systems. Decentralized names have suffered a far greater fall during the last month. While that might be good for centralized domain names, it is possible that they were instead dragged down by the decentralized volatility.

No one knows how long most of these factors will impact the domain market. It is quite possible that another era of strong domain name sales is just around the corner, but it is also possible that the decline will be lengthy and deep.

Nevertheless, it is best to be prudent, and we discuss some specific steps in the next section.

How To Respond

Especially during tough economic times, it is critical to prioritize: protect your most valuable assets. This might be a good time to go through your entire portfolio and decide which names are in your ‘definitely keep’ group.

If you have made a significant sale lately, this is a good time to retain some cash for future needs and to renew in advance your highest quality domain names.

Those who are in a solid position financially may find good opportunities for acquisitions if the wholesale market weakens, not that the wholesale data yet shows that happening.

It is important to follow business trends. Some of the niches that were strong in 2020 and 2021 may no longer be the right places to invest, and some hard-hit sectors may see a bounce back as the economy emerges from the pandemic.

The best domain names will always find buyers, so in uncertain times it is important to stress quality.

Clearly the best path forward will depend on your own individual circumstances.

Sound Advice From Twiki

@twiki is a NamePros member who sells domains frequently, and also generously contributes to the NamePros community through detailed commentaries. This week he speculated on the downturn and how to respond.

First, he commented on how quickly the downward trend had emerged:
A month ago in a post I was saying I expect a good year in domain sales. Then April came and .... poof! I was wrong – the downtrend came suddenly and much sooner than I expected.

He follows that with advice on how to respond. Here are some key points, but read his full post, and the comments by others, to place the ideas in context.

At lower sell-through rates and weaker prices, as he points out, the math may not be profitable without changes.
The problem we have is, the math will not work out anymore for many domainers. The solution for this? Get better names, even if pricier. Improve the overall quality of your domains.

You also want to reduce the bill for renewals, and that means:
Don’t renew your questionables. Those names which you aren't 100% sure will be sold someday. If they don't sell before renewal, let them drop.

While you may want to continue to acquire names, be very selective.
Reduce your buying. This is the worst time to hoard domains. Cut from the list all those that are questionable and stick only to the top ones. Same applies to what you renew - only renew your top ones. The less junk you have, the better off you will be.

It is natural to try to get sales flowing again, and perhaps see price reductions as a way to achieve that. @twiki argues against thinking that way.
Don’t steeply reduce prices. And don't panic. If you decrease your prices right now, you will likely lose overall. The market is used with these price levels and the problem is not one of affordability, but one of demand.

Other points he makes are to watch the business and domain markets carefully, and to respond accordingly. Read his full post for supporting arguments and additional points.

Share Your Views

What do you think?
  1. Are we in for an extended period of domain market downturn?
  2. What sectors or niches do you think will weather the storm best?
  3. Have you personally seen a recent downturn?
  4. What steps do you plan to personally take to address the situation?


Thanks to all who voted or commented in the polls. Thanks also to NameBio for a superb interface that makes analyses such as the one reported here easy to carry out. Special thanks to @twiki for sharing valuable reflections about the downturn.
 
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The views expressed on this page by users and staff are their own, not those of NamePros.

Mkt Sales Leads

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Hard times, but I strongly believe that domain names will remain as great asset. Even cryptos fail, or web 3.0 & metaverse, internet will be here. Online business and other activities will stay online.
Think, we had life before cryptos. Why not after?
And the most important: This downturn doesn't mean that names are useless, but the opposite. People want to start new things, but this CURRENT period it's harder than other times.

The future for domain names is more bright than ever!
The question isn't whether domains are useful or not, but how much the market has affected domainers and if the good results some claim to be getting are representative of the community as a whole.

Of course, there will be those who are having their best year ever (and would sell names whatever the economy), but are these people in the minority? It would appear yes, since most domainers are estimated to lose money, and of these, a large number happen to be newbies who handreg junk soon after reading about a 3 word hyphenated, alphanumeric.org/net/app/TV/
.horse etc that sold for over 50k.
 
