discuss Riding the tsunami wave with your domains (upcoming economy crisis)

[twiki]

I'm saying "upcoming" because we ain't seen much of it yet. Anyway.

A month ago in a post I was saying I expect a good year in domain sales. Then April came and .... poof! I was wrong - the downtrend came suddenly and much sooner than I expected.

Although some sellers here still have had a great April, some had their best month ever. And my own April sales? They were normal, because in the first week I sold enough names for the whole month. But then, for 4 weeks (last 3 weeks of April and first week of May), I've had almost silence. Occasional lower value sales I don't count much.

( Edit: I still have some sales here and there in May so it ain't all that bleak for me personally. Plus I have other opportunities as well so I can't complain, overall I am on to a normal month as well )

But I wasn't entirely wrong. And this is what this post is about. Plus, what to do next.

Was just watching Bloomberg and I saw Larry Summers saying that "the tech companies are still going to be the biggest ones during this crisis" - not an exact quote, but anyway. I don't like the guy (at all) but on this, he's right.

I mean, what do we expect to come in here and replace the tech zone as the biggest purchaser of domains (what interests us)? Mom and pop shops? Big pharma? etc - No, the tech is still going to be here. And tech / finance related domains will still continue to sell, albeit at a lower level.

The problem is, though, that fewer names will likely sell. That is already here. Since NASDAQ is already -25% YTD, we can expect that to reflect in most of our sales. Now the question is, what to do about it. Here's what i thought:

- The problem we have is, math will not work out anymore for many domainers. Solution for this is? Get better names, even if pricier. Improve the overall quality of your domains.

Especially those of you guys with lower margins (Edit: and lower value names - I've been there, and got out of that). The higher your % overall profit margin is, the lesser the chance you will go underwater. I know, it might sound counter-intuitive in this market to buy higher priced names; but the less renewal cost pressure you have, the better off you will be.

- Don't renew your questionables. Those of which you aren't 100% sure they will be sold someday for a lump sum. If they don't sell before renewal, let them drop. Chances are you will still find them appearing out on the drops market.

- Don't steep reduce prices. And don't panic. If you decrease your prices right now, you will likely lose overall. The market is used with these price levels and the problem is not one of affordability, but one of demand. Demand will be less (Edit: because tech founders are panicking and will postpone their investment, everyone says hold to your cash right now which is both a safe and dumb advice as we all drive the crisis further with that holding) - but good names still sell for high $$$.

If you reduce your prices a lot, chances are right now you will still sell the same names but for less over the next months etc. So don't do that.

I've reduced some of my prices from say $2988 to $2488 - where they were high anyway - but otherwise nope. Also I've tested sheer discounts and yeah, doesn't work - as expected. So I would still hold to that pricing if I were you.

Besides, if we all start panicking and selling for cheap we will achieve nothing else but drag the whole domain market down.

You can try clearing your expiring ones here on NP though - nothing bad in trying that.

- Stay tuned to what happens and watch the NASDAQ index (and other factors). Including crypto - even if you don't have crypto names, chances are the better bitcoin will be, the better our names will sell as well. Because it's all in the tech bubble that started to burst. And yeah, we have bubble after bubble about to burst next - unfortunately. But it was all expected and predicted in the last years. They say right now, the biggest financial in human history might be happening next. Can't comment on that, but guys like Robert Kiyosaki etc have said it.

- Reduce your buying. This is the worst time to hoard domains. Cut from the list all those that are questionable and stick only to the top ones. Same applies to what you renew - only renew your top ones. The less junk you have, the better off you will be.

And some things that might happen, but we will have to see it first:

- Great names might be dropping and become available for catching or at auctions. Chances are auctions might end with much lower numbers on good names that are worth holding on long term.

- Domain name registration and renewal prices might fall down. I know this hasn't happened (ever?) but at least to me, it is expected to happen. (Edit: the opposite would be a dumb move for the registries)

If ICANN keeps these prices they will soon realize that a lot of their business will go down - and domain investors play a big role in that, we roll like half of their revenue through our portfolios. Decreasing prices will allow us to get more names and still continue to drive revenue not only to the registry but also to the registrars, including through their cut of domain sales etc.

