Categorized | Domaining Tips

Most Chinese Investors Are Beginners

Posted on 05 May 2016 by Andrei

Reading buyout threads has been quite frustrating because most of them have something in common: due to the fact that China has been the main “engine” of those buyouts, a lot of people use illogical arguments such as “the Chinese are buying, they must be on to something” or “do you actually think the buyout will stop and that all those Chinese investors will lose money?” as if “the Chinese” possess a crystal ball and can accurately predict the future.

They don’t. They can’t.

On the contrary.

Not only do Chinese investors NOT possess a crystal ball, they’re not even experienced investors either (for a deeper cultural perspective, read a bit on china funds when you get a chance to).

Most of them are beginners, just like you and I were.

And what do beginners have in common? They make mistakes by investing in ultra-speculative assets.

In my case, the #1 mistake has been hand registering less-than-stellar keyword domains.

Nowadays, the #1 beginner mistake is taking part in irrational “ten number dot horse” buyouts.

The principle is identical.

Back in my day ( 🙂 ), beginners didn’t have the money or didn’t want to spend the money it takes to buy a solid one word or two-word dot com. Instead, they hand registered a lot of longer dot coms or two keyword dot net/org/biz/info/etc. domains. Those domains seem far more exciting because if all you’re investing is the registration fee, you fall into the trap of making calculations about the huge returns you’ll generate once you sell for a profit. Of course, that frequently doesn’t happen 🙂

The same thing is happening when it comes to short domains. Instead of investing in a LLL dot com or in a LLLL dot com, lots of Chinese newbies prefer speculating on for example LLLLs in exotic TLDs, especially if the registration fee is low. The main problem, of course, is that when renewal time comes, things can get tricky. But most beginners don’t like thinking about renewal time because they think they’ll find some way to generate profits by then.

Again, the exact same principle as with long keyword domains.

Don’t make the mistake of believing Chinese investors have some kind of a domaining superpower.

They don’t.

There are some brilliant Chinese domainers out there, I know some myself, but most Chinese investors are beginners.

Try seeing things from this perspective for a change.

4 Comments For This Post

  1. AbdulBasit Makrani Says:

    Very well said. That’s why I mostly stayed away from buying 4L .com CHIPS which most of them didn’t make sense to me.

  2. Tony Says:

    It’s a case of the tail wagging the dog and some of the noted bloggers fell for playing the game of chasing a falling knife.

    Nov2015-Feb2016 was a wonderful opportunity to pick up keyword domains. It was a godsend.

  3. Rich Says:

    Keyword names were not, and are not given away cheap, most people who play in the space already owned a ton of 4L chips for next to nothing, it was the traders who kept flipping.

    I agree most Chinese were just chasing some kind of dream, well they got served, now they are eating crow.

  4. DN Invest Says:

    Very good post. Each investor in “chips” of any kind should understand domains and Chinese mentallity before placing his investment. For example, LLLL.ws chips will never have some real intrinsic value although they might go up in value soon. Investing in such domains is almost the same as gambling.

 
 
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