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kite26

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The question isn't whether domains are useful or not, but how much the market has affected domainers and if the good results some claim to be getting are representative of the community as a whole.

Of course, there will be those who are having their best year ever (and would sell names whatever the economy), but are these people in the minority? It would appear yes, since most domainers are estimated to lose money, and of these, a large number happen to be newbies who handreg junk soon after reading about a 3 word hyphenated, alphanumeric.org/net/app/TV/
.horse etc that sold for over 50k.
If worst things happen, I think full time domainers will get the most damage. But money change hands, don't disappear completely. Sales may show a temporary reduction in quality and quantity but the fact that domains can be related to any niche, is the reason of their survival. For the time internet exists, domains will have value. I am very optimistic, even better days will come. I suggest you be the same. Imo...
 
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poweredbyme

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I mean, fake Biden would make himself look stupid intentionally, but people would still approve "his presidency" if economy is good. So economy needs to look bad to wake people up. Otherwise people won't want/need the new system (I mean good guys' system). But it can't be very bad either, because good guys are in control, and people would learn about this eventually.

I think the US economy f*c'ed up beyond repair. Noone can repair.
 

topdom

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US will be ok. It looks like US is in big debt, but US can print money to pay its debt, but east-block might not accept USD anymore. Each of these are half true. If we go deeper, things are more complex. "Embezzled" (in positive sense) gold, hidden tech, angelic aliens, will make the world and this side of the universe a better place, for a while. We will explore other planets redesign them, and just before a big solar flare, teleport there.
 
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I
US will be ok. It looks like US is in big debt, but US can print money to pay its debt, but east-block might not accept USD anymore. Each of these are half true. If we go deeper, things are more complex. "Embezzled" (in positive sense) gold, hidden tech, angelic aliens, will make the world and universe a better place.

The USD is currently stronger than it has been at any point in the last 20+ years.

https://www.marketwatch.com/investing/index/dxy
 

alcy

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US will be ok. It looks like US is in big debt, but US can print money to pay its debt, but east-block might not accept USD anymore. Each of these are half true. If we go deeper, things are more complex. "Embezzled" (in positive sense) gold, hidden tech, angelic aliens, will make the world and this side of the universe a better place, for a while. We will explore other planets redesign them, and just before a big solar flare, teleport there.

all basically true..u just forgot to say that not everyone will teleport.. and we all know who will
 

topdom

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International USD is strong. Local USD may not be, this is why there is big inflation in US. What is the difference between local USD, and global USD: global USD is accepted as payment by East-Block. Value-wise, there may or may not be a difference, depending who is transferring the money, and how much... I mean, there is a complex deal we are not aware of, but it must be similar to what I say above.
 
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International USD is strong. Local USD may not be, this is why there is big inflation in US. What is the difference between local USD, and global USD: global USD is accepted as payment by East-Block. Value-wise, there may or may not be a difference, depending who is transferring the money, and how much... I mean, there is a complex deal we are not aware of, but it must be similar to what I say above.

Inflation is not just a US thing, it is happening all over the world for many reasons. If you think gas, food, supplies, etc. are bad here...look around the rest of the world.

Supply chains are still a major issue. A lot of industries have still not recovered from COVID effecting their business.

In most of the rest of the world inflation is even higher, largely due to the strong USD.

Brad
 
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topdom

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I think, in most of the world USD preserves its purchasing power,
but in the US it doesn't. (I think)

(If so) This is because local USD and global USD are not the same thing.

For example such a thing can happen (might be happening): US wants to purchase something from China.
But if US prints money out of nothing, that money is not accepted by China. But China prints that money
(as global USD) in coordination with the rest of the world, and that money would be accepted by Russia, India, Japan,..and other countries.
This is a temporary solution of course.

