Importance of Maintaining Liquidity

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In difficult financial times and tough market conditions, it is very important to maintain a portfolio of liquid domain assets that could be sold very quickly if necessary. Two and three letter .com (LL.com & LLL.com) names, strong dictionary .com terms, city/geographic terms and some numeric domain names are considered liquid domain assets.
There are reasons for maintaining solid liquidity, other than having bills to pay. For one, other people may need to start selling their liquid assets, and if you are in the right place at the right time – and you have the capital to make the purchase, you could benefit. Additionally, it costs quite a bit of money to develop and maintain a website. If you need to finance a web project, you may need the cash in short order.
When you evaluate whether your portfolio has enough liquidity, think about whether you could get anywhere near a reasonable price if you put your best names on a forum with a 24 hour time limit. If you don’t have names that would easily sell if you priced them for 20% less than their full value, you might want to consider adjusting your portfolio mix. This is especially true if you are buying domain names to resell rather than to develop, as it can be difficult to sell domain names in poor market conditions.
Although I got my start in the domain industry buying new registrations and selling them for 3-4x the registration fee quickly, I think that can be difficult in tough economic times. While you may feel more comfortable paying $9.00 for a name rather than $4,000 for a better name, look through your portfolio and see how many $9.00 names you have. I think you will be in a better position if you have a single $5,000 name than 600 new registrations.

1 COMMENT

  1. I’m thinking that if your measure is the yardstick for the domain industry, then things really do not look good for the vast majority of domains. The common comparison with the real estate market is perfect for this, as if you set the sell price of a house at 20% under market value, it’s going to sell fast even in this down market that everyone is hyping. Most any house will sell fast at a 20% discount. That’s how Realtors get their inventory to move, by encouraging their clients to lower the price. In the domain industry, though, when you look at people trying to sell domains in the forums, you’ll notice that almost none of them sell, even the ones that discount from their asking price. I regularly see people discount 50% or more from their initial ask price, and not getting any interest. If you use this yardstick it’s a pretty soft market. I think for the most part, people are just making up prices for their domains with no basis in reality, and you have too many people in the industry with thousands of domains registered and none of them are worth being registered in the first place let alone having the potential of a multi-thousand dollar resale value. I think it’s really good advice for people to be more selective on what they register, and to try to develop one of their better names.

    ***UPDATED BY ELLIOT***
    For the most part I agree, but there are people who would like a big potential pay off when an end user emails them. I really think many people stay away from the high dollar names because of fear. It’s easier to justify spending $9 than $5k. However, in tough times, having a lean portfolio of great names is smarter and easier to manage.
    I haven’t been in the industry in tough times, so this is really just my gut feeling.

  2. This is good for new domainers coming in now with the LLLL.com soaring. If you just got in, saw what was going on and acted quickly… you’ve got some solid liquid names to start off with rather than the typical noob rubbish had a reg fee…

  3. my view is not to put money into domains that I will ever need…it slows down my domaining but I’ll prolly never have to sell one I want to keep…also I no longer buy ANY that couldn’t be developed

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