Domain name investment versus shares ROI

[soggyindo]

there was just a story on the news about the (Australian) share market - $100k invested 10 years ago would be $317k today.

It made me think about domain ROIs, and how easy it is to turn a $7 name at least to a $21 name. Sometimes more, and sometimes in only a few days.

Would anyone hazard to estimate how much $100k invested in a pretty conservative, diversified domain portfolio (dictionary, keyword, LLL, LLLL etc etc) 10 years ago would be worth today? And even more of a shot in the dark, how much $100k invested today should/ would/ might turn into, over 10 years?

I think I'm less interested in the "You could've bought Download.com and Business.com for $100 in 1994" type discussion, and more about what an average, mum and dad investor - with the best professional advice at that time - could have received, on a year by year basis. At one stage they almost gave away farmland with oil (bad for farming), and I kind of see the early internet as a similar, freaky stage.

I guess to make it simpler, we're probably talking buying and holding in both the shares and domains, not constantly reselling - but reselling and any other thoughts on this would be interesting to hear.

 

[Khristopher]

Hi Soggy,
It is interesting to think of the ROI on domains, and over a period of time the value of them would likely climb because of scarcity (fundamental of economics right there..). However, I think that one huge factor in domain name sales and the ROI is the "Marketing." There are people who can take a 7$ domain name and turn it over for 10,000 in a couple of days if they know the who and how. I wish it were so easy, but the point I'm making is that I think there is quite a variation in domain name ROI. No matter how you look at it.. they are one of the best investments around. Real Estate on the Web.

Cheers,
Kris

 

[bobdigital]

you are comparing rotten apple cores(stocks) and orange groves(domains).
100,000 ten years ago would = 10's of millions maybe even 100's of millions.

 

[-REECE-]

When inflation is factored in that 317k is more like 200k.


Very hard to guess what you would have made in the past -- as we all know, the returns have been pretty exceptional. I would imagine a portfolio of LLL.coms, keywords, dictionary words, etc would have easily made 1000%+. That's assuming you knew what you're doing which most people back then did not.

LLLL.coms are up 400% already since buyout -- it really does go to show how quickly money can be made here. At the same time, very few stocks are as volatile as LLLL.coms.

I don't think anyone is qualified to answer your 2nd question -- way too many variables over way too long of a timeframe. With smaller value domains, one has to consider renewal fees and future Verisign price hikes.

I'm far more optimistic about the future of domaining than I am of the stock market.

there was just a story on the news about the (Australian) share market - $100k invested 10 years ago would be $317k today.

It made me think about domain ROIs, and how easy it is to turn a $7 name at least to a $21 name. Sometimes more, and sometimes in only a few days.

Would anyone hazard to estimate how much $100k invested in a pretty conservative, diversified domain portfolio (dictionary, keyword, LLL, LLLL etc etc) 10 years ago would be worth today? And even more of a shot in the dark, how much $100k invested today should/ would/ might turn into, over 10 years?

I guess to make it simpler, we're probably talking buy and hold in both, not reselling - but reselling and any other thoughts on this would be interesting to hear.

 

[bobdigital]

even with 1 million to invest, 10 years ago you needed to have a futuristic vision of domains. You could have caused mad damage with only a few grand if you knew then what you know now, renewal fees or not.

 

[soggyindo]

You could have caused mad damage with only a few grand if you knew then what you know now

lol, i like that phrase, mad damage (.com available, btw!). i've added a new proviso to my first post - "with best information that was at hand to the average investor".

i agree, it's still a nigh impossible question, and shares of course required much less psychic ability in 2008. but still, with the huge (and largely only known to a relatively few) ROI on domains - versus what looks like piddling returns on "mighty" shares - dragging domains in and putting some real figures down will become increasingly important IMHO. 1000% is still 'only' x10, and it's ten years we're talking about! Given, there are a few write offs.

or do we want to keep all this a secret?

:lol:

in some ways i see domains more like the art market than the share market. sure, some people can turn $1000 into $30,000 or $1,000,000+ in the art market... but most people will just be throwing their money away there (from a strictly financial investment point of view)

 

[DomainTalker]

A couple of thoughts on this one:


1. Whilst there have been many terrific deals done with domains for a great ROI - some spectacular - the key weakness in the domain business model, for the vast majority of domainers, is the disconnect between those that own the vast majority of domains for sale (domainers), on the one hand - and the holders of the vast majority of the potential money to buy them (ie end users), on the other.....ie where the real riches could be, is not a well-functioning market.

That means restricted profit potential, because our resale market is mostly 'churn' between reseller domainers.....Or, PPC income - which only returns good money for the very few that own the best .com domains....Most portfolio owners probably make relatively little.

Or, alternatively, to become an 'end user' ourselves - ie develop real & successful online businesses with our domains.


2. Looking ahead is always tricky. But, one thing I'm sure of is that whatever dynamics & business models for domains that drive great ROI over the next 10 years, will be different to what drove ROI in domains in the past 10 years....Perhaps, even radically different....Nothing stays the same - ever...

...So, whoever spots the inevitable new opportunities, early, with fresh business models, will scoop the pool.

.

 

[Keral_Patel]

Don't ask me LOL I have lost 35K last week in stocks market Don't know how I have handled the pressure but I have stopped thinking about it right now. Just hoping it will rise maybe someday and I will collect my belongings and run :D

 

[martinisky]

Yeah i'm getting burnt in the stock market too.... bad time for all investors.... but on a positive note there are loads of opportunities to be had... for those who have the eyes for it!

Don't ask me LOL I have lost 35K last week in stocks market Don't know how I have handled the pressure but I have stopped thinking about it right now. Just hoping it will rise maybe someday and I will collect my belongings and run :D

 

[accent]

.... the key weakness in the domain business model, for the vast majority of domainers, is the disconnect between those that own the vast majority of domains for sale (domainers), on the one hand - and the holders of the vast majority of the potential money to buy them (ie end users), on the other.....ie where the real riches could be, is not a well-functioning market. .....

I think, beyond the growth of the overall internet market, and the advent of mobile computing, this is the third major potential point of growth for domain values.

Imagine you are a Real Estate buyer looking for a location for your business. You sell surf boards and have found that your market is mainly 16 - 25 year old males with a family income of $40 - $150K. You want a well traveled location near the beach in a suitable demographic.

So you go to the real estate office. There on a big table you find a typed list of every property available in the entire world. In alphabetical order by street name.

There is nobody around the office to help you so you look around until you find a computer with a sign on it: "Search". You type in Surf Boards. The computer churns a bit and prints out a list of 200,000 properties, again alphabetical, starting with Acme Lumber. Price is Make Offer.


It is a wonder any of us ever sell a domain. The "disconnect" DomainTalker mentioned is the single largest factor, IMHO, holding back domain prices. And it, most certainly, is a curable imbalance, one that promises immense riches to those who create an efficient way to connect buyers and sellers.

Markets abhor inefficiency. The only question is how soon.