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Should You Buy and Hold “Hot” Domains?

Posted on 16 August 2014 by Andrei

If you’re not sure what “hot” domains are, here’s a quick example: NNN dot coms or numerics in general, if you will. In other words, I’m referring to domain categories which have done remarkably well lately.

Should you limit yourself to flipping in these cases or is “buy and hold” a viable strategy as well?

At the end of the day, it all boils down to the following two questions in my opinion:

1) Is the reseller market price evolution sustainable?

2) Is there enough upside potential when it comes to end user sales?

Ideally, the answer to both questions should be “yes” but if that’s not the case, we should have at least one positive answer for “buy and hold” to be a strategy worth looking at.

Or we could simply combine the two questions and try to answer the following one: where will your profits eventually come from?

If the end user upside potential is limited, you should at least feel confident that the reseller market growth pattern is sustainable. The same way, if you have doubts about the reseller market value sustainability of the domain category in question, there should at least be decent end user upside on the table for you.

Otherwise, the “buy and hold” strategy makes little sense.

As far as I’m concerned, I have my doubts about the viability of a “buy and hold” strategy when it comes to numerics at this point. Do I think reseller market values for numerics will go down soon? Not necessarily but that doesn’t mean I consider their price evolution sustainable. And when it comes to end user sales, I just don’t see enough upside to make me feel confident about buying and holding.

Of course, this is just an opinion but as far as I’m concerned, I don’t think buying numerics at current market values with the intention of holding for let’s say 3-4 years is a viable strategy.

Will prices go down very soon?

I have no idea.

When will prices go down?

I have no idea.

I simply believe that there are better “buy and hold” opportunities elsewhere at this point and therefore, don’t consider numerics attractive in that respect. I’ve referred to numerics since they’re the most obvious example but the principles I outlined are just as valid for pretty much any domain category which has been outperforming the others lately.

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