cache said:
for a fixed amount of money, should I invest it in a stock market where I expect 10% return (say buying a index fund) or invest in llll.com domain (just blindly buying up available llll.com to reg)?
which has better return, which has higher risk?
I would say the domain market has both more risk and more potential reward. The reason is that domains are only a few years old as an investment vehicle and things are not sorted out. There will be big jumps in value as the market discovers imbalances (three letter .us names doubled almost overnight a few months ago) and fads that will go bust when common sense returns (the qt craze on eBay??)
It really is like the old west - some folks choose their moves well - or were lucky - others did not. You want quality "real estate". The San Francisco Bay is taken, metaphorically, but maybe you can find Sacramento.
Thus we come to your statement: "just blindly buying up available llll.com". While LLLL.com are a class that will establish a floor price, there is considerable variation in the quality of the names available, which will translate into variation in the price you will receive when you sell. This is a major difference from buying mutual funds - each item is different.
You may be able to sell a small portion of your holdings before term to end users for a lot more money than you get eventually for the remainder. Selling is more time consuming than calling your broker. Selling prices will be difficult to estimate. And renewal fees need to be considered.
What about just buying up all the remaining LLLL.coms? Well, if you have the $ to risk (remember renewals) it might work out - kind of like buying random land. You would certainly be popular with me and others whose portfolios will gain value when the overhang is removed. The over riding question would be the direction and acceleration of the internet and the domain market as a whole. The acceleration has been there and seems to be continuing, barring major national or international problems that would hit the stock market also. The internal direction of the market is harder to tell -- we get jerked to the right or left on a regular basis. Short domains are popular now, particularly the LLL's. There are real reasons for this, reasons that may be stronger in the future (mobile devices) or weaker (voice).