The economy today is either already in or on the verge of going into a recession. This, unlike other recessions is no coincidence. This was deliberate and unchecked with unstoppable greed.
The sub prime mortgage crisis was not news to me. I knew this would happen. Speculators were flipping homes like it was red hot burgers waiting to be served. Only that it was not well made and gave poor people who got sucked into this madness, financial diarrhea. I even warned a few people I know, not to get caught in the herd mentality and media hype. No one listened. They ended up losing big.
If you want to be a successful investor, you must learn to ignore the media for the most part. Understand that, for the most part these poor souls are paid employees. They submit what is current. They talk and write about what is hot. Right Now! Those same folks who gave stories pretty much everyday across the nations newspapers and online media about how successful people were buying and selling real estate are now bemoaning the fact of todays reality.
They for one were in essence responsible for feeding the hype of real estate and greed. The flippers made enormous amounts of money. But they (the media) had a job to do. They do not educate. They simply report.
If you touch what is hot and sizzling, you will burn. This is not the case for everyone and with every circumstances. As in my previous post somewhere I mentioned that investments edge up or down in cycles. There is no straight path up. Now couple that with greed, it is bound to brew trouble.
In my personal opinion, those banks and mortgages companies committed fraud and in essence a felony. They fed off the potential homeowners desire to fulfill their American dream and sucked them dry. The CEO’s who were responsible for this crisis had fat contracts written for them. Even when their bank lost billions (with a B), they left with a severance package worth millions.
Week after week when big banking and mortgage institutions came out with bad news, I would wonder - ‘Who are these people’. Weren’t they the same grads from Harvard school of economics who were hired by these banks. What kind of investment advice did they provide to prospective clients when they were sitting in their offices?
We took them at face value. We determined they were the experts. Yeah right! These are the very people who are directly responsible for the economic crisis we see now.
The Federal Reserve was also to blame. It stood on the sidelines, although reducing interest rates through much of the decade, but not intervening with any dire warning whatsoever of the impending doom and gloom. And these people are paid big bucks to hold on to their jobs.
Today, everyone is pointing fingers at each other whereas the homeowners do not have fingers long enough to dig them out of their financial woes.
The point of my rambling is to beware of where the herd is moving. Before you join them, look at the horizon and see what is that they are chasing. Look out for that inevitable cliff at the end of the stampede. Or the price you will end up paying will be high indeed. It will be long fall down the hill.
On the other hand, look at what happened to my domain name investments made in 2004-2006. I made a healthy and astounding return of 75k plus for a total investment of 88k. But the most significant aspect of this balance sheet is that my inventory is barely touched. I had to just sell 27 names from my huge portfolio of over 10,000 names to make 75k plus. Try that with home sales and in the market scammed with greed.
I was a real estate licensed agent once. I know the industry. They want to make a living just like in any profession. They follow current trends. They do as told. They are not experts. They do not forecast what is to come.
If you cannot forecast what is to come, you MUST not invest.
Domain names are the new ‘Real Estate’. It is universal. Sure, economic downturn will affect its momentum. But there is no signs of that just yet. Even if this happens, it will be limited to a specific country or region. Those unsold homes sitting in Florida will barely be a good investing prospect for someone from India. But if I own BadmintonIndia.com (which I acquired recently), it is huge. For one, I am here in New York. This name has a geo significance primarily in India and possibly Badminton fans of Indian origin and Indian citizens scattered across the globe.
A recession in The United States will not affect something that cost me $10 and targeted to a country half way across the globe. Grasp what I said. For something that cost me $10, recession or no recession, I will make a profit. The same cannot be said of a piece of land or a structure on it that cost you $300,000 in downtown Miami.
The .ORG version of the domain name is owned by the official Badminton association of India. Instant value. I get visitors to the .COM version of that name everyday without paying for any advertising. Instant value. I own a name which will not fade away in 2 years time in popularity. Long Term Value! Get the idea!
Who decides that my investment is of any value. I DO! The moment you rely on an agent, a broker or any outside agency who just hired a college grad to tell you what your investment is worth, you lost right there. Be the EXPERT. And that takes a lot of work.
I cannot stress enough that it will take more knowledge into buying domain names than buying real estate. #1 reason being, even a condemned real estate will have some inherent value. A bad domain name registration will be just registration fee or worthless even. Your investment will be irrecoverable. You just cannot cram yourself reading a how to book and start investing in domain names. It just won’t happen. But the upside to an educated and knowledgeable domain name investment plan is this. You end up owning a prime, desired part of cyberspace, where people pay occasional or even daily, hourly visits with no work on your part. And your investment grows in value with every passing hour.
Even in my worst financial crisis, I made it a point to cut back on unnecessary expenses and save $1, 10, $30, where I could and buy domain names of value. I spent hours in research and 15 seconds to buy them.
Own assets. But do not follow the herd. Even in my business, I educate myself every passing day. I watch the herd. I may even jog with them for a while to understand what is going on with these folks. But I am also careful to see the distance between the herd and the horizon. Because as picturesque as the horizon may look, that’s where the Cliff is.
If you don’t see the cliff, you are in for a big fall.