This is the final part of a 3 post series looking at the LLLL.com market since January, 2008. If you missed the other 2 posts, they can be found here:

Short Domain Name History: LLLL.coms I
Short Domain Name History: LLLL.coms II

So where did we leave off in part two of our short domain series on LLLL.coms? We left off talking about what essentially was the short domain name world’s equivalent of the Prisoner Dilemma, where the actions taken that were rational for the individual short domain name investor proved to not be so rational when we considered their actions on a group level encompassing all short domain name investors.

LLLL.coms sure have been an interesting market to follow. In the 2+ years I’ve now been actively following and investing in this market, I’ve seen it compared to everything from tulips to tech stocks in the late 90s from those who didn’t believe in the LLLL.com market’s fundamentals, and domainers investing in the LLLL.com market saw it as anything from a good place to invest money to the biggest domain name opportunity in years. I never was extremely “hyped” about LLLL.coms myself and it was a medium to long term focus I first came into the market with. Pre-buyout, I certainly didn’t think we’d see prices rise as quickly as they did and I was actually hoping to maybe turn a 100% ROI after a couple years of holding my LLLL.com investments — something quite a bit lower than what actually ended up happening. For some of us, our initial expectations were far exceeded, others had much greater visions for the near future of the  LLLL.com market and others still have had expectations which have changed along with the market (eg. me).

The only short term method I’ve ever recommended of investing in this market for the short term has been to look for deals which you can quickly resell at a profit. One LLLL.com for example recently sold on eBay for I believe it was $0.52 — it was reasonably pronounceable as well and could quite likely have been sold for $10 or so had it not been sold on a day where there were 200 other LLLL.coms on eBay instead of the usual 20 or so. Similarly, some people in the past have had luck getting CVCVs cheap by contacting owners via WhoIs that weren’t domainers — you can of course do that with any type of domain, however it works with LLLL.coms just like other domain name markets. Alternatively, you could of course choose to seek out end users, however make sure you properly factor in the value of your time in determining whether this is worthwhile for you or not.

I’ve been criticized a few times in the past for changing my position on short domain name markets, however my belief is that one has to adapt to change and new information which presents itself. I still maintain the optimistic long term view that I initially had when first entering this market — I never thought we’d see $7 LLLL.coms turn into $60 ones inside of 4 months, and I never thought we’d see those $60 LLLL.coms with under $7 by the time that year ended. That’s what I find pointless about long term “predictions” — they really are nothing more than a guess. We can predict with reasonable certainty what will happen tomorrow based on what happened today, but any data we have today is completely useless for trying to predict what will happen 1 year, 2 years, 10 years, etc years from now. There really isn’t a right or wrong answer to where the LLLL.com market is going — perhaps the only right answer would be that we just don’t know. One Namepros member said it best a couple years ago when he suggested that the LLLL.com market would be full of ups, downs, and uncertainty until it establishes itself. Whether it establishes itself as a worthy investment remains to be seen — I’ve never been particularly high on short term speculation in the LLLL market, mainly because I’ve seen many people lose their shirt doing it. The LLLL market (be it LLLL.com, LLLL.net, or otherwise) just isn’t the kind of market you can pick a day in the future and decide that you’re going to sell out on that day and expect to come out ahead or with a small loss. I showed some data a few days ago about how CVCV sales for the exact same CVCV had varied by sometimes over $1000 from one month to the next — sometimes up $1000, sometimes down $1000. If you’re going to get into that market and try to cash in when the market is up, my suggestion would be that you use your money to play roulette — bet on red or bet on black, because you’re either going to be right or wrong, and I don’t see this depending on skill to near the extent I see it depending on luck.

What will future end users be interested in? Some of these potential end users see a good domain very differently than the large majority of current end users. The big issue as I see it right now is the cost of renewal fees versus the value of the cheapest LLLL.coms. If the renewal fee wasn’t there, there’d be very few people arguing that cheaper LLLL.coms wouldn’t increase in value long term, however it is there and so long as prices stay low, it continues to play an important role in the value of the cheaper LLLL.coms. The more LLLL.coms get above regfee, the less they’ll be affected by renewal costs — that’s just common sense right there. So, what’s going to get those LLLL.coms above regfee? What’s going to get those LLLL.coms so much over regfee that they’re no longer or negligibly impacted by renewal fees?

