Back in December 2013, I wrote a post about Nassim Taleb’s Black Swan Theory, which refers to the fact that certain extreme events can end up proving that everything we thought we knew about something was wrong.
Through his latest book, he takes things one step further by explaining what the “antifragile” concept is all about.
Simply put, antifragile assets don’t just help you maintain your purchasing power during times of turbulence, they thrive in such environments.
Let’s assume that an extreme financial crisis were to start.
Would domains be antifragile?
In other words, are domains assets which can go up in value when everything around them is crumbling?
In my opinion, the answer is negative.
On the one hand, they are indeed “exotic” assets and for this reason, people seem to think they’re antifragile but the truth is, we just don’t have valid reasons to believe that they are.
As the 2007-2008 financial crisis has shown us, domains are *not* an oasis of stability during times of turbulence. Lots of domainers thought they were but they were proven wrong.
Domains tend to go down in value during times of turbulence for two reasons:
1) They’re tech-related risk assets, some of the most affected ones when investors are scared
2) Domains are highly infrastructure-dependent, so in an extreme scenario where access to that infrastructure were to become a challenge, who knows what would happen?
Don’t get me wrong, I strongly believe there’s a place for domains in everyone’s portfolio.
But (and this is the message I’m trying to get across through this post), domains aren’t assets through which you “protect yourself” but rather assets which thrive in a positive environment, when investors are optimistic rather than scared.
I guess you could kind of consider them a way to protect yourself against inflation, however you’re missing the entire point if you’re only investing for this reason.
Domain investments are all about optimism.
Optimism about the future of the Internet.
Optimism about the impact it will have on everyone’s life.
… and so on.
The conclusion is simple.
Nassim Taleb tells us that certain assets are antifragile, in other words that they thrive during challenging times.
Domains don’t fit that description and in fact, there are lots of reasons to consider them the exact opposite.
There’s nothing wrong with investing in domains, just like there’s nothing wrong with investing in antifragile assets as long as you understand what you’re doing and make informed decisions.