My plans are: I wont' renew half of my portfolio (the questionables), but won't reduce price nor clear for dirt cheap on NP (not worth the hassle for me). Whoever really wants the domain will buy it in the last 2 days or desperately email me after they expired, to make sure they can still get it and not have the name ending in DC public auction - seen that lots of times.

That's it for now, if there is more I remember right now I'll post that. Thanks!

Edit: If you have any such due diligence tips for hard times ahead, don't be shy, please share them as well below. We all NP members here would be glad to learn from you.

 

[AEProgram]

Was the pandemic a financial crisis? Some people went from rich to poor and some from poor to rich because of it. The same is true with every financial crisis.

What to watch for?

Disclaimer: When I use the word "tech" I am not talking about Microsoft, Apple etc. If you do not understand what I mean, please do not read my posts, you will just end up more confused with anything I say. I cannot spend too much time explaining every detail. This post is not financial advice. You can lose your money, mind, soul, home, bird and family if you follow any part of this advice. I am not responsible for anything you do.

A small introduction before I get to the relevant part about domaining.

If tech stocks continue to show weakness, startups will have a hard time raising money. Existing companies will have more pressure to show results and cut costs. Expects millions of people in the tech sector to get fired if things continue showing weakness.

Some tech companies are already laying off employees and some warned employees to start cutting costs.

If you didn't live through the dotcom bust you probably think that I should shut my computer down and go see a doctor immediately.

It takes a long time to build something, but a fraction of that time to destroy it.

Tech is in a serious bubble. The bubble is supported by people chasing the big IPO returns that at the moment are just a fantasy. Smart money will stop pumping billions into tech and because most tech companies burn a lot of cash, tech companies will desperately start firing people. Many will go out of business.

The salary some of these tech companies paid cannot be replaced by most other industries unless your job at the company was a Full Stack Developer or you were an exceptional designer. These people will be the last to be fired anyway.

Inflation was unfortunately not transitory (if you knew it wasn't from the start here is a gift ) and the increase in people using their credit cards more is probably not a sign of confidence but rather a sign of danger ahead.

During the pandemic a lot of people got fired or felt insecure about their job. We know for a fact what millions did. They decided to start their own business. This was the reason stocks like Wix, Shopify, Fiverr and many others had incredible revenue boosts (their stocks, like most are down significantly for the year). This was also the reason domain sales increased together with the prices.

Another thing happened during the pandemic. A lot of people got into buying stocks. Depending when they got in and what they purchased, there is a chance millions are looking at a portfolio that is showing that the money they invested is now worth half that (not to mention inflation).

When people look at a portfolio for months that shows them earning over 30% on their money in a short time and then suddenly in a few weeks they lost half their money, do you know what most people do? They get desperate to find a way to recover that loss. Usually this is the period that they wipe out all their money.

Now let's tie this all into domaining. If a financial collapse happens, million of people will lose their jobs within months. People are already maxed out, they will buy less junk on Amazon and order less food and cook at home more. They will also take mass transit and rely less on the apps like Uber. Why is this important to grasp? Because these companies hire a lot of people and for once, they might lay people off, regardless if you can imagine it or not. You couldn't imagine a lot of things that happened in the past few years, so please be open minded to the possibility.

We will see a lot of people take real steps to start their own business. Most will want a domain name. What businesses will they start? Software / Web dev, Social media marketing, adwords managers, web design, copywriting, seo marketing, general artists, video editing, voice overs and a lot of other things they might've done full time for a company and they will try to do it on their own. They might also get into one of the more fantasy home businesses that only a few ever make a lot money, think Amazon FBA and selling courses.

You should think about what these people might do and buy names in those categories and if they are really good names you can even try it in other popular extensions.

