Domain Name Investing Tips
As we begin a new year, I’d ask you what are you trying to with your portfolio? What are you intentionally trying to accomplish? If your not operating with some plan, I feel you may have an uphill climb in being successful in domain names.
Before I address diversification versus focus or theme investing; lets take a look at what happens if you don’t have a plan. My summation after being around the industry for 20 years, is that without a plan, you can end up buying higher than you should, selling low and at the wrong time, and needing to give up Domaining, or losing capital.
If you don’t have a plan you chase. Your easiest choices are to buy expired names off the most bid lists, find names others have found, or others have seen, on the tip lists. Your buying where there is the most competition. Your going up against the maximum animal spirits. Then, once you own the name, you list and pay a broker 20% to handle any natural traffic inquiries. Brokers may be after a deal at any price, rather than your best price, and you could sell too early or too cheap. If you decide to shrink, your choices are to sell in the same auction platforms where you think you are buying cheap.. its a bit myopic to think you can somehow buy cheap, and maximize sales on the same platform.
As months go by without the juice of a big sale, you may start taking any offer. Lastly we only have liquidity in our business at levels of 20-30% of whats paid at the most popular auctions. And, if your in the themes that are the most covered in blogs and posts and chatrooms, your more subject to swings in sentiment.
If your fast, well funded and correct, you make money as certain themes go up up up. Right now that would be shot numbers, one word .coms, techy .ios, and great brandables. Another theme working now is buying names already used by companies, and hope they will pay up. Lastly, high Godaddy appraisal names make you feel better when you buy, but your up against more and more buyers; and values don’t always mean a great name.
So what to do? I always try to have a plan. Now its not all about the plan because we don’t control retail buyers. We are trying to anticipate where lightning will strike, where a motivated, funded strong buyer will decide they need a name, TODAY. So what CAN you do?
I try to find places where website owners are already buying, and own names that have low substitution options. There I feel I can be strong on price if I KNOW other options aren’t available at my price. If there are more choices for the buyers, then I sell on price, trying to be a little enticing. Turnover trumps exacting the highest value per name, for me. So if your in Brandables, be in some patterns that are rare. If you fell its two consonants and then a y, like fuggy, baggy, pippy; try to not be random but really be in where people are buying. Realize they have other choices.
But when you look at 2020 and beyond, you have a couple options regarding the make-up of your portfolio.
You can go diversified. Recommended by most stock analysts you have stakes planted in various asset classes, or industries. If you re-balance, those areas that grow provide high returns, you re-balance the money on other classes, and as they grow your whole portfolio grows. So you have some 1 word names, some geos, some new tlds, some brandables, some vanity names and names in finance, sports, crypto, cannabis and two word combos.
In this type of Domaining this means if you sell names, and reinvest the money, reinvest some in the category where you sold, and some across the spectrum of other classes. If you don’t reinvest, you run the risk of selling strong categories, and only leaving weaker names in your portfolio.
Now investing with Focus says find a small number of areas, and know them as best as you can; and better than most Domainers. You will be a better buyer, knowing when to spend to gain a great asset. And selling in one class or theme lets you keep up on the industry or trend.. and you will make better sales calls because you know, and can take the time to get to know your customer base.
If your in brandables, understand what start-ups are thinking and looking for. Clearly understand the scarcity and whether prices are going up, or just domainer demand is going up. If you have special knowledge in things like medical names, foreign language names, lead-gen; play to your strengths. This strategy can also mean PPC or traffic names.
Focus can also be in certain venues. Its extremely difficult, especially for part time domainers, to watch and be strong at every venue. Can you really do them all? You would be buying deleted names, hand reg names, Godaddy-Namejet-Snap and the other expired name auctions platforms, new gTlds, expired GTlds, cctlds, deals, bargains, contacting end-users directly, global markets, Asian Numbers, forums, chatrooms, scanning marketplaces… and on and on.
Try to find one that a good marriage of lightly regarded, but still with good names.
Ill go over some sample portfolio options tomorrow. Good luck.