I’ve read a post on TheDomains about Dominic, a short domain investor who shared his story on NamePros and first of all, I think he deserves our respect for having the courage it takes to share his numbers in an upfront manner.
In an industry where many adopt a “mine is bigger than yours” (domain sales, of course) mentality, it’s refreshing. Most domainers love talking about their winners all day yet fail to refer to their losers as well. As such, newbies end up mostly reading blog comments or forum posts about successful domain sales. Naturally, they therefore assume making money in the domaining industry is a lot easier than it actually is.
As Dominic pointed out, trading domains (short domains, in his case) is a lot easier when the uptrend is strong, as it was during late 2015 to early 2016. If the uptrend is followed by a downtrend or sideways movement, trading becomes multiple orders of magnitude more difficult or even downright impossible.
Especially after factoring in commissions charged by platforms such as NameJet and Sedo as well as of course escrow fees and payment processing fees.
It reminds me about a post written by someone who initially made and then lost a lot of money trading dot com stocks. He mentioned that at the beginning, he felt like a genius, as if everything he touched turned into gold. He considered himself a brilliant stock picker and his results seemed to confirm that.
What he failed to take into account is that when an entire asset class goes up (be it dot com stocks or short domains), everything everyone touches turns into gold.
The most important lesson, in my opinion, is this: we’re all brilliant traders when the uptrend is strong. I’d highly, highly recommend reading Dominic’s forum thread as well as the post on TheDomains about it.