Buy them, list them on Afternic (make sure fast transfer enabled) and Dan with a buy now that is priced to move.

But can they afford names in the X,XXX or XX,XXXX range? Remember what I told you about people looking at their stock portfolio that is at a loss and they will look for ways to make a better investment to make money? Many will opt to take that cash and invest it in something they have more control over like their own business. Price your names fairly but do not be scared to price them high if they are worth it AND the name is in a popular category.

If food inflation continues on the current path, we could start seeing serious global social unrest that will be historic because a lot of people are already on edge, angry, hateful, miserable and nothing destroys the fabric of society, even in the most authoritarian countries, like food insecurity.

 

[bmugford]

There are not a lot of catalysts for the economy improving soon IMO.

There are still supply chain issues, largely related to COVID.

There are geopolitical issues, like the war in Ukraine.

There is political upheaval.

There are asset bubbles all over the place from crypto to collectibles to NFT to (meme) stocks and everything else.

The latest nonsense with LUNA and "stable coins" is unlikely to help.

Interest rates are going up. The supply of free/cheap money to inflate assets is over.

Long term I will keep investing in quality assets be that domains, stocks, or other.

When times are good I have renewed my best domains for years in advance to prepare for when times are not so good. Expect the best, prepare for the worst is a core part of business and just life in general.

Brad

 

[Mkt Sales Leads]

Sales are down because marketplaces are dishonest, incompetent, or nontransparent/evil (they prefer arbitrage and dropcatching over sales with standard commission). Also because economy is down artificially and intentionally, a little bit (to wake people up, and prepare for the next phase).

You can tell times are not the best economically when some registrars
start competing with domainers/squeezing them dry by:
- hoarding names (esp dropped ones) as 'registry reserved'/premium
- having their own names show up above domainers in marketplace listings
- increasing reg prices and making some names premium renewals
- increasing commissions, esp for names not using their landers

It's now everyone for themselves

 

[bmugford]

I'm talking about depression here. The serious and last part of the economical crisis.

For now we're in stagflation, and during this time prices go up - a lot.

If domain prices will go down, it will happen at a moment when they will not be any bad signal anymore, cause nobody would need any more bad signals in order to clearly see what already happened. Rather, it would be an alignment with everything else. I thin it is rather logical for them to do so in those times.

But again, we will have to see, nothing is guaranteed.

Less than a month and a half ago you were talking about a booming economy, now you are talking about a depression. What happened?

https://www.namepros.com/threads/good-news-we-should-expect-a-boost-in-domain-sales-next.1270048/

At the time I called the stock market a dead cat bounce, which it seemed to be.

I think the reality of the economy is somewhere between those two extreme positions.

The bottom line is a lot of future wealth is made by acquiring quality assets in a down market.

For instance I entered heavily into the domain market during the 2008-2009 crash. In retrospect, it was quite an investment opportunity.

Brad

 

[kite26]

Even if a tsunami happens, the water doesn't disappear. It just changes location. My point of view.

 

[topdom]

Sales are down because marketplaces are dishonest, incompetent, or nontransparent/evil (they prefer arbitrage and dropcatching over sales with standard commission). Also because economy is down artificially and intentionally, a little bit (to wake people up, and prepare for the next phase).

 

[twiki]

Took some time to reflect and study how things are going. And there's good and bad as well.

I personally have no doubt right now that the once in 100 year's crisis is unfolding. There are too many layers of bubbles about to burst in mayhem, no doubt about that. What we see right now is, however, still much of the emotional wave ahead of the real depression wave. (Edit: Perhaps except the crypto industry which has already popped although it's yet to hit the real bottom)

The stagflation is already happening, and it is strong. In my country, inflation is already at 14% and about to hit 20%. Overall in the world, not so high but nevertheless getting higher.

There are countless aspects that tell us it's an 1929 type of crisis. One being, straight 9 weeks of Dow Jones decline, guess what, when did it happen before? Yeah... before the Big One. That led to the rise of you know, nazis and stuff.

