Monday, October 3, 2011

As Markets Crash, Numeric Domains Disappear

Anyone watching the markets these days ($SPY $QQQ $IWM) can see that things are bad, and probably going to get a lot worse.  With bonds, precious metals, commodities, and stocks all looking like bad investments at these levels, there seems to be very few places worth putting money.  $SPY looks poised to break $110 for a trip down to $100 and then possibly much lower.  Bonds ($TLT) are doing well but how much further do they have to go?  Europe is falling apart, and precious metals provide some hedge against currency debasement and global unrest ($SLV $GLD) but are very expensive at these levels and prone to mass liquidations like we saw over the last few weeks.  Are there any alternative investments that make sense right now?

Yes.  My personal preference is numeric domain names, because China is driving the demand for these pieces of internet real estate.  As we have profiled before, Chinese registrars are booming, and numeric domains which are popular in China are in the early stages of a huge bull market.  There simply aren't that many of these domains available, only 10,000 four digit .com domains exist and only 100,000 5 digit domains, all of which are registered as of this morning.  There are a million six digit .com combinations, and there seem to be more than 100,000 of these domains registered already as well, with the nicer ones commanding high prices every day in auctions at 4.cn, the premier Chinese domain auction site.

This is a tiny market, and supply is drying up.  Five digit .com domains have been teetering near a buyout for months, and are currently bought out as of today.  If the buyout sticks, prices will likely rise, and six digit domains will be the next battlefield for registrations.  With total .com domain registrations approaching 100 million, it is very likely that over the next decade these domains will all disappear as well.  While everything else in the market may be crashing, numeric domains look likely to significantly outperform over the next several years.