Ok, I know we are not officially in a recession.
A recession is defined technically as a decline in the Gross Domestic Product (GDP) for two or more consecutive quarters.
We do not have that.
Yet
However there is no doubt that the overall economy is in trouble.
And (as they said in the show the Music Man) that’s with a capital “T”.
Citibank wrote down 18 Billion dollars related to mortgage investments and announced that they lost 10 Billion dollars in the 4th quarter.
Citibank also cut it’s divided by 40% and cut 4,200 jobs.
Retail sales figures released yesterday, showed the worst results in six months and a drop in the busy holiday shopping season.
The National Retail Federation announced yesterday that it expected retail sales for 2008, to grow only 3.5% which would be the worst in 6 years.
The Labor Department said that Wholesale inflation shot up in 2007 by 6.3 percent, the largest amount in 26 years. The consumer price index rose 0.3% in December. The core CPI, which excludes volatile food and energy prices, advanced 0.2%. Consumer prices soared at their fastest rate in almost two decades last year, rising 4.1% from a year earlier.
The Unemployment rate, which was announced last week, hit 5 percent in December which was the worst one month increase in unemployment since October 2001, after 9/11.
The Federal Reserve, announced today that it auctioned $30 billion in funds to commercial banks at an interest rate of 3.95 percent, the lowest rate produced by of any of the three similar auctions it has held.
Monday the euro hit a new high against the dollar at $1.49 and gold traded at $900.
So the question is how is the economy going to affect the domain industry???
Google Inc. stock sold Tuesday morning after a Soleil Securities, a Wall Street firm, lowered price estimates citing slow December growth in site visits, among other factors.
Earnings estimates for the fourth-quarter 2007 to was lowered to $4.40 per share from $4.72 per share, and for all of 2007 to $15.54 per share from $15.87 per share.
Google stock is down around 60 points in January.
Could all this bad economic news actually help domain valuation?
At the same time all this extremely bad economic news came out, as reported here, Oak Hill Partners announced it was investing 150 Million into Oversee.net, one of the few giants of the domain industry.
The question is where do you invest your money?
Real Estate has a long way to go before hitting bottom.
Investing in mortgages is a horrible idea.
The stock market is looking very bearish.
Interest rates are low and going to get lower.
Domain names continue to rise in value and are still one of the only investments that generate annual income while appreciating.
Maybe that is why on the day of awful economic news; Oak Hill was a buyer of domains.
As long as corporate America is content they have no reason to change. Now they have reason. As the economy gets worse the internet and domain names will have a better audience willing to take chances and spend more on its brighter future.
I see 2 risks with domains in 2008. NO liquidity, which is magnified in a bad economy and p p c income seems to still be droping
Tim
I don’t see domains as having “NO liquidity”
We are still selling to retail customers, the adult domain auction the other night did over 1.2 million, and domains at namejet.com seem to have very active bidding and impressive totals.
We will see how snapnames live auction goes next week and TRAFFIC auciton in Feb.
Check out the reported sale of IReport.com being reported. CNN paid $750K for it.
maybe my no liquidity was much … By liquid I mean if someone that had say 1000 names …what percentage could they sell if they needed ccash in 30 days
Tim
I have personally seen companies like Marchex and Buydomains.com liquidate all of their adult and gambling names in a couple of weeks.
We certainly buy Portfolio’s as do companies like oversee.net.
It always comes down to quality. If you have qualty .com’s, that mean something, or a portfolios of names that have PPC earnings you can sell quickly.
Of course your not going to get retail prices and you not going to get top dollar that way, just like any other asset you have to sell quickly.
There are also plenty of auctions, 3 TRAFFIC shows, DomainFest, snapnames daily auctions that you can submit names to, sedo.com afternic.com, and there is always ebay.
If you have a bunch of crap, non-com’s, trademarks, and names that have no PPC revenue, it’s much harder.