The Tax Man Cometh and Taketh Business With it!?

Morning Folks!!


If you have been reading my posts in 2008-2009 you would have read the discussion about tax time 2011 and 2012 as being the depths of this recession. The big squeeze is on. Folks are financially weaker than ever and the pinch is coming at the same time. For some, this is the last nail in the coffin. They will not survive April 15th. The money is due and many just won't have it. This sets up a problem that may not actually manifest itself for another year or two.


The dollar is worth less than ever at the same time there is a shortage in dollars and prices are skyrocketing. Food, gas, clothing all going up significantly and that just adds to a squeeze that is already dangerously tight.


There is a lot of activity but that may not translate into a lot of success. For some, this will be the last gasp.


Closer to the domain industry payouts are rock bottom and each day more premium domains are being pulled from PPC to try new things. Small businesses are struggling to keep afloat. Their biggest hope are the corporate giants with giant reserve of dollars that are becoming worth less each day.


I never thought that I would want to trim my 'Exposure' with cash holdings but that is exactly what I have been doing for the past 2 years. Buying whatever I can that I think can hold value. Gold, silver, collectibles, classic cars, property, domains and anything that will hedge against the dollar. Diversifying ASAP.


Remember one thing. Gold was at $500 when Steve Forbes came to TRAFFIC just 4 years ago. Today about $1500. That is your dollar eroding away. That is your buying power being washed away.


Gold could retreat to $1000 and lower. But I don't care if I have a loss like that because what I am protecting against would see gold at $15,000 an ounce. Inflation is coming and it will be like something we have never seen before in the USA. Inflation is the ONLY thing that can payoff the debt.


Meanwhile I sit here and rack my brains out each day thinking about this or that. The silver lining is I see PREMIUM domain names as still being the only thing SAFER than gold and it can be income producing which gold can't do. The #1 investment I see is STILL premium domain names. I STILL hand register domains everyday because the world evolves every day. Most won't pan out. But it only takes patience and ONE to pay for THOUSANDS. That is the simple formula.


The good thing about April 16th is folks know where they are financially and can then plan from there. That translates into a bump for business and businesses able to make Capital investments as they also have a clear road ahead.


I expect many high profile domain deals between now and the end of the year. I think domain names may finally be entering a new phase. I see more and more stories about domain names in the media. Just this week it was Trump making news with his new domain. This is going to become more and more common place. Imagine the evening news starting with who bought what domain? It's coming!


Have a GREAT Day!

Rick Schwartz




22 thoughts on “The Tax Man Cometh and Taketh Business With it!?

  1. David Williams

    The USD certainly seems to be in trouble and won’t be helped by the current standoff in negotiations between Democrats & Republicans. Doesn’t help me since I’m Australian and 1 USD now equals less than 1 AUD (and seems to keep getting worse all the time). However instead of cashing out profit from sales I am reinvesting into profit generating things such as premium domain names, website development, etc. Similar to your thoughts which I agree with. The USD is very fragile and volatile at the moment and not something that I’d like to have a whole lot of.

    Reply
  2. Bob Fontaine

    With all due respect, anyone who has more USD thatn they would like to have, can send them along to me. I can still buy domains for under $10 each with those USD.

    Reply
  3. Kevin

    Agree 100% that the value of the dollar will continue to collapse and gold will be heading to $2k and beyond. I think it will end up hovering in the $2k to $3k range for most of this current decade. Silver coins are also a good investment right now.
    The domain market has picked up a bit this month. There’s lots of cash out there looking for bargain deals and a flood of eager sellers. Most domain investors are still pruning the domains they’ll never do much with from their portfolios.
    Domains that have solid website / ecommerce potential are drawing a lot of interest. Also GEO’s and locals.

    Reply
  4. LS Morgan

    Bubble brewing in metals, but I’m wondering how early is too early…
    Smart people started calling the bubble in RE in 2003… Lyndon LaRouche has been calling the bubble in the derivitaves casino that’s been getting pumped up since the 80’s, that only now is starting to get recognition outside academic circles.
    There are about a billion interrelated things going on, any one of which could spike this bubble, or pump it up even further. I’m getting a bit short on COPX, GLD and SLV right now but prepared to throw on the brakes fast.

    Reply
  5. robsequin@gmail.com

    The nice benefits of owning premium domains:
    1. Low carrying cost – $8 year renewal and you don’t have to paint it or feed it.
    2. There really is no”value” to it so the government can’t assess a value to domains so that means they can’t tax it.
    3. You can take it with you – You don’t have to declare that you have domain names in your suitcase when you travel abroad :-)
    4. Good domains make people contact you with opportunities… sales, business development, marketing etc.
    5. Inflation is good for domain names. If everything is more expensive then so are your domains.
    6. A bad economy makes people stay home more either because they are out of work or not going out to eat or on vacation as much. That means more people online and that’s always good for domains.
    The downside to owning quality domains.
    1. They cost $8 a year to own.
    2. ?

    Reply
  6. Rob Sequin

    On a separate note, I have about 3000 domains. I have maybe 5 that are parked.
    I have about 40 developed websites with adsense and/or direct advertisers focused on a large Caribbean country (any guesses?) and about 2500 point to the most relevant website.
    Most of the other 500 domains point to an Afternic sales page with a buy it now price.
    That’s my domain business model for 2011.

