Importance of Maintaining Liquidity
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.
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