I like to read and listen to experts from fields outside domain investment. Sometimes this is in sectors like technology, that will directly inform investment in new niches or sectors. Other times, it is in aesthetics or design, that can be helpful in name creation and evaluation. But I particularly like to follow what conventional investing experts have to say.
One of the investment experts that I read regularly is Ben Carlson. He is a certified financial advisor at Ritholtz Wealth Management. I first learned of Ben by reading his first book A Wealth Of Common Sense: Why Simplicity Trumps Complexity in Any Investment Plan.
Ben somehow finds the time to write something informative, well-researched, and interesting each day at his blog site AWealthOfCommonSense.com. Yes, I know that is a long domain name, although easy to remember for those familiar with his book, since an exact match to the title.
A week or so ago, Ben Carlson wrote a column entitled 24 Things I Believe About Investing. In this NamePros Blog post I take a deep dive to consider what insights might also apply to domain name investing.
Let me stress Ben Carlson is talking about investing in the traditional sense, in stocks, bonds, ETFs and so on. But I was surprised at how many of the points can readily be adapted to domain investing.
Simple Beats Complex
It is perhaps not surprising, considering the subtitle of his first book, but the first point Ben makes is
Relevant to this discussion, check out the Interview with Sten Lillieström: Part 1 Challenging Persistent Domain Name Views, along with Part 2: Creating Effective Brand Names.
Is That Advice Relevant to Me?
Ben’s third point was
Be Disciplined
The domain community is littered with poor domain name acquisitions. At other times, lack of investor patience resulted in hasty decisions to let domain names go, just before the value of the name significantly increased.
In commenting on traditional investing, Ben Carlson wrote
Some Investments Will Be Losers
However, his next point is that, no matter how careful your research, at times you will see investments incinerated, that is just part of investing. That is definitely also true in domain investing, and sometimes we will invest in domain name resources that become worthless. That is just part of investing. That leads nicely into the next point.
You Have To Take Risks
In point 7 on the list Ben wrote:
In case you missed it when it was published a few years ago, you might find Catching Trains and Avoiding Train Wrecks useful background on the topic of risks and opportunities.
Define What You Won’t Invest In
Many domain name investors have pretty clear ideas what they will, and will not, invest in. However, sometimes it is easy to see a big sale, or read about an emerging technology, and rush into domain acquisitions that you will later regret. While making those mistakes is part of investing, so too is learning from past mistakes. Don’t overlook the importance of investing only in what you know.
I’ve been thinking a lot lately about the relative merits of being diversified across different kinds of domain investments, versus specializing and becoming expert in a single niche. I think there are solid arguments each way.
Ben wrote the following:
What Are Your Domain Investing Blindspots?
Point 16 on Ben’s list is about knowing your own weaknesses:
Back in December 2017, @Nikul Sanghvi (Hypernames) wrote probably one of the best posts in the long history of NamePros. If by chance you have not read it, check it out now: (Almost) A Decade of Domaining…
In the post Nikul Sanghvi talks about the emotional side of domain investing, and biases.
Have Your Say
Ben Carlson’s article covers a number of other points, so I hope you will check out the full post. Here is a teaser: at the end of the article he relates a story about how Warren Buffett responded when Jeff Bezos asked him if Buffett’s investment ideas are so simple, and he has done so well, why doesn’t everyone copy Buffett. Read to see how Buffett replied.
Sincere thanks to Ben Carlson for the great article that sparked this NamePros Blog post. As well as his four books and blog, Ben Carlson, along with and his colleague Michael Batnick, also has a podcast called Animal Spirits. The podcast is pretty wide ranging in what it covers. As they describe it, “We talk about all things financial markets, personal finance, our favorite books, movies, and TV shows, parenting, the asset management business and more.”
I hope that readers will comment in the discussion below on one or all of the following:
One of the investment experts that I read regularly is Ben Carlson. He is a certified financial advisor at Ritholtz Wealth Management. I first learned of Ben by reading his first book A Wealth Of Common Sense: Why Simplicity Trumps Complexity in Any Investment Plan.
Ben somehow finds the time to write something informative, well-researched, and interesting each day at his blog site AWealthOfCommonSense.com. Yes, I know that is a long domain name, although easy to remember for those familiar with his book, since an exact match to the title.
A week or so ago, Ben Carlson wrote a column entitled 24 Things I Believe About Investing. In this NamePros Blog post I take a deep dive to consider what insights might also apply to domain name investing.
Let me stress Ben Carlson is talking about investing in the traditional sense, in stocks, bonds, ETFs and so on. But I was surprised at how many of the points can readily be adapted to domain investing.
Simple Beats Complex
It is perhaps not surprising, considering the subtitle of his first book, but the first point Ben makes is
That got me thinking about domain investing. There is no doubt that we have many more tools and metrics than were available to a domain investor even a few years ago. Is it possible that this plethora of metrics can cause us to lose sight of the fundamental question? Is this a good name that would be desired by end users?I believe simple beats complex. The problem is simple is much harder to implement because complex will always sound more intelligent and appealing.
