Holding cash for buying opportunities

It’s a curious time in the financial markets. What regarding the domain market?

It’s hard to believe that the greatest stock market crash and economic recession of our generation is now a decade old. Since then, at least as far as the stock market is concerned, it’s been nowhere but up. There have been some blips, such as this stretch, that serve as a reminder. But those have usually been followed by a continued march upward.

It can be easy to become complacent in such environments. I personally like to keep cash on the sidelines to buy into opportunities when the market dips–whether that’s for stocks or domain names. Unfortunately, you can’t time these things. I ended up keeping way to much cash on the sidelines over the past five years as the market soared.

That stated, some of the best domain investments I made were when people were hungry for cash during the great recession.

Although the domainer-to-domainer market is a bit soft right now, it seems like some of the valuations people are putting on domains in the expiry stream are rather frothy. The prices don’t seem sustainable when you consider the typical domain investment practice of selling 1%-2% of a portfolio per year. That doesn’t work if you buy at prices that you can only get a 5x return on when the domains finally sell.

I’m continuing to hold cash on the sidelines for the true buying opportunities. But my conservative approach is probably why I don’t drive a Bugatti.