Anyway, the good part: There is time.

People still have money and assets. Many of us have something saved. We can adjust and prepare.

I'm currently optimizing my portfolio, will be discarding a lot of it. I'm also moving my funds from one investment to another one that is about to run red hot in my region (it has to do with real estate of a particular kind). Anyone can figure out what they wanna do, gold, whatever, you know. Also I will be buying and setting up a fully sustainable property where I can live, just in case.

But the big burst is not happening today - not yet. Soon though.

I think we still have one year ahead to figure things and see how stuff settles (or un-settles). Use this time wisely - not necessarily do like I do, do your own thing, but make sure you do something. It's too risky to get unprepared in times ahead.

 

[twiki]

Also, don't forget - you plan for an crisis in economy before it starts, not after.

 

[twiki]

@lovely4ever

My portfolio has always been a mixed bag but for very specific reasons. I've explained several times why in my posts. I know that not everyone gets it so here's the why.

I usually have one primary investment tier. Those are the ones you see sold pretty often in the sales thread in the 2-3k range. This is less than 5K in number.

I also have a secondary tier. These are domains I know I can sell but have some doubts as to he sales ratio. Currently I have less than 3K. Aiming to reduce my names to 5-6k in total next. I've been culling and improving quality heavily lately for obvious reasons.

I used to be a discount domainer and focus on efficiency in selling in xxx range - see my lots of posts about that. The market has shifted in the last year on those so I'm out of that and going only retail now (4-fig + and quite high 3-fig clearance prices)

I also used to have a discovery tier, last of which is ending in these couple months.

Sometimes I invest a lot in large tests over various directions. Some pay off well, others don't but the advantage is always the information. What sells is often VERY surprising, and I want to have that information.

If you value a portfolio by the weaklings sold at bargain bin, you're at a loss of understanding. Besides i don't even do bargain bin anymore because a few of these are selling at $788 or even more than 1k before expiry so they are valuable even if you don't see the value.

I don't care however how others see my names overall. What I do care is about my bottom line, which is great so far and good for April as well. I do care also for fellow domainers here getting the right info so they don't make the wrong decisions, hence this explanation.

Edit: @phaethon , also see my explanation here. Hope this makes things clear.

Edit2: In the future you guys will probably not see low quality domains posted because I'm not doing tests anymore, although occasionally each of us might have a dud here and there. Side note, overall I always made at least some profit on these tests and did them when more capital was available for a bit of time.

Also, times are such right now that buying xxx range domains is too risky to be worth looking at.

 

[AEProgram]

True. But the problem is, if that "something" is cash / fiat currency, then it's a bad idea in such times. They will get devalued hard, some almost near zero.

So the idea is to buy something of value now, that keeps its value and can be exchanged anytime later for cash.

Physical gold is one of them. Although of course you lose some of your money in the process.

Crypto - well it's probably not a good idea yet to buy it (hasn't hit the bottom) and still a risky type of asset, but on the long run it might be worth it. Might. Problem is, during this longer period it might also be worth not so much or decreasing.

Stocks - these are also going to be hit hard, and while the right stocks will get up again after the crisis, it might be years until you can touch them again (as in sell) - therefore again it might be the wrong asset.

And so on. That's the problem - what to buy now with your cash.

In summary, everything might be a good idea and might be a bad idea. It might be a good time, it might be best to wait before the perfect time to invest shows up. You might lose a little after you invest, but it might go up long term, yet you might lose your whole investment. This is how all investment articles sound in these days. You read and read and at the end you are exactly where you started.

 

[Primary Names]

I have a few offline businesses but nothing has brought me returns on my investment as domains but I agree that sales have completely dried up in the last one and a half month. Up till then I have been making regular xxx-xxxx sales every month.

Recently, I have been adding domains to my inventory but your post made me realize what if it is not about the inventory ? Although I believe I have decent quality inventory... still I believe in numbers.

thanks for the heads up I will give it a break for a while now.

