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Where are you spending your time?

November 27, 2012

If you domain invest long enough, you’ll eventually come to an axiomatic truth, which is that the more value a domain name has, the less effort is generally required to convince other investors of the same.

For example, if it requires a lengthy dissertation to explain why small businesses should be climbing over themselves to acquire your domain, it’s demand is probably less evident than you imagine.

If your email to a domain broker consists of a 1000-word treatise complete with carefully crafted excerpts from online news articles and a full bibliography of links to sources, all to rationalize why there is such-and-such a market for your domain and why the broker should agree to spend hours of their time handling its sale, don’t be disappointed if they don’t jump at the opportunity.

The question is how much time are you spending on such activities and is it time well spent?

I would say that the wise investor spends more time on the back end, behind the scenes, meticulously researching domain metrics and other parameters to get a good sense of value before making an acquisition. Perhaps over time one develops a certain intuition, but this does not come without rigorous exercise.

The foolish investor buys on a whim, and spends their time attempting to establish a domains value not before, but after it’s purchase. This may involve exerting effort to ‘convince’ others to see what you see through lengthy emails and forum posts. More often than not this is wasted time.  A good domain will speak for itself.

It can be difficult to remain completely objective about a domain once you’ve added the pony to your stable and that is problematic.  We may have a tendency to overvalue our own domains.  This has certainly been the case for me in the past.  It is probably a part of basic human nature, just as no parent can see their own child as ugly.

Perhaps it is a helpful to review your portfolio now and again and ask yourself, which of my domains am I looking at with starry eyes?  Then try to figure out if you’re being realistic.

Don’t get me wrong, I am not saying your domains are worthless. In fact many investors made their fortunes by being ahead of the curve, recognizing value before others did.  By nature all investments are more or less speculative.  I do own a number of such domains that I hope are at the early stage of a massive trend, but I would be silly to try to flip these domains now to other investors for the kind of profit I hope they will one day elicit from end-users, and worse, waste hours upon hours of time on such an endeavor.  These are buy and hold opportunities, and I expect the market will come to me once mature.

In any case, if you find you are putting forth a lot of time and effort into convincing other investors about the value of your domain hoping to ‘educate’ them as to why they should buy it from you, you may want to re-examine your approach.  Food for thought.

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