Words Of Wisdom on LLLL.com Investing

In past weeks, we had alot of people literally expecting to double their money inside of a month and as Dominik  has pointed out, this “flipping among domain investors” combined with massive hype brought about by the incredible returns early investors were making was in turn was causing price inflation of ~ 50% per month up until recently. Obviously no market can possibly sustain that rate of growth forever and now LLLL.coms have been brought back to reality.

I think anyone buying a bulk lot of LLLL.coms (any quality) will do very well for themselves if they hold them for 5-10 years, the problem we’ve had is that at least half of the “weak hands” which bought out LLLL.coms in the August-November timeframe were expecting to get rich in a 5-10 month timeframe. It’s worked out well already for those who invested big and many of us who did invest sizeably have begun to withdraw (or completely withdraw) from the LLLL.com market. When a 12k investment like I made in August-October 2007 offers you a 600% ROI inside of 6 months, it’s somewhat hard to be anything less than 100% content with the outcome and many of us who invested big were more than happy to get out while we were ahead.

I’ve since reinvested about 20k into higher quality LLLL.coms and strongly believe all LLLL.coms have a very good future (as all dotcoms less than 5 letters will imho), it’s just a different perspective one needs to take now…

I haven’t even bothered listing my current LLLL.com collection for sale, something which may come across as quite unusual for those who remember how little time it took me to put up a sales thread post-buyout. I know it’s a long term play now and I’ll wait on the LLLL.coms I now have for a few years (maybe with a bit of trading, but overall I’ll keep the same amount invested in LLLL.coms) and see what happens. If 10 years down the road an LLL.com costs 100k, there’s no doubt in my mind there’ll be domainers out there more than willing to drop considerably more than $50 on even the worst LLLL.coms…

The nice thing about LLLL.coms is that in the long run I believe their value will be somewhat indexed to the value of LLL.coms — a rise in one should in turn affect supply/demand for the other. This is also unfortunately one of the very factors that in turn limits the value an LLLL.com can have.

I recently purchased the domain BQB.com with the intentions of developing it into a domain name marketplace for short domains (see below posts for more info). I was looking for a short domain under 10k that was memorable, not trademarked, and that I could incorporate a domain business around. Suppose I had only 1k instead of 10k, what might I be interested in? Perhaps BQBO for BQB Online or BQBI for BQB Inc. , maybe BQBD — BQB Domains? The point being if I couldn’t afford BQB or if it was already being used by a real world company, I’d have considerably more options if I decided to go for an LLLL.com.

These options in turn limit how much a domainer can likely get from an enduser.. Not only does the price likely (although not necessarily) have to be lower than the equivalent LLL.com, but it also shouldn’t be considerably higher than what owners of comparable LLLL.coms would be willing to sell for. This in turn reduces the demand at a high price-point for most LLLL.coms and also gives rise to what I believe will eventually be a very large price discrimination between starting and ending letters which I only believe will continue to get bigger.

 All LLLL.coms are not created equal, nor are all anti-premiums, quad premiums, … Certain starting letters (eg. A,S) sell for considerably more on average than any other starting letter. Matter of fact, research conducted by Phil (aka VURG on Namepros/DNF), a real life statistician, based on data I collected and analyzed from TDVR suggests that domains containing an A or S (that’s containing anywhere in the LLLL.com), regardless of what category (anti-premium, quad premium,…) they fall into tend to sell for on average $10+ higher than if the letters that make up the LLLL.com do not include A or S. This was an analysis conducted based on 1057 reported domain sales in February 2008, so the confidence of our findings is practically indisputable and I’m sure many of the more astute verteran LLLL.com domainers have noticed similar results.

As for Lorenzo (aka ItalianDragon on Namepros/DNF), our findings confirm his belief that the letter U should be considered premium. Out of 415 reported LLLL.com sales containing a U, the average price was found to be ~ $78. Sure, U’s can be used to form CVCV and VCVC domains, so this figure may be a bit high, but even when we remove all instances where U played the role of a CVCV or VCVC, we’re still left with an average price of ~ $73. Compare this to an average selling price of ~ $71 on both F and H, and ~ $66 on G. Unfotunately for W, our findings suggest that W is not a premium letter and may actually be overpriced based on sales data we collated.

 A new price guide will be out on March 20th, so make sure you stop by then to see what’s happened in the LLLL.com market over the last couple weeks.

Source: Words Of Wisdom on LLLL.com Investing

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~ by Reece on March 16, 2008.

4 Responses to “Words Of Wisdom on LLLL.com Investing”

  1. A nice post – I think that the recent LLLL.com rises (of, as you say, even 50% increase per month) has been pretty amazing, especially considering the domain market has been a bit slow as of late. And the actual economy may actually be going backwards. So week-on-week rises in LLLL.com prices have been really amazing IMHO.

    I think that this has been the first major buyout that the majority of domainers have seen (taken 456k domains is never an easy task), so expectations were a little too high (mine included). However as long as domainers realise that the recent price depreciation isn’t a sign that the market is failing (just that all markets realign themselves at times), the future of LLLL.com prices should be rosy as always!

  2. So where does that leave the average “joe” that has a 100 LLLL.coms and 100 LLLL.nets?

    Are the pros suggesting that everyone dump there double and single premiums? This will lower the price because of supply and demand, but eventually big players will be sitting with thousands of names and the price will only go up from there. If I was a betting man, (and I am) I would easily say that LLLL.coms and .nets should easily stay on a 50 percent incline for the next five years.

    Average LLLL.coms
    $60 year one
    $90 year two
    $135 year three
    $200 year four
    $300 year five

    What would you bet on Reece?

  3. Tristan — fully agree. In comparison to many tech stocks (intel, google, ebay, apple are coming to mind now), domain names and especially LLLL.coms are doing quite well. The only sector that seems to be outperforming LLLL.coms lately is the LLL.com segment which has really heated up over the last 3-4 weeks after being in a similar situation to what LLLL.coms now find themselves in earlier this year.

    Jeremy — Your predictions are very reasonable and quite similar to my own. It’s really not too hard to imagine a $100 min wholesale come this time next year..

    While a quad premium (especially if you can get it at $300 like a few have went for lately) will likely prove to be a better investment, that certainly doesn’t mean all LLLL.coms won’t prove to be excellent investments. Some people prefer to have cheaper names — in the event of a UDRP, you don’t stand to lose as much (the counter argument perhaps being that you’re more likely to an encounter one) and you have more chances to make enduser sales (although one could say that statistically these names have a lower probability of finding an enduser).

    It’s hard to say what will happen in the end, but betting on short dotcoms sure seems like a bet you cannot lose 😉

  4. Thank you Reece, I think your explanations are very important for newcomers.

    In 2007 I was looking for a single domain name for our team and was browsing a list of free 4000 LLLL.com

    Finally I have registered just one name. Later I have received offers from guys who wanted to purchase that name from us, but we cannot sell it because it was used for our video surveillance project.

    Now I see I was not clever enough. Why I didn’t registered them all. Such a mistake!

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