 

[twiki]

I have a few offline businesses but nothing has brought me returns on my investment as domains but I agree that sales have completely dried up in the last one and a half month. Up till then I have been making regular xxx-xxxx sales every month.

Recently, I have been adding domains to my inventory but your post made me realize what if it is not about the inventory ? Although I believe I have decent quality inventory... still I believe in numbers.

thanks for the heads up I will give it a break for a while now.

For me, domains are also one of the best investments I made, and I also believe better than many other forms of investment.

But times are rough - for all industries.

It is about the inventory, but particularly about the quality of it. In rough times, yearly STR % will decrease, for obvious reasons. Then what matters is the margin, because this decrease will begin eating margins fast.

One needs high value domains to ride this out. Fewer perhaps, but definitely better.

Low-quality, xxx range domains will probably be hit the worst - due to increasing renewal pressure.

 

[inforg]

I had a great start this year, so I always get way ahead on renewals. Based on what I am seeing now, I'm glad I did. I am about 8 months ahead at this point, and my parking revenue would cover a couple more months.

I generally won't drop much unless it gets to the point where I would have to start putting in significant fresh money to pay renewals.

 

[NickB]

The bottom line is a lot of future wealth is made by acquiring quality assets in a down market.

There's your takeaway for this thread people..........

 

[twiki]

Off topic, but how's your Squadhelp experiment going, Twiki?

Not so great, so far. Only a couple sales.

If this continues like that, I'm gonna pull everything off SH and call it case closed.

 

[Recons.Com]

A portfolio consisting of well researched names should be robust enough to ride the current crisis. If your renewal bills were 15% to 50% of your total revenue after the commissions, then even with 50% loss in sales, you should be able to ride it out (worst case is breaking even or very small loss) without culling your portfolio or doing drastic shifts. If you are the type of domain investor that has a lot of churn out in his portfolio (buys and drops big %), then you might not be well prepared for it. And if your renewals were 50% to 100%+, you are not well prepared either. The same goes for those whose portfolios have too much exposure to the hurt industries like crypto etc. They might decide to either liquidate or hold them for the future absorbing the losses.

I personally am keeping my portfolio and growing it, but instead of doubling might do 50% growth over next 12 months. And, mainly, not due to the crisis, but needing more time elsewhere.

 

[Helmuts]

just make more money .. and consume less news .. my pill against just another economy crisis

best!! H

 

[koolishman]

As someone who is on the cusp of a big sale, I say, buy quality names and be patient.

Do a brutal culling of your portfolio and hold on those names you believe in. Others have expressed similar idea in this thread.

 

[phaethon]

[QUOTE="twiki, post: 8597358, member:

My plans are: I wont' renew half of my portfolio (the questionables)

[/QUOTE]

Firstly, I think your posts are very useful to old and new domainers, however when someone owns 20K domains bought mostly over the last years, I'm really wondering about the quality of those domains. Then, I saw some domains that you offered here for 11 bucks I think and I would not take them even for free. You are way more experienced and successful than me, but I just wanted to make that point..

 

[twiki]

Great, thanks, Twiki. I made that comment based on the sales you post here. I think it would be great if you sometimes post 'total outsider' domain sales, because the ones you post here are decent names I would say.

I like to go against the stream whenever possible. My usual way of thinking is out of the box. Although at times I do step on some sensitivities by posting about it.

Indeed, in the past I was set to prove that you can make a living through volume, not necessarily quality. And it worked.

Because volume is so huge, your domains' business can be scaled indefinitely. That was an attractive prospect, also you could grow fast if you had the funds. Again it definitely worked - until one year ago or so. I was posting a ton of $199 and $299 sales in the past although i had a sheer number of $75 sales that I almost never posted about. Now I don't sell almost anything at such prices even if I discount names. It might be that domainers OR small businesses don't spend such amounts anymore. Only end clients spending 4-fig + for a good name are worth targeting nowadays.

