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Domaining Industry Fallacies – Cherry Picking

Posted on 12 March 2014 by Andrei

The name of today’s fallacy (logical error) speaks for itself. When you’re cherry picking, you are only referring to the data points that confirm the message you’re trying to get across, while “conveniently” overlooking other data points which are just as relevant but that contradict whatever it is you’re trying to say.

There are countless examples when it comes to new gTLDs as well as dot coms.

For example:

“Wow, this new gTLD is going up in value, I just read about a 5 figure sale that took place last week!”

“Wow, LLLLLL dot coms are going up in value, I just read about a 5 figure sale that took place last week!”

Sure, a 5 figure sale is great and everything but by only referring to that sale and leaving all of the lower value ones aside, you’re cherry picking.

What if over the past month, there was only one 5 figure sale and, instead, there were ten 2-3 figure ones? Furthermore, what if these numbers are lower than those from the previous month?

As can be seen, by only referring to the 5 figure sale, you can make it seem that the domain type in question (the new gTLD, the LLLLLL dot com, doesn’t matter) is going up in value despite the fact that there’s actually more data that suggests the exact opposite.

When you’re involved in a debate, ask for clarifications whenever something doesn’t seem right. If someone only refers to one high value sale or to a handful of high value sales, ask him or her for more data or better yet, search for that data yourself.

It may not be as convenient as simply accepting whatever information is being thrown at you but if you want to make informed decisions, you have to roll up your sleeves and start working/researching. It might not be the most entertaining thing to do but if you’re a professional domain investor, it comes with the territory :)

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3 Comments For This Post

  1. Company Name Ideas Says:

    Spot on, I agree. I’ve seen this a lot with 4L sales. People will site the sale of Tree.com or Love.com and then by default say that EHWY.com is worth the same amount. We pick the domains we are going to buy 5 days in advance, that way we have time to do the research. Every buy has to have a game plan, because in most cases we would love to develop rather than just flip. It’s the difference between $15k and $100k respectively.

  2. Krishna Says:

    I like the way you focus on the psychological aspects of investors. One can apply your thoughts to all investments. ex. stocks.

    Another good post.

  3. Andrei Says:

    @Krishna: yep, the principles I’ve outlined are valid when it comes to stocks and pretty much everything else.

 
 
         
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