2014-08-04

A Domain Name Portfolio is Not a Plan

In the general investment advisory world one often hears the words "a portfolio is not a plan," meaning as Nick Murray writes in his fifth edition of Simple Wealth, Inevitable Wealth: "A portfolio is not, in and of itself, a plan. And a portfolio that isn’t in service to a plan is just a form of speculation ..."

Portfolio Plan Definition | Investopedia: "Definition of a 'Portfolio Plan'--  An investment strategy applied to a personal or corporate portfolio that determines its general purpose and constraints. Once a portfolio plan has been determined, investments adhering to the plan are bought and sold accordingly."

As noted, a key to good planning is determining the "constraints," both internal and external, self-imposed and imposed by things over which one may have no control.  Examples of constraints are available capital, liquidity needs, income needs or requirements, investment time horizons, risk tolerances, caps on individual purchases, market conditions, and other requirements or limitations, some of which may be unique to the individual or organization.

Being mindful of the portolio plan, its purpose and the constraints, helps maintain focus and avoid losses chasing things that don't "fit" the plan. And of course, in evaluating one's portfolio, if it contains domain names that no longer adhere to the plan, then drop or sell them.

Finally, domain name portfolio plans are not static but should be dynamic, evolving, undergoing regular evaluation as circumstances and objectives change. Speaking solely for myself, I have found I save unbelievable amounts of time, and money, investing in accordance with my portfolio plan and avoiding chasing things which may be fine and appropriate for others, but do not meet my requirements or constraints. It also frees me up to keep the focus where it needs to be instead of distracted and chasing a thousand different things.

For example, I have intentionally avoided investing in any new gTLD domain names (I do have one in my portfolio that cost -0-) as I do not, personally, consider any of them "investment worthy"-- for example, there is no way to be assured [under ICANN's new gTLD registry agreements] of what the cost of annual renewal registration fees in the future will be on the new gTLD domain names--it is solely up to each individual registry operator, and can be changed with very little notice. (How would you like to build a business at a given street location and have no idea what the ground rent or taxes would be year to year? Reportedly one new gTLD registry is going to charge $30,000 a year to renew one new gTLD domain name after the first two years. Insane!) Therefore I am currently only investing in .COM domain names.

A domain name portfolio is not a plan. So what's your plan? And does your domain name portfolio adhere to your plan?

John Poole
Domain Mondo





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