Criteria: If you earn it , it is real money, if you print it, not necessarily (if gold backed yes, if not, maybe).
For example most of the money in stockmarket is "not real".

There must be some room for arbitrage, but good guys must be blocking such possibilities as much as they can.
 
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poweredbyme

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Once USD losses its reserve currency status, it will end up collapsing the US economy and will end the US empire. A quick look at previous empires in the history will show how the decline trends of existing empires start and how emerging new powers become the new empires of the World. For instance before USD, GBP was reserve currency of the World. Where is GBP now? How many people use GBP today in global trade? almost noone? Correct almost noone uses GBP outside of the UK borders. Before GBP, gulder was the reserve currency of the World, backed up by Dutch empire, which is the country of Netherlands of today. Before Dutch, Italians (venice-florence kings) were super power between until around 15th century. What the FED is now, Bank of England, Bank of Amsterdam were the same in the past. If you go further China was the empire of the World, the most developed, richest one. That's the history. Before Chinese Empire, there was Roman Empire which came after the decline of Egypt.

USD will loss its reserve currency status. That trend has started after the 2008 financial crisis. US was unable to solve it or maybe while they were able, they didn't want to solve for populist politicians. I am not much into US politics and US politicians. So I don't know the real reason. US tried to cure only the symptoms of a life threatening cancer.. As a result, 2008 mortgage/financial crisis was a horrible cancer, was not cured and now it's in the last stage, is too late for everything.
 
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topdom

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This is "outdated" info. Lots of things changed in the past 10-15 years.

What were all possibilities:

US will continue printing money out of nothing, and buy stuff from
other countries (so other countries would obey).
This would mean, USD stays as (unbacked) reserve currency.

Russia and China joined their powers and became the "most powerful
country" (economy, military, land,..), and there was no reason to
get scammed (or let others get scammed by US) anymore.

US could force the West to use USD,
but then Germany would be a victim here.
Russia China can say "we don't accept USD", and then
US/West could say "then we don't accept your gold".

Also companies from different countries made
long term business deals based on "fixed USD value",
and collaspsing USD would create mess everywhere,
not only in US.

US could start WW3 because Russia+China wouldn't obey.
And Obama tried a few times. If happened, noone would win, or
at least US wouldn't be the winner for sure.

USD stays as reserve currency, but then to get protected against devaluation,
other countries would buy stuff from US with USD they earned.

US could prints lots of money and devalue USD, this way USD
holdings of other countries would have no value left.
In the short run, the world would lose, in the long run, US would lose.
This is another way USD would collapse (overprinting; previously mentioned:
not being accepted globally)

Collapsing USD (by not allowing it to stay as reserve currency)
is not the solution for anyone. It would almost like ww3.

US had to stay as strong country, because, for example nukes of US
would be in hand of mafia.
People of the world go to US for education, and to learn/improve
their english. If Russians and Chinese don't know English,..how would they communicate:
in Russian or Chinese?: both are difficult languages, for the other side.

US needs to print money for its internal business, but on the
other hand printing devalues USD globally, and US-bond holders
become losers. How to fix this: split USD into two categories:
global and local (or maybe more). But you can't allow free flow of money,
there must be some control and limits.

USD was the main global currency in recent past, ..
so is now, but there is a difference.

USD was not US money anyway, it was deepstate money (Fed note).
Now, global USD is international money not controlled by US only.
You can maybe call it Chinese money.
And local USD cna be considered now as money issued by
US Treasury... Fed is now actually the Treasury.
There is no deepstate control anymore (or not much left).
 

AEProgram

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"The US has worse inflation in Germany, France, Japan, Canada, India, Italy, Saudi Arabia"

https://nypost.com/2022/06/16/white-house-pressed-on-bidens-claim-inflation-higher-everywhere-else/
Cherry picking.

Inflation is a problem almost everywhere. The US in the middle of the pack globally, despite people hyperventilating over it.

