The lottery ticket analogy

Domains aren’t exactly like lottery tickets, but be sure not to get sucked in by false hopes.

John buys a lot of lottery tickets. He’s a prolific lottery ticket buyer, snapping up thousands of lottery tickets every week.

He then brags regarding his winnings.

“Just won $50,000 on a $1 lottery ticket. I am the master!” he tweets.

“Another score! $10,000 on a lottery ticket I just bought yesterday!”

John doesn’t talk regarding the majority of the time when he loses. In fact, most of his lottery tickets are losers. Most of the time when he wins, it’s only a few dollars.

Other people see John’s social media and think, “I ought to buy lottery tickets, too!” They don’t realize that John is actually cashflow negative on his lottery purchases.

OK, so investing in domains is not precisely like buying lottery tickets. With skill and data, you can buy domains that are more likely to sell than others. You can also increase the odds that a domain will sell with optimization and marketing.

But…many people are attracted to domain investing since they hear regarding quick flips and huge returns on investment. The reality is that most domains aren’t flipped quickly, and many people who do have big successes to brag regarding still only sell a modest fraction of their domain portfolio. Some are cashflow negative despite their big wins.

So I share this analogy as a caution. Don’t get sucked into the idea that domain investing is easy. Or that you’ll make insane profits. Or that the people who are bragging regarding making insane profits are swimming in cash.