Investing in domains versus the stock market

[JoshuaPz]

It's a known fact that, over a long period, the S&P 500 rises 8% annually.

Now, let's say tomorrow I were to buy a premium LLL.com, say pep.com. This is the sort of domain I'd consider a "low-risk investment", one whose value probably wouldn't be susceptible to shifts in specific global trends or the value of a specific stock.

For these low-risk domains, how much would you say its value would rise annually, over a long period, assuming ICANN's allowance of new extensions won't affect the values of the LLL.com domains.

The answer could prove helpful for sales calls. If I propose an asking price of $XXX and the seller is hesitant to pay it, I'd like to be able to play a card conveying "Think of buying this domain as depositing $XXX into a bank account that pays 15-20% interest annually."

What are your thoughts?

 

[godolphin]

Both are speculative.

However, you can use the strategy you listed.

 

[Michael]

3character.com historical stats for min wholesale:
July 2005 - $1,300
July 2006 - $2,500 - 48% increase
July 2007 - $3,850 - 54% increase
July 2008 - $7,650 - 99% increase

Premium ones rose at an even quicker pace. It seems like that growth was not healthy and based a lot on speculators driving prices up. LLL.com are tanking now.

 

[snoop]

Now, let's say tomorrow I were to buy a premium LLL.com, say pep.com. This is the sort of domain I'd consider a "low-risk investment", one whose value probably wouldn't be susceptible to shifts in specific global trends or the value of a specific stock.

For these low-risk domains, how much would you say its value would rise annually, over a long period, assuming ICANN's allowance of new extensions won't affect the values of the LLL.com domains.

This is a high risk investment, the gains can be very large in good times with massive losses in the bad times.

 

[metronome]

imo, right now, the investment in LLL.com has higher return and growth than stock market.
not to mention that in the domain name world, you could do something to your domain name if you plan on keeping it, eg, park it, develop it, rent it, add more back links, and so so much more(even if your domain name value goes down), in the stock market, your stock gets trouble eg. the value goes down or something, the most you can do is sell it(some will buy even more, each person has different strategy), keep it, weep over it.

but I do still think that real estate is better investment than domain name.

 

[weblord]

Similarities and differences between stocks and domains
http://www.igoldrush.com/investment1.htm

 

[R9V.com]

I feel with the stock market, the average person without "insider" info is always 3 steps behind and bound to get burned, with those who have more info at their disposal to benefit - while with domaining, I feel anyone can get in on the ground level of any "trend" and almost always turn a profit so long as you also know how to market your assets for sale...

If I had my money in the stock market - I'd be in trouble!

 

[Mike]

at this time - domains, hands down. they provide more security than stocks. on the flip side, if one doesn't mind high risk investments, then the stock market is the way to go.
As stock investor, you're mostly 20 minutes behind, thanks to regulations
At least with domains, you're on the pulse as things are happening.

M.

 

[james0306]

imo, right now, the investment in LLL.com has higher return and growth than stock market.
not to mention that in the domain name world, you could do something to your domain name if you plan on keeping it, eg, park it, develop it, rent it, add more back links, and so so much more(even if your domain name value goes down), in the stock market, your stock gets trouble eg. the value goes down or something, the most you can do is sell it(some will buy even more, each person has different strategy), keep it, weep over it.

This is exactly how I feel as well. Even though, my job is mainly to provide stock analysis for clients. However, I had move all my money invested in stocks to domains and wil keep doing so in the next 20 years.

 

[NetOctave]

When the stocks bomb, you are left with nothing.
But with a domain, you have an option for developing a site.

 

[Burano]

The stock market has been around a LOT longer than domain names. No one can guarantee that the way the internet works now is the way it will be in 20 years. Thus, no one can guarantee that domains will be necessary. Stocks will always be around. The economy goes in cycles - there is a history and pattern to look to.

You don't have to have 'inside' information to do well, very well, in the stock market. You just have to diversify, pick strong companies when they are down (like now) and be willing to be patient. Sure plenty of people lost a fortune recently, but those that are smart and have cash on hand - make the most of these times and buy up great stocks on the cheap. The reality is when people who played their hand right make smart investments during times like these - they can get rich down the road.

Domains might be a better turn around in the short term, but I wouldn't put my eggs all in one basket - stocks or domains.

 

[soggyindo]

sometimes i think of art and other collectibles as a better comparison to domains than stocks.

LLL.coms and vincent van goghs - they're not making any more of either of them.

prices can suddenly go up - $22 million to $44 million - on a van gogh. but as soon as it gets to unreachable values speculators move onto the next big thing.

