Thursday, August 4, 2011

Domain Registration and the Stock Market

So today the market completely fell apart into the close, the general indices $SPY and $QQQ are way down, while bonds $TLT are way up.  Even $SLV (silver) started to fall apart.  Is this the start of a major stock market collapse?  Well, could be.  But in case anybody wants some optimism, we're going to try to provide it.  As we have noted previously on this blog, it appears that .com registration trends may have signaled the market collapse in late '08/early '09. 

Now, we here at nnnnndomains have been tracking .com registration trends, as we count down to 100 million .com domains registered, a huge milestone.  It had originally seemed we were going to hit this milestone by the end of 2011, but then registration slowed a bit, and it looked like we might have to wait until early 2012.  Now, having looked at the last month of registration data, it seems that .com registration has picked up, and we actually might get very close to the 100,000,000 mark by year's end.  Since we last checked, .com domains have been registered at a rate of 19,309 per day, a slight increase over the previous average of 18,201 per day.  If this trend sticks, we will have 99,325,879 registered .com domains by year end. 

What does this have to do with the stock market?  Maybe nothing.  But as we noted before, there were three months in 2007 where there was actually a decrease in the total number of domains registered, a very rare occurrence.  This coincided with what was in hindsight the top of the market.  And then in 2008 when the market began to completely fall apart, there were several months of very weak .com domain registration numbers.  It would be easy to come up with theories connecting the two things (slowdown in capital spending by businesses, etc.), but I don't know if anyone has looked into this hypothesis in greater depth than we have here (which isn't that deep, obviously).  Anyways, we are keeping our eyes on the .com registration statistics as a possible harbinger of stock market doom, and as of now, it's not signalling doom.  In fact, it's showing that .com registration remains strong, even though 96+ million domains are already registered.

So are there any gems remaining to be registered out there?  Well, obviousy we believe that domains (5 digit .com domains) are the best investment right now.  There are only 100,000 of these domains, and they are currently hovering around 99.99%/100% registered, with a few dozen drops every day being picked up.  Unlike precious metals ($GLD, $SLV), they aren't making any more of these, there are only 100,000 domains, and there will always only be 100,000 domains.  And every number has a huge number of possible uses as Chinese lucky numbers, US and foreign postal codes, product numbers, and more.  Even rare earth metals I would argue are a worse investment, because even though these are highly priced now, eventually they will find a way to get more production in various parts of the world ($MCP, $REE, $AVL, $SHZ).  Domain names are a good way to invest in the internet's "real estate" and hedge against currency devaluation as well as profit from increased internet use worldwide, which is going to continue to grow substantially over the next decade.

5 digit numeric domains are used as US zip code domains primarily, and more recently as Chinese domains, as Chinese internet presence keeps increasing (and will continue to do so), and numerics are incredibly popular in China.  Prices for domains are topping $1,000, and random are starting to fetch higher prices as well, now that these domains are getting impossible to hand-register.  So, if anybody is looking for somewhere other than the market to invest, this is a way to play the China growth story without worrying about possibly fraudulent companies stealing all your money ($CCME, $LFT, $RINO).  Consider some numeric domain names, and be a part of history in the making as we go towards 100 million registered .com domains!