U.S. inflation rate is in the middle of the pack globally​

https://www.axios.com/2022/06/13/inflation-rates-around-world-us-china-eu-japan

1655422224967.png


https://www.pewresearch.org/fact-ta...e-world-inflation-is-high-and-getting-higher/
 

AEProgram

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Cherry picking.

Inflation is a problem almost everywhere. The US in the middle of the pack globally, despite people hyperventilating over it.

U.S. inflation rate is in the middle of the pack globally​

https://www.axios.com/2022/06/13/inflation-rates-around-world-us-china-eu-japan

View attachment 217947

https://www.pewresearch.org/fact-ta...e-world-inflation-is-high-and-getting-higher/
The person suffering because of it does not care if it's worse somewhere else just like the person sick with one disease does not care about someone suffering even worse.

The only people pushing the it's worse elsewhere are people with a political agenda so strong that have ran out of excuses.

It is ok to admit it's bad without feeling that you are endorsing an opposing party.
 
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AEProgram

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Once USD losses its reserve currency status, it will end up collapsing the US economy and will end the US empire. A quick look at previous empires in the history will show how the decline trends of existing empires start and how emerging new powers become the new empires of the World. For instance before USD, GBP was reserve currency of the World. Where is GBP now? How many people use GBP today in global trade? almost noone? Correct almost noone uses GBP outside of the UK borders. Before GBP, gulder was the reserve currency of the World, backed up by Dutch empire, which is the country of Netherlands of today. Before Dutch, Italians (venice-florence kings) were super power between until around 15th century. What the FED is now, Bank of England, Bank of Amsterdam were the same in the past. If you go further China was the empire of the World, the most developed, richest one. That's the history. Before Chinese Empire, there was Roman Empire which came after the decline of Egypt.

USD will loss its reserve currency status. That trend has started after the 2008 financial crisis. US was unable to solve it or maybe while they were able, they didn't want to solve for populist politicians. I am not much into US politics and US politicians. So I don't know the real reason. US tried to cure only the symptoms of a life threatening cancer.. As a result, 2008 mortgage/financial crisis was a horrible cancer, was not cured and now it's in the last stage, is too late for everything.
As long as people see the US as the safest option for their wealth and it remains the country most people want to move to, it will remain the dominant power even if the whole world starts using dogecoin for everything.

If you asked 50,000 millionaires not from the US where they would prefer to move to if they have to, most will say the US. If you asked people that don't work with millionaires globally what they think millionaires will say they will tell you, Singapore, Canada, New Zealand and Switzerland. Majority prefer the US, for now.
 
The person suffering because of it does not care if it's worse somewhere else just like the person sick with one disease does not care about someone suffering even worse.

The only people pushing the it's worse elsewhere are people with a political agenda so strong that have ran out of excuses.

It is ok to admit it's bad without feeling that you are endorsing an opposing party.

I just feel like a lot of people in the US whine more about it than in other places, without realizing there is a big world out there.

No one likes gas prices going up, but in a lot of the world there are far more serious problems like war, famine, etc.

The entire point is inflation is basically a global problem for a large number of reasons.

Brad
 
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poweredbyme

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@topdom Those are historical info and old, but not outdated invalid info. We still run global economy and trade based on more or less the same financial principles since around 500 years. If not all, most of those possibilities you wrote, happened in the past, some of them or most of them combined. For instance, inflation, printing money, capital control happened altogether to the previous reserve currencies with no exemption. Internal and/or external wars happened. For instance there was a war between Britain and Dutch, before GBP became the new reserve currency. Brits won that war.

Collapsing a reserve currency is not desirable by anyone, I agree. But it's not preference based on free will. It's a natural consequence, a simple cause and effect.

Some of those possibilities are low. US can not force usage of USD. It's almost out of possibility. Money and trade related things can not be forced, are either encouraged or discouraged by power. Enforcing, dictating never work and have never worked in history when it comes to money, business, trade related things.