During the pandemic, related or not to it, domain sales have changed. This model of low XXX range high volume domain business is not working anymore (for me at least). Besides, managing so many names is a too heavy burden. So I've moved to retail and will be staying there.

My aim now is to always reduce portfolio not increase. I drop like a couple dozens per day and maybe I renew or buy one quarter of that or less.

 

[AEProgram]

Took some time to reflect and study how things are going. And there's good and bad as well.

I personally have no doubt right now that the once in 100 year's crisis is unfolding. There are too many layers of bubbles about to burst in mayhem, no doubt about that. What we see right now is, however, still much of the emotional wave ahead of the real depression wave. (Edit: Perhaps except the crypto industry which has already popped although it's yet to hit the real bottom)

The stagflation is already happening, and it is strong. In my country, inflation is already at 14% and about to hit 20%. Overall in the world, not so high but nevertheless getting higher.

There are countless aspects that tell us it's an 1929 type of crisis. One being, straight 9 weeks of Dow Jones decline, guess what, when did it happen before? Yeah... before the Big One. That led to the rise of you know, nazis and stuff.

Anyway, the good part: There is time.

People still have money and assets. Many of us have something saved. We can adjust and prepare.

I'm currently optimizing my portfolio, will be discarding a lot of it. I'm also moving my funds from one investment to another one that is about to run red hot in my region (it has to do with real estate of a particular kind). Anyone can figure out what they wanna do, gold, whatever, you know. Also I will be buying and setting up a fully sustainable property where I can live, just in case.

But the big burst is not happening today - not yet. Soon though.

I think we still have one year ahead to figure things and see how stuff settles (or un-settles). Use this time wisely - not necessarily do like I do, do your own thing, but make sure you do something. It's too risky to get unprepared in times ahead.

Twiki: Many of us have something saved.
Inflation: Hold my beer

 

[kite26]

We have to adapt all the time. In any case everyone can understand that what we live is the intro of ww3. Sorry for the raw words, that's my opinion. Well, I will die as good teacher, domainer and soldier. I just hope Greece stay neutral.

 

[twiki]

Less than a month and a half ago you were talking about a booming economy, now you are talking about a depression. What happened?

https://www.namepros.com/threads/good-news-we-should-expect-a-boost-in-domain-sales-next.1270048/

At the time I called the stock market a dead cat bounce, which it seemed to be.

I think the reality of the economy is somewhere between those two extreme positions.

The bottom line is a lot of future wealth is made by acquiring quality assets in a down market.

For instance I entered heavily into the domain market during the 2008-2009 crash. In retrospect, it was quite an investment opportunity.

Brad

I already explained in the post: I was wrong. Jan - Feb were good for most domainers, March was excellent for me. Even April went OK for me overall, bottom line. But the dead cat is already not bouncing anymore; that part is clear.

While finance and tech will still continue to be a big part of our sales (what else could replace that?), the sales will obviously be fewer, or significantly fewer. How low will it go, remains to be seen.

The thing is, I did not expect tech to go down so fast. For some reason I was betting a good 2022 and perhaps a bad 2023.But obviously bubbles are bursting already and that's highly visible already.

Indeed, quality assets is the key term, as to what to do next.

 

[twiki]

Twiki: Many of us have something saved.
Inflation: Hold my beer

True. But the problem is, if that "something" is cash / fiat currency, then it's a bad idea in such times. They will get devalued hard, some almost near zero.

So the idea is to buy something of value now, that keeps its value and can be exchanged anytime later for cash.

Physical gold is one of them. Although of course you lose some of your money in the process.

Crypto - well it's probably not a good idea yet to buy it (hasn't hit the bottom) and still a risky type of asset, but on the long run it might be worth it. Might. Problem is, during this longer period it might also be worth not so much or decreasing.

Stocks - these are also going to be hit hard, and while the right stocks will get up again after the crisis, it might be years until you can touch them again (as in sell) - therefore again it might be the wrong asset.

And so on. That's the problem - what to buy now with your cash.