2014-02-05

New gTLDs, Domain Names, and Gold -- What You Can Learn

I found Barry Ritholtz's analysis (edited excerpt below, read full article at link) of Gold also applicable to domain names, particularly the new gTLDs -- [my comments are within brackets below]

What Can You Learn from the Rise & Fall of Gold? | The Big Picture: ". . . Consider the following lessons as applicable to not just gold, but any investment [in this case, domain names, particularly the new gTLDs]:

1 . Beware the Narrative . . . When it comes to investing, there are two problems with . . . storytelling: It ignores actual data. And it makes investors feel good, regardless of what is actually happening.

2. Carefully Examine New Investment Products . . Salesmen [registrars, registries] always need something to sell....

3. Ignore History at Your Own Peril [what happened to previous new gTLDs? -- Rick Schwartz can tell you all about that] . . .

4. Leverage is Always Dangerous [when it comes to new gTLDs, no matter what anyone tells you, you are gambling, not investing] . . .

5. Understand the Circumstances of the Moment [this is an exciting time in the domain business with all the hype, noise and misinformation; think and reflect before you jump] . . .

6. Don’t Be Unwilling to Walk ["No" is the most powerful two-letter word in the English language] . . .

7. Ask What is Already Reflected in the Price [hype, promotional costs, etc.]

8. Don’t Guess [unlike stocks, new domain names have no fundamentals. They also have no cash flow, or earnings] . . .

9. Ignore [the hype, spin, and misinformation -- "dot com is your daddy's extension" and Other Nonsense; also beware of FOMO - fear of missing out - see #6 above] . . .

10. Pay Attention to the Skeptics - Someone challenges the belief in gold, and instead of responding with empirical, data-driven counter-arguments, the true believers revert to personal attacks. Scroll through the comment section of the blog ZeroHedge.com to see the sort of nonsense that passes for debate. A lack of reasoned discourse is overcompensation for a weak investment thesis. [Rick Schwartz, the Domain King, has written all about this] . . . . Astute investors will learn something from watching and thinking about other people’s mistakes. Hopefully, you can avoid repeating these errors when the next mania rolls around."




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