It is good if your goal is to flip to the greater fool, the bigger pool of buyers for your names the better. But this is, in my view, more speculating than investing. At this point people are buying high hoping to sell higher, with no clue or care as to end user potential.
If your goal is to buy low and sell high to an end user, the domain industry expanding is undoubtedly bad. Competition is driving up prices almost to the point of retail and squeezing margins to the point where it is barely worth being in this business. Even old-school value investors are overpaying just to keep replacing inventory and accepting ROI's that don't really make much sense.
Andrew Rosener said something really interesting, and to me scary, towards the end of the latest Sherpa show (I'll paraphrase). He advised people to buy aggressively at auction because you know there are 4-5 other people who saw value in the name within 10-20% of what you paid.
So if you win at $4k you know there are at least a few other buyers at $3,200 to $3,900 if you need to liquidate. The idea being that your upside potential trying to outbound is high, maybe 5x, but your downside risk is theoretically low. This isn't even necessarily true though as they might not get into a frenzy next time, I've seen plenty of auctions driven up to $5k that didn't complete and went for sub $1k in the re-auction.
But the real problem with this thinking is that if those 4-5 other people are speculating and not value investing, then your "social proof" is other crazy people who aren't acting responsibly. If all of them have relatively deep pockets, you could drive a $1k name up to $10k with each one of those 5 bidders convincing himself to keep going because the others are there validating a near price.
Now those four other crazy people who didn't blow their bankroll on that auction live to be ridiculous another day, and they drive the next auction to silly levels. By the time it circles around, the first buyer who won got his next paycheck and is ready to get crazy again. With a big enough pool of people who think this way, or with deep enough pockets, this can get completely out of control. I think we're at or close to that point.
But where does it stop? Surely some of these people paying near-retail prices for low-mid tier expired auctions are going to go out of business eventually. But if enough people replace them, or replace them at an even faster clip than they are failing, it will likely continue until the next global financial crisis and then there will be a crash in this industry like we've never seen before. There will be people losing 75%+ of what they paid trying to liquidate.
Just my $0.02. I predicted two of the last zero crashes so don't listen to me