I try to remain relatively neutral on this short domain blog — I’ll praise a good sale but I will at the same time acknowledge a bad one or when the market is performing poorly. There’s no denying that much of the LLLL.com market has been performing poorly lately — poorly for quite some time, matter of fact. Will that change? What will make it change? Why would or could it change? When will it change? Those are some good questions to ask yourself before investing a sizable amount of money in this market. Speculation is fine, but if you’re going to put a lot of money into a speculative domain name market, do yourself a favor and understand both the risks and opportunities as best you can. Risk is a reality of any investment — there is no such thing as a completely safe investment and don’t let anyone convince you otherwise. We live in a world of imperfect information, one where we don’t and never will know the complete picture. All we can try to do is assemble as much of the puzzle as possible so we can make an investment that we’re comfortable with, understanding to the best of our abilities what the risks and potential benefits are with the  domain name investment we’ve chosen to make.

Andrew Miller, a long time investor in short domains and author of 3Character.com said it best in my opinion in response to a Namepros post in May 2008 asking about whether every LLLL.com may someday reach $5000+ as LLL.coms had at the time. His response was that it’s of course possible but then questioned  how likely it would be — there really is a chance anything could happen probabilistically speaking, and so we need to determine what presents the right risk/reward profile for us. What’s your need for liquidity? How much uncertainty and fluctuation in the value of your investments can you comfortably live with? Do you have money set aside or know you’ll have money around to pay for LLLL.com renewals now and in the future? If short domains become more popular, who’s to say that popularity will create additional investments in short LLLL.coms and not short domains in other extensions (such as ever increasing in popularity ccTLDs) or market segments (such as brandable LLLLL.coms)? What will make for a better investment long term — cheap LLLL.coms or expensive ones? Questions, Questions, Questions… I’m sorry, but I don’t have any more definitive answers. One more thing I’m reasonably certain about is that the performance of the LLLL.com and short domain name markets as a whole will largely depend on the economy. LLLL.coms are an interesting market when it comes to the economy because the market has some very different investors — from the little guy who has a few LLLL.coms and is worried about losing his job, to rich domainers and domain name companies, some of which own 10,000+ LLLL.coms. What about everyone between those 2 extremes?

To quote a post made by accentnepal in June of 2008, “Times like these the long-term investors sleep right through while the flippers think the world is ending. Wake me if they get down to $10.” The prices for the weakest ones are of course below that today, however that was clearly not the point of the statement. The bottom line is that there are 2 very different types of LLLL.com investors — the flipper and the long term investor. Most people fall somewhere in between and the ones who need be worried most about what the near future holds are those investing today hoping to resell tomorrow, something which has never been a great strategy for most domainers to adopt in any domain name market and has only worked well for short domains in the past because their values were going up so quickly. So are prices today a bargain — a chance for domainers who missed the boat the first time around to hop on and go for a ride or do prices today serve as a warning to domainers interested in investing in this market that we may not yet have seen the end of the LLLL.com bust? This is a question I’m sure a lot of Americans are asking themselves at the moment with respect to housing prices down there. Houses really do make for a pretty good comparison because there are plenty of costs associated with owning a house. Are U.S. housing prices a good deal at present or were they so overly inflated that they’ve now merely been brought back down to earth? Your answer might depend on whether you’re interested in buying your first house or are considering the possibility of buying a second house as an investment. Anyone actually using what they’re buying will be happy with the current prices — now is a better time to buy than it’s been in a long time. Similarly, now is a great time to buy LLLL.coms if you’ve been planning on developing them or seeking out end users — the prices have never been better.

LLL.coms have over the years slowly gotten out of the budget of many (if not most) end users. Prices are better now that they’ve dropped around 55% on the low end, however they remain expensive. Most domainers think LLL.coms will eventually begin rising in price yet again once the economy improves — trophy domains aren’t a luxury many can afford in a recession after all. Will companies adopt LLLL.coms that end in corporation-friendly letters such as C, I, and L? I’ve always been a fan of those kind of LLLL.coms myself, mainly because from what limited research on the matter I’ve done, they do seem to have higher usage with end users.

If you’re unsure what to do with your LLLL.coms — you’re in one of those hold  positions where you’re not sure if now is a good time to buy but at the same time aren’t sure if now is a  good time to sell, why not develop a few of your LLLL.coms? This domain (www.LLLL.com) was getting about 60 uniques per day before the previous owner developed it into a blog. By the time I acquired it, it was averaging around 100 uniques per day and now with a bit of work, it averages around 300-400 uniques per day. How many domains out there get 400 uniques per day of targeted traffic? Not a whole lot of undeveloped ones, that’s for sure… If I had to sum this market up in one sentence, it would be that anything is possible and that nothing is impossible. You can put a positive or negative spin on that line however you see fit

Related posts:

1. Short Domain Name History: LLLL.coms I
2. LLLLL.coms
3. Short Domain Name History: LLLL.coms II