Buying Indian domains or stock?

[cache]

If I have a fixed amount of money to invest, should I buy the .in domains or should I buy the stocks of sify?

http://money.cnn.com/2006/03/13/news/international/india_internet/index.htm

 

[VisualArtistFrankBonilla]

If I have a fixed amount of money to invest, should I buy the .in domains or should I buy the stocks of sify?

http://money.cnn.com/2006/03/13/news/international/india_internet/index.htm

How about a 50-50% investment? Thanks for the info!!

Frank

 

[Rush]

Go in for Infosys rather than Sify IMHO.

 

[smub]

i will say invest 50 - 50 because that way you are safe on both sides i mean you have chances of loosing money on both sides so why not secure it

 

[cache]

statistically, on average which one gives better yield?

If I had $30K, I could either buy 100 average domains or 100 average(indexed) stocks, which one would be better performance? (You can not compare the best performing stocks with the best performing domains because chances you are not lucky enough, thus we should choose an average thing).

 

[antonis12]

statistically, on average which one gives better yield?

If I had $30K, I could either buy 100 average domains or 100 average(indexed) stocks, which one would be better performance? (You can not compare the best performing stocks with the best performing domains because chances you are not lucky enough, thus we should choose an average thing).

Boy that is a tough (and interesting question). I think the reality is that there is not nearly enough price history and transparency in domains to do a comparative analysis that you can feel good about.

I think logic would suggest that you should only invest in domains if you believe that you will earn a much higher return than stocks, given the add't risks that domains have:

1. Not as established as an asset category
2. Vulnerable to changes in business models (e.g. PPC advertising)
3. Ongoing registration costs (could be meaningful depending on what type of portfolio you build)

To look at in another way, stocks are predicted to return between 5% - 10% per year on average going forward.

It is clear than nobody in the domain world that is doing new registrations expects returns that low and I think even folks that are buying established domains are hoping for somewhat higher returns than that to justify the risk and additional work.

Sorry that this is not exactly an answer, but I am not sure that at this stage this is an answerable question.

 

[cache]

agree with you.
I was looking for some numbers. For example, the food industry only returns 5% for your investment. The technology should return >15%
For the risks involved in domains as you mentioned, I would think the return must be much higher (like 200%) to justify the risks.

....

To look at in another way, stocks are predicted to return between 5% - 10% per year on average going forward.

It is clear than nobody in the domain world that is doing new registrations expects returns that low and I think even folks that are buying established domains are hoping for somewhat higher returns than that to justify the risk and additional work.

Sorry that this is not exactly an answer, but I am not sure that at this stage this is an answerable question.

 

[antonis12]

agree with you.
For the risks involved in domains as you mentioned, I would think the return must be much higher (like 200%) to justify the risks.

Yup. I agree. You need to be in triple digits in the short run and high double digits over longer periods of time to justify this asset class today, unless you are buying well established premium domains (e.g. sex.com)

Now, that does not mean that these assets will necessary give the returns that they "ought" to. They might just be a bad risk-reward investment...though I hope not!

Now the big buyers of fancy domain names (Internet REIT, etc) are likely anticipating lower returns than that...and if this becomes a more consistently established asset class, then returns demanded by investors should drop dramatically which means that price appreciation still has a way to go.

 

[IAmAllanShore]

Nice posts, antonis.

My own .02 is that it partly depends on what level of risk you can accomadate (Are you 18 or 78; squeaking buy or rolling in it; etc.), as well as your envisioned horizon.

As well, I agree with the idea behind the 200% return on the .in's (Overall), but I might view it as a 3,000% (or more) necessitated return on 5-10% of your portfolio. You won't sell every name, so you need to plan on the names you do sell having a premium. Buying 100 names for $10 each and then planning on selling the domains piece by piece for $30 each wouldn't be the best model, :imho although it could work out. I know that isn't what cache was necessarily suggesting, just thought I'd clarify for my own purposes

And consider other extensions over .in, or wait to buy .in's until they expire in floods.

-Allan

 

[antonis12]

Nice posts, antonis.

As well, I agree with the idea behind the 200% return on the .in's (Overall), but I might view it as a 3,000% (or more) necessitated return on 5-10% of your portfolio. You won't sell every name, so you need to plan on the names you do sell having a premium. Buying 100 names for $10 each and then planning on selling the domains piece by piece for $30 each wouldn't be the best model, :imho
-Allan

Good clarification - that is exactly how it works out for speculative domains. I thought that internally but did not write it.

Because (unlike stocks) the markets are not liquid, it is not efficient or possible to flip your whole portfolio for "200%" gains.