Domain Name Investment: Specialization vs Diversification

In domain name investment, should you focus on a few types of domain names to become an expert, or is it wiser to make diversified investments? Both have their advantages and disadvantages, and need to be weighed according to specific circumstances.

1. Specialized investment

Advantages:

1. Expertise: Focusing on a certain type of domain name can provide in-depth understanding of the field, master pricing strategies, identify potential buyers and sales opportunities.

2. Gaining advantages: Ability to acquire domain names more efficiently and understand appropriate wholesale prices.

3. Time efficiency: Reduce research and pricing time and improve overall efficiency.

4. Establish connections: In-depth understanding of the industry and its leaders, and establish connections that help sales.

Disadvantages:

1. Risk concentration: If there is a sudden negative change in the field, it may result in significant losses.

2. High volatility: Market fluctuations may result in unstable returns.

2. Diversified investment

Advantages:

1. Risk dispersion: Different types of domain names can complement each other and reduce the risk of a single field.

2. Seize the trend: You can invest in some emerging trend domain names without increasing the overall risk.

3. More opportunities: Being open to multiple types of domain names can take advantage of various investment opportunities.

4. Learning opportunities: Handling multiple types of domain names helps to improve investment skills overall.

5. Interesting: Diversified investments may make work more interesting.

Disadvantages:

1. Time cost: Handling domain names of different types and industries may require more time and energy.

2. Complex management: It is necessary to manage and study information and dynamics in different fields.

Diversified Portfolio Construction

According to NameBio, the recommended portfolio allocation, measured by dollar volume over the past 24 months, is as follows:

- .com: 77.5%

- .net: 1.9%

- .org: 5.9%

- .ai: 3.5%

- .io: 1.6%

- .co: 0.8%

- Other country codes: 5.2%

- .xyz: 1.3%

- Other new extensions: 2.1%

In a portfolio of 1,000 domains, the approximate allocation would be as follows:

- 775 .com

- 59 .org

- 35 .ai

- 19 .net

- 16 .io

- 13 .xyz

- 8 .co

- 21 new extensions

- 52 other country codes

- 2 other extensions (like .info or .biz)

Diversification is not limited to extensions

Diversified investment is not just about allocating by extension, but also about domain name type and industry. For example:

-Domain name type: single and double word names, brand names, numbers, alphanumerics, etc.

-Industries: Fintech, SaaS, space, environment, health, fashion, travel, artificial intelligence, games, gambling, cryptocurrency, art, education, services, retail, real estate, etc.

Domain Matrix

To demonstrate the possible domain name types, a 7x7 domain matrix is shown here. It should be clear that this is just a reference list to help investors find new niches.

The matrix shows some domain name extensions and types that can be invested in. In some cases, a domain name sale can belong to multiple categories. Although it is not necessary to cover all areas, the matrix can be used as a reference for investors to diversify their investments.

Conclusion

In domain name investment, specialization and diversification each have their advantages. Specialized investment can gain in-depth understanding of a certain field, improve efficiency and returns, but there is also concentration risk. Diversified investment can spread risks and seize more opportunities, but it requires more time and energy to manage. Investors should weigh the pros and cons and develop an investment strategy that suits them based on their own circumstances.