As I look around me, people right and left are pulling their money out of the stock market or refusing to invest in anything so they can stockpile cash. 

I cannot really say others are “wrong” for wanting a stockpile of cash and a sense of security, but what astounds me is that every time the price of something tanks (stocks/precious metals/real estate) a lot of people will quickly bailout and sell, believing the market is too volatile to be profitable.  That way of thinking boils down to:

“Buy high and when the price goes way down, panic and then sell!!!!!“

The above, does it make any sense to you?  It doesn’t me either!  Truthfully, it confuses me. Everyone knows that you are supposed to buy low and sell high.  Right?!?  If so, why do people sell when the economy tanks?  Usually, those people want to have cash on hand, because of the sense of security it brings them.

Keeping cash on hand for emergencies is good and everyone should always have access to some cash in case something unexpected comes up.  But aside from that, wouldn’t this now be the time to buy?

Yes.  It is.  As a matter of fact, this is a perfect time to buy.   I am!

With the recession that we are going through I have seen some panic and the beginnings of a sell-off in the domain space.  Because of the sell-off, the prices of domains have gone down. When prices go down that means there are deals to be had. 

Depending on how long the recession lasts the deals are going to get better and better (as people get more and more desperate to sell) so you are going to have to be able to judge when you should stop buying.  I can’t predict when we will start seeing an improvement in the economy (which would also equal a rise in prices,) but I do know a deal when I see one.  This is a golden opportunity to build your portfolio. 

For years I have had people complain that they didn’t get into domains early enough so the big opportunities had passed them by.  If you don’t invest now while prices are low, then your golden opportunity is going to pass you by as well.

Historically speaking, look at the .com bubble burst in the year 2000.  What happened?  People lost their jobs, there was a recession (at least in the tech sector,) and the prices of domains plummeted.  What happened next?  Smart domainers came in and bought up a lot of domains for cheap.  They didn’t sell domains for cheap, they BOUGHT DOMAINS FOR CHEAP.  Then they held onto them….and guess what?  Today, those same domainers either hold very nice portfolios or have already sold those domains for healthy returns.

Fast forward to the year 2008.  The economy has once again slumped, and once again, people are selling domains for cheap.  Do you see a pattern here?  You can either be the one to sell your domains off for cheap or buy other peoples good domains for cheap.  Which side of the fence do you want to be on?

And just to continue on this rant a bit, do not be sucked into this idea that you should be selling off everything.  The sky is not falling.  Things in the economy may be bad, but people are not rioting in the streets.  If you have the ability to invest, then there is not going to be a better time in the foreseeable future to do so.  From here, I suspect it will get worse before it gets butter, but it will get better.    

As far as my own recent experiences, I’ve picked up domains for only a few hundred dollars that would have cost thousands only six months ago. 

So, what happens next?  Well I am no physic, but I will give a few predictions:

1.)    “Brandable” names that have no meaning and no traffic will be dropped by their owners in droves.

2.)    A ton of .info’s will drop because they were so cheap to register.  A lot of people registered some .info’s just because they wanted quantity (instead of quality) and now they don’t have the money to keep them.

3.)    The .biz aftermarket (which was never huge in the first place) will take a hit and we will see a big drop rate in those as well.  .Mobi will also have a big drop rate (percentage wise.)

4.)    .Com, .net, .org domains will all drop at a higher rate than usual, because some owners may not be able to afford to keep them.

5.)    The prices of the standard three letter .com combinations (that have really no meaning) will continue to fall.  The same is true of .net, .org, .biz, .info, and .us domains.  These three letter combinations were usually always regarded as a safe bet since they have been so coveted.  However, they are now seeing some price declines.

6.)    The three letter .com, net, org domains (plus .info, .us, .biz) that have meaning will hold a bit more steady, but will take a small hit in pricing as well.  Those who hold these are better off to keep them until the storm is over or, of course, sell them to an end user at end user prices. 

7.)    Buyers will still be buying, but they will be looking for good deals.  Buyers (educated domainers) almost always have the upper hand when purchasing domains.  This recession will give buyers another ace in the hole, because there will be fewer buyers and more sellers.  With fewer buyers they can demand more value for their money.   

8.)    Since there is less money changing hands in the domain space and there are fewer buyers, there will be fewer fresh registrations and fewer people trying to “flip” domains.  Those that registered  domains a  while ago and were not able to flip them will contribute to the drop rate of the points 1-4 mentioned above. 

9.)    Sellers who want unrealistic prices for their domains will notice most, if not all, of their sales drying up.  They will either be forced to lower prices if they intend to sell or keep and hold their names until the storm passes.

10.) Of all the domains that end up dropping, there will be a few gems that find their way through the drop process.  If anything, drop catchers will probably notice the same amount of business, if not more, because of all the names dropped.

11.) A few nice gems will pass through drop catchers undetected and will be ripe for the picking.   Take a look at justdropped.com and you can scour the daily drop lists for diamonds in the rough.

12.) PPC prices (have taken) and will continue to take a hit.  I think we can reasonably see a 20% hit in the amount of payouts compared to pre-recession prices.  Once the recession is over the payouts for PPC will slowly get better, but it won’t be an overnight thing.  Be prepared to see at least a small drop in your PPC revenue.

I may be a tad off on some of my projections, but these are the cards I am playing right now.  Best of luck with whatever cards you're playing and happy domaining!