 

[npcomplete]

The stock market has been around a LOT longer than domain names. No one can guarantee that the way the internet works now is the way it will be in 20 years. Thus, no one can guarantee that domains will be necessary. Stocks will always be around. The economy goes in cycles - there is a history and pattern to look to.

You don't have to have 'inside' information to do well, very well, in the stock market. You just have to diversify, pick strong companies when they are down (like now) and be willing to be patient. Sure plenty of people lost a fortune recently, but those that are smart and have cash on hand - make the most of these times and buy up great stocks on the cheap. The reality is when people who played their hand right make smart investments during times like these - they can get rich down the road.

Domains might be a better turn around in the short term, but I wouldn't put my eggs all in one basket - stocks or domains.

Truly excellent answer that deserves a rep. I was thinking the same thing... and then I read your post - so now I don't need to say it!

Everything is subject to the market - including domains. As I said in another recent thread that was comparing "gold or domains": It is not that simple. Balance your investment portfolio using some reasonable asset allocation model that accounts for risks, volatility, fundamentals, technicals, etc.

Never been much of a kool aid drinker.

 

[snoop]

The stock market has been around a LOT longer than domain names. No one can guarantee that the way the internet works now is the way it will be in 20 years. Thus, no one can guarantee that domains will be necessary. Stocks will always be around. The economy goes in cycles - there is a history and pattern to look to.

You don't have to have 'inside' information to do well, very well, in the stock market. You just have to diversify, pick strong companies when they are down (like now) and be willing to be patient. Sure plenty of people lost a fortune recently, but those that are smart and have cash on hand - make the most of these times and buy up great stocks on the cheap. The reality is when people who played their hand right make smart investments during times like these - they can get rich down the road.

Domains might be a better turn around in the short term, but I wouldn't put my eggs all in one basket - stocks or domains.

Wise words sir.

 

[GF]

The problem with domains vs. stocks is liquidity. If you need to cash out your stock portfolio immediately, you can - and you know what your ROI (or loss) will be.

With domains, you're not entirely sure what your ROI (or loss) will be - although you can be pretty close. Domains are not illiquid, they just take a while longer to sell.

 

[snoop]

When the stocks bomb, you are left with nothing.
But with a domain, you have an option for developing a site.

This is BS, when a domain bombs it is generally left to expire.

 

[onewordonly]

The problem with domains vs. stocks is liquidity. If you need to cash out your stock portfolio immediately, you can - and you know what your ROI (or loss) will be.

With domains, you're not entirely sure what your ROI (or loss) will be - although you can be pretty close. Domains are not illiquid, they just take a while longer to sell.

That's a good point and you also have to have good marketing skills to really profit from selling domains.

 

[sundaybluez]

Stocks and domaining are both luck games.
Only some make it big while the rest 90%+ just dream of it.

 

[goodkarmaco]

Its over for the U.S. dollar

At least with domains you don't have dictator actions that you have no control over.

The stock market is now run by theives and thugs for the benefit of the good ol boys. If the free market is doing something they don't like the crimminals {Paulson and Bernenke) make new rules overnight. These new rules are never for the health of the market, although that is the lie they state. For instance hundreds of stocks now cannot be bought as a bet on the stock going down.

At least if the market is weak for domains, the price is a true reflection of the market place and domains are cheap. If new money comes in then the price of domains go up.

Unlike domains that are set by market conditions, stocks are now under the control of the Fed heads. The stock market is now being seen for what it is by the countries of the world, a mess that is destroying Americas once strong dollar. The money will flow now to commodities and hard assets as these countries understand fully what future our markets have and will want no part of it.

Domainers who are not tied to the market may experience much better profits.

for sale: marketgoldprice.com marketgoldprices.com goldcoinprice.us

 

[Burano]

The stock market is now run by theives and thugs for the benefit of the good ol boys. If the free market is doing something they don't like the crimminals {Paulson and Bernenke) make new rules overnight. These new rules are never for the health of the market, although that is the lie they state. For instance hundreds of stocks now cannot be bought as a bet on the stock going down.

Unlike domains that are set by market conditions, stocks are now under the control of the Fed heads.

Oh, come on. Domains set by pure market conditions? If you believe that, you probably also believe in Santa Clause. Paulson and Bernenke criminals? Stocks that can't be bought right now are in an effort to ward off the speculators (the kind that bid oil to horrendously high prices) - the stock market isn't just a game. It has serious effects for the economy at large which is why unprecendented actions are being taken right now. This doesn't just effect the US dollar - it effects much of the global economy.

It's not even worth comparing domains when it comes to this situation. Though I will say the stock market is where it today - because there hasn't been enough government regulation to keep the greedy in check, which proves yet again that people usually don't do the right thing when it's a free for all.