Assigning value to a speculative domain »
By admin on Jul 6, 2007 in speculation, valuation, Featured | 5 Comments
Not long ago, I wrote about the principles I’m using to guide my early domaining efforts. In that post, I noted that my investment strategy is more like that of Warren Buffett than of a day-trader: buy and hold for the long term.
Yesterday, though, that strategy was tested. I received an offer to buy a speculative domain that I’ve been holding for less than a year. The initial offer would have given me nearly a 100X profit (and would have paid the renewal fees on my portfolio for a long time).
I have to admit, it was a tough decision despite my commitment to the buy and hold strategy. I’ve set up my domaining business as a pure sideline - I pay for all of it with ‘extra’ money and don’t need it to generate any cash. But the temptation to realize a 100X profit was incredibly strong. Only a crazy person would walk away from that, right?
Wrong. I ultimately decided that only a crazy person would flip this domain at this time.
How did I make the decision? This was the hard part - I hadn’t received an offer like this before, so I had no frame of reference or rules to go by. I had no idea how to assign a value to the domain and, therefore, had no meaningful way to analyze the offer (other than “hey, that looks like a bunch of money”).
I thought about it for a bit, and ultimately scratched the following questions on a notepad:
