Are “The Worst Investment I’ve Ever Gotten Into” — Why Domains

It depends on if you’re investing or gambling.

I was reading a blog post on The Hill this morning regarding a guy trying to sell Romney-Perry2012.com and Perry-Romney2012.com for $50,000.

You read stories regarding this all the time as people try to bankroll on current events.

But here’s what I found interesting:

He has bought other domains in the past, but without much luck.

“I have lost a bundle actually, and they’re the worst investment I’ve ever gotten into,” Jeffreys stated. But he stated it is hard to resist the temptation to buy more addresses for the chance to score a big payout.

The practice is “essentially gambling,” he stated.

This is interesting since it sheds light on two different mentalities when it comes to domain investing: investing vs. gambling.

Here’s how I’d define these:

Domain Investing: You buy domains that mostly have existing value that you think will increase over time. Only a modest percentage of your portfolio is hand registered these days. Many of your domains get type-in traffic. The majority of your portfolio is relatively liquid, with a smaller portion dedicated to opportunistic and hand-registered domains. You turn over 2%+ of your portfolio a year through sales. Although 2% is low, it’s not that low for domains.

Domain Gambling: Most of your portfolio is recently hand registered. You try to take advantage of event-driven domains. You never price your domains and ask for big sums if someone is interested in buying them. You register lots of domains in alternative extensions. Basically, you’re counting on that one big domain sale to make or break you. You sell fewer than 2% of your domains a year.

What do you think. Do you agree with these definitions?