Relevant to this discussion, check out the Interview with Sten Lillieström: Part 1 Challenging Persistent Domain Name Views, along with Part 2: Creating Effective Brand Names.
Is That Advice Relevant to Me?
Ben’s third point was
While I would not go as far as to say we should ignore what legendary and highly successful domain investors have to say, I do think that we should keep in mind that their circumstances are often very different from our circumstances. This could be in terms of starting point, available financial resources, personal strengths, experience, and more.I believe you should ignore what billionaires and legendary investors think about the markets. These people don’t share your circumstances, time horizon or risk profile. Why should you take investing advice from them?
Be Disciplined
The domain community is littered with poor domain name acquisitions. At other times, lack of investor patience resulted in hasty decisions to let domain names go, just before the value of the name significantly increased.
In commenting on traditional investing, Ben Carlson wrote
I think the same can be true in domain investing. Being disciplined in approach, including being willing to do the learning and the hard work, will, over time, yield results.I believe self-control can make you far more money than just about any other trait as an investor. I know plenty of high IQ people who are terrible investors because they don’t have the right temperament.
Some Investments Will Be Losers
However, his next point is that, no matter how careful your research, at times you will see investments incinerated, that is just part of investing. That is definitely also true in domain investing, and sometimes we will invest in domain name resources that become worthless. That is just part of investing. That leads nicely into the next point.
You Have To Take Risks
In point 7 on the list Ben wrote:
So while as a domain investor always be cognizant of risks, you do need to take some risks. While no one can predict with certainty the risks of a particular domain investment decision, I think asking yourself what is the likely sell-through rate going to be, and probable sales price, is a way to keep risks in mind.I believe risk management is important but you have to take risk to make money. Managing risk is a major component of portfolio management but you can’t avoid risk altogether. You have to invest in something.
In case you missed it when it was published a few years ago, you might find Catching Trains and Avoiding Train Wrecks useful background on the topic of risks and opportunities.
Define What You Won’t Invest In
Many domain name investors have pretty clear ideas what they will, and will not, invest in. However, sometimes it is easy to see a big sale, or read about an emerging technology, and rush into domain acquisitions that you will later regret. While making those mistakes is part of investing, so too is learning from past mistakes. Don’t overlook the importance of investing only in what you know.
I’ve been thinking a lot lately about the relative merits of being diversified across different kinds of domain investments, versus specializing and becoming expert in a single niche. I think there are solid arguments each way.
Ben wrote the following:
I believe defining what you won’t invest in is more important than what you will invest in. Investors have never had it better but the paradox of choice can be paralyzing. You can find liberation by limiting yourself to certain types of investments and ignoring everything else.
What Are Your Domain Investing Blindspots?
Point 16 on Ben’s list is about knowing your own weaknesses:
Overconfidence bias is a well-studied cognitive bias, and it is definitely present in domain name investing as well.I believe every investor has their own behavioral blindspots. Knowing yourself is more important than worrying about what other investors are up to.
Back in December 2017, @Nikul Sanghvi (Hypernames) wrote probably one of the best posts in the long history of NamePros. If by chance you have not read it, check it out now: (Almost) A Decade of Domaining…
In the post Nikul Sanghvi talks about the emotional side of domain investing, and biases.
Nikul goes on to urge investors to not only interact with those of like mind, since that will reinforce your own biases:There is a constant battle between your analytical thought processes and your emotions/gut. If you can control the emotions, you can also control the biases that affect decision making. That’s why it’s important to feel good about domaining and be happy with the decisions you make. If it’s becoming emotionally stressful or if it is affecting your health/wellbeing in a negative way, you’re doing it wrong.
Listen to others, especially those that disagree with you. If you ask for opinions, and receive views that challenge your perspective on things, pay attention and try to understand where they come from. The worst thing that an investor can do is only to seek opinions that reinforce their own. It inhibits learning if you receive a challenging viewpoint and then immediately double-down (reaffirm) on your own opinions without giving it serious thought.
Have Your Say
Ben Carlson’s article covers a number of other points, so I hope you will check out the full post. Here is a teaser: at the end of the article he relates a story about how Warren Buffett responded when Jeff Bezos asked him if Buffett’s investment ideas are so simple, and he has done so well, why doesn’t everyone copy Buffett. Read to see how Buffett replied.
Sincere thanks to Ben Carlson for the great article that sparked this NamePros Blog post. As well as his four books and blog, Ben Carlson, along with and his colleague Michael Batnick, also has a podcast called Animal Spirits. The podcast is pretty wide ranging in what it covers. As they describe it, “We talk about all things financial markets, personal finance, our favorite books, movies, and TV shows, parenting, the asset management business and more.”
I hope that readers will comment in the discussion below on one or all of the following:
- What would be on your personal list of beliefs about domain name investing?
- To what degree do you think there are parallels, and differences, between conventional investing and domain name investing? That is, of course, a whole topic in itself.
- What do you like to read or listen to outside of the domain name community that you find offers helpful insights for domain investing too?
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