English language would likely stay for a few generations from now as the language of global trade and agreements. People would not go to US for education as scientific production center would be elsewhere. But it would not end the popularity of English language for couple of generations.

US and all countries try to stay strong. But again, it's a simple cause and effect, not a choice. Nukes in the US would be controlled by state actors after a peaceful agreement. Nobody would let nukes be in wrong hands, mafia, etc. I don't think US would be invaded or destroyed by the next empire. In my opinion US would likely stay as is, probably with its nukes under agreements. After new super power is declared nobody would let instability and chaos in the US or in any country in general. Chaos, mafia would likely appear in the transition period only. Then stability period would start. Historically those things happen like that, more or less in this chronological order.

I didn't carefully examine all the possibilities you wrote. I likely missed some of them. I have little to no idea on some of them. However most of those possibilities happened in history and will happen again.

A currency can not be divided as internal and external usage. USD is a single currency like others, is belong to the US. Its domestic and international circulation, technically and logically can not be controlled differently. Only currency volume/amount can be controlled at some point, but full control, let alone half (50%) control is not possible, even on its amount. If you try to use a currency differently within and outside of a country, you have to name them differently, hence you would have 2 different currencies. There is no something in between.
 
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Would you have the balls to tell a person that is having a mental breakdown for being misgendered that in other countries they would have it worse?

Would you fly into a demonic rage if it was a political party you do not worship that suggested that in other countries they have it worse?

Do you think it's ok for a celebrity millionaire to tell Americans to shut up about higher gas prices?

I don't know anything about your political viewpoints so it's all general talk.
I have no idea where any of that stuff came from. I am socially liberal and don't really understand the comparison between gender issues and inflation.

I would suggest anyone who is having a mental breakdown (for any reason) seek professional help.

The bottom line is inflation is relative. It is an issue everywhere, not just in the US. Some people in the US act like it is only us dealing with it.

The USD is as strong right now as it has been in 20 years in relation other world currencies.

Brad
 
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AEProgram

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I have no idea where any of that stuff came from. I am socially liberal and don't really understand the comparison between gender issues and inflation.

I would suggest anyone who is having a mental breakdown (for any reason) seek professional help.

The bottom line is inflation is relative. It is an issue everywhere, not just in the US. Some people in the US act like it is only us dealing with it.

The USD is as strong right now as it has been in 20 years in relation other world currencies.

Brad
How does the fact like other people dealing with it help? Would you tell a person starving in Yemen that there are people that are terminally ill in say Bogota?

Inflation is a real problem for every person dealing with it regardless if someone else has it worse.

You need to stop thinking that you have to play down inflation or some GOP'er might get a vote.
 

poweredbyme

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As long as people see the US as the safest option for their wealth and it remains the country most people want to move to, it will remain the dominant power even if the whole world starts using dogecoin for everything.

If you asked 50,000 millionaires not from the US where they would prefer to move to if they have to, most will say the US. If you asked people that don't work with millionaires globally what they think millionaires will say they will tell you, Singapore, Canada, New Zealand and Switzerland. Majority prefer the US, for now.

All those are correct for me. You started with "as long as" condition. The point, or my point is that people place their bets on not-changing the existing status. Those bets don't change and always end up with loss. People before 2008 crisis, dot-com bubble, great depression in '29 were thinking the existing trend, existing norms, existing rules, existing power/money distribution will continue till forever. That's my point

The things change when people don't expect. Unexpected things happen. Large sums of wealth change hands suddenly, at least on the surface. People or most people blindly think everything will go on as is till forever.
 

AEProgram

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This thread is about a downturned domain market not politics not currency.
Hard to discuss an issue like a downturn in any asset without it going to politics etc.

However, I thank the member that sent me the links showing your and brad's political stance, I now understand why my comment mocking the justification of inflation got him and then you to comment here. Glad this place is not run by the Twitter mods. Regardless, my apologies for not checking myself, I am not here to get anyone upset in their beliefs.
 
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