What it Means for Domains: Economic Turmoil

Credit markets, home prices, and stock markets are down. What does it mean for your domain portfolio?

Here are some of the headlines on CNNMoney.com right now:

“Gas prices surge nearly 5 cents”

“Industrial output dives more than forecast”

“AIG pummeled 51%”

“What to do if your broker fails”

“Worst far from over”

“Lehman files for bankruptcy”

Ouch.

So what does this mean for domain owners?

If you look at domain names as an asset class (and relatively few people do), one of two things could happen. First, if stock markets look like they’ll continue their slide then people would move money to more stable assets. That may include high quality generic domain names. Or, if people have lost lots of money in the stock market they may not have much left to invest in domains.

The keys are diversification and a long term view of the market. As I wrote the prior week, domain names seem to have more stable values than stocks right now. Your domain values won’t drop 50% overnight just since some CEO made a bad decision.

But won’t that affect pay-per-click revenue in the long run? Perhaps. Let’s face it, there are fewer people buying mortgage leads online these days. Or at least they aren’t willing to pay as much for them. Nevertheless, no one would argue that ten or twenty years from now online advertising revenue will be less than it is today.

It’s going to be rough, and long tail domain investors in particular are being squeezed. But that doesn’t mean you ought to run away. I took a breather from the domain market following the dot.com bust. I saw all of these guys hanging out on the GreatDomains chat board and I wondered why they were wasting their time trying to come up with ways to still make money with domains. I missed out on the biggest buying opportunity since 1994. I don’t want to miss out again.