I know the title is kind of harsh but think about it:
Stocks are ridiculously overpriced. I’m not saying they can’t go up for another year or two but that’s hardly what I’d call a decent investment. A short-term speculative opportunity perhaps but nothing more.
Real estate is also ridiculously overpriced in a lot of countries (especially Canada and Australia but lots of other countries as well).
Gold/silver? We’re in a downtrend and generally speaking, trying to catch a falling knife is a bad idea.
Bonds? The yields are ridiculously low and not the least bit in line with the *real* risks.
I’m not saying domains are perfect but compared to the alternatives, they sure look more attractive right about now.
At least we’re pioneers, our industry isn’t even 20 years old.
Plenty of upside in my opinion.
Sure, as time passes, it will become harder but believe me, we’re still in the early days.
Therefore, even if you’re not a very calculated domain investor and overpay for a good domain, I’m convinced you’ll still make a very nice return as long as you’re willing to hold and are reasonably good at understanding why some domains are great and others aren’t.
For example, let’s assume you’re Joe the investor and buy 5 very good domains but overpay by 50%.
I’m convinced that let’s say 5 years down the road, those domains will be worth *considerably* more. So even if you overpaid when buying them, their value 5 years down the road more than makes up for that.
Whereas with stocks for example, even if you’re a great stock picker and manage to make good purchases today, I’m not sure your portfolio will look all that great if you hold for 5 years.
That’s just my perception.
I didn’t even provide any studies/data/whatever to back up my claims.
Maybe in a future post, why not.
What I’m trying to say is this: in my opinion, domaining is one of the few genuinely attractive investment opportunities we have. Just something to keep in mind 🙂
October 17th, 2013 at 3:45 pm
I think you’re doing it wrong. With today’s financial instruments you can make money regardless of whether the prices are going up or down. If you think stocks are overpriced then you should have easy money buying puts or selling short. If you think real estate is overpriced then you can buy puts in a REIT. The problem is not that they aren’t attractive it’s that you don’t have a full understanding of how to monetize your ideas.
October 17th, 2013 at 4:03 pm
@Shane: I agree and understand that if you’re bearish on stocks/metals/etc., you can short them but this post wasn’t about speculative opportunities (there are plenty of those), it was about “traditional” investments for the average saver for lack of a better term.
For example, I’m bullish on the domaining industry as a whole.
That brings us right back to my example with Joe the investor:
“For example, let’s assume you’re Joe the investor and buy 5 very good domains but overpay by 50%.
I’m convinced that let’s say 5 years down the road, those domains will be worth *considerably* more. So even if you overpaid when buying them, their value 5 years down the road more than makes up for that.
Whereas with stocks for example, even if you’re a great stock picker and manage to make good purchases today, I’m not sure your portfolio will look all that great if you hold for 5 years.”
This post was written from the perspective of Joe the investor or let’s say from the perspective of an unsophisticated investor.
When it comes to sophisticated investors who know how to play the bullish/bearish speculation game then sure, I agree that there are always opportunities.
But from the perspective of unsophisticated investors, those opportunities are just not there in my opinion.
With interest rates kept artificially low, savers are basically finding less and less reasonable investment opportunities in my opinion.
October 17th, 2013 at 4:49 pm
Hi…there are tons and tons of opportunities in the Stock Market. It is a zero sum game, and an incredible amount of money movement takes place on a daily basis. Domains are good for the rate of return they provide, and while I made approx 250K last year flipping domains, that is chump change compared to what the Stock Market can provide. I know for a fact that many Domain Investors are also active Stock Market traders. The only time I am not watching CNBC, is when I’m watching a DomainSherpa video.
October 20th, 2013 at 12:41 am
stick with what you know. stay with domains. they perform.