Categorized | Domaining Tips

Investment Grade Short Domains – Pros and/or Cons?

Posted on 27 November 2013 by Andrei

First of all, I’m referring to investment grade short domains as in quad premium LLLL dot coms at the very least (so quad premiums, CVCVs, LLLs, NNNs etc.).

Personally, I wouldn’t buy anything less valuable than a quad premium and I explained why at the beginning of November.

Anyway, let’s start with the pros.

First of all, there’s considerably less downside than with other types of domains.

If you buy a LLL dot com now and have to sell it next month, then even if you don’t have time to do it properly and sell at a loss, that loss will probably be low.

This aspect can also be a con though because the same way, you can’t expect to sell the LLL you just bought at a huge profit on the reseller market next month. Not going to happen.

In other words, the fact that prices aren’t as volatile can be a pro as well as a con, it all depends on your perspective.

For example, a generic might sell for $x at one venue this month and it wouldn’t surprise me to see it go for $2x or $x/2 at the exact same venue next month, whereas with short domains, there isn’t as much volatility.

Another pro would be the fact that investing in short domains is “easier” for lack of a better word. There’s no language barrier, there’s less subjectivity and so on. But just like with volatility, this pro can also turn into a con because it’s harder to find great bargains than with generics.

Next, you guessed it: we have another pro that could also be considered a con. Short domains are pretty much the only domain category for which reseller market appraisals can actually be accurate. They’re ranked based on letter quality, acronym potential and so on, pretty straightforward. Why can this also be considered a con? Well, simply because as mentioned previously, this means that bargains are harder to find.

Last but not least, let’s talk about the appreciation potential of short domains. I’d say that for the most part, they’re kind of like an index fund for the domaining industry. If domains as a whole do well, short domain prices will reflect that. Once again, this can be a pro as well as a con. If we’re in an uptrend, it’s a pro because your profit would pretty much guaranteed on the reseller market. If we’re in a downtrend, it would be a con because selling at a profit on the reseller market (again, I’m only referring to the reseller market, not to end user sales) would be very difficult.

All in all, pretty much all pros can be considered cons as well, it all depends on your perspective. The most important thing you should know is that short domains are the most liquid domain assets and as I tried to explain through this post, this situation comes with advantages as well as disadvantages.

3 Comments For This Post

  1. John Harrison Says:

    I agree with all your points but what do you think about the not so desirable letters becoming more desirable as more of the world’s population coming online in languages that don’t necessarily have the same popular letters?

  2. Kassey Says:

    Comparing short domains to index fund. Interesting perspective. Thanks.

  3. Andrei Says:

    @John Harrison: at the end of the day, the market will decide but personally, I don’t think non-premium letters will become premium letters. While some non-premium combos might go up in value more than the overall LLL dot com market, it still won’t be enough (in my opinion) to catch up with the premium letters.