    Reply
  7. BullShitWebsites

    That why they come to my BullS site and learn that it is best not to spend and not waste time on the internet!!!
    If they got no money, however good your site is, there is no value.
    ***************************************************
    6. A bad economy makes people stay home more either because they are out of work or not going out to eat or on vacation as much. That means more people online and that’s always good for domains.

    Reply
  8. Eddie Morales

    If I had 2500 domains from the largest Caribbean country I would have their leaders kill so that my domains would get real value.
    Cheers..

    Reply
  9. Bill Roy

    Being in the UK things are slightly different here – though I think the point about tax must be ‘generally’ universal. The fall in the dollar does of course affect all domainers and especially those non-US domainers who ‘may’ find renewal fees slightly less than anticipated. However on the horizon we in the UK have our own problems with the potential trouble of having to help out Spain (and possibly Italy) should they go the route of Greece, Ireland and Portugal!
    My own 2011-12 plan is simple and is based on three pillars:
    1) Concentrate on my circa 1,150 US geo-domain portfolio and their development, for although the earnings may be worth less in GBP’s because of the dollar decline the potential is still tremendous.
    2) Slowly build my small portfolio of ‘quirky’ hacked domains such as ‘Fig.ht’ and ‘JesusChri.st’ – but they must have an obvious target market (a very good long term investment in my opinion).
    3) Hand register new names as and when something appears that could take off in the future (Rick is absolutely correct here as the world keeps evolving so will the desire/need for new domains).
    Not being in the position to worry about obtaining precious metals or other commodities I am fortunate in not having to deal with that end of the marketplace (though it does of course still affect me as it does everyone else). With the Chinese economy still expected to obtain 4+% growth this year perhaps they will still be looking acquisitions, and with their investments in Africa they are already well placed to ‘ride the wave’ in precious metals and other raw materials. I therefore think that it will be less than surprising to find many premium domains this year and next changing hands into Chinese ownership. (Hell, even the computer I am writing this post on is a Lenovo!)

    Reply
  10. Dave Wrixon

    One of the perhaps the few things that Rick and I agree on.
    Hyperinflation is inevitable. Too many dollars have been printed, too little real wealth has been created (Note the financial and legal, and even retail industries do not create any wealth per se but cost an awful lot to run) and the interest rates can not be increased significantly without bankrupting the Federal Government. If the US Government was not in such chronic debt, then interest rates would be rising to prevent run away inflation and that in turn would protect the value of the Dollar which would further protect the US Government. Because Government has wasted far too much money, much of it on wars it cannot win, none of that can happen. If interest rates go up then Gold crashes. If interest rates cannot go up and the value of the Dollar continues to crash, then Gold is a one way street. But Gold is not such a fantastic investment really, the real answer would be to get your hard earned cash the fuck out of the US economy, and particularly fixed return dollar investments. Anyone buying Treasury Bonds must have a hole in the head you can drive a truck through.

    Reply
  11. Dave Wrixon

    Chinese growth will be at least 8% this year and probably near 10%. If you also take into account the growth in the underlying value of their currency that could be more like 20%.
    Did it ever occur to any of you that name that have a relevance in their own market might actually be more attractive to Chinese Investors?

    Reply
  12. Bill Davies

    I think it is ridiculous that so many economists and politicians are pontificating about this economic crisis when Rick has nailed it. Global thinkers (i.e. people not tasked with getting re-elected or saving their jobs) understand that the ONLY way to pay off the debt is through inflation. That’s why, like Rick, I am clinging on to anything I can buy that will retain value and have determined the bast answer is domains.
    The real reason there is no credit available in this country is because serious credit (like mortgages) generally has a flat interest rate. When rates are 31% and inflation is rampant, and your 4.875% mortgage is sitting secure, you will be able to pay off your mortgage with the change in your sofa cushions. THAT is where the rubber will hit the pavement in the banking crisis and the bank shareholders will get hurt the worst. The banks see this coming, so they will not loan money when they know it will result in a long term loss.
    All of this leads to domains being the best investment. Electronic real estate has the lowest”property tax” (around $10/year, unless you like paying $34.99 + extra to forward your domain) available. The asset has hidden, non-taxable value. The secondary market is becoming more liquid by the year. There are no building restrictions – you can build a single family home (stand alone site), a coffee shop (social network site), an apartment complex (like blogs with subdomains) or a shopping center of any size (e-commerce). Every parcel of land can be used for virtually any purpose and every computer in America has several built in GPS systems (search engines) to get visitors to your site. How amazing is that? You get all of that for $10/year for an asset that will increase in value as inflation hits. How amazing is that?
    The key for us long-term investors will be to get to have the first $xxx,xxx excluded from capital gains when we sell off our portfolios and use the money to retire – just like the homestead exclusion. If we could do that, we’d be in great shape.
    If the governments devalue the currency in order to betray all creditors, you politely call this procedure “inflation.” – George Bernard Shaw

    Reply
  13. Davenport Wrixon

    Bill. You might be right. The Eulro mortgage is right around the corner, .but beware Eastern Europe got burnt on that one.

    Reply
  14. Bill Roy

    Dave Wrixon, your assessment of Chinese growth is correct, sorry I should have said 7% not 4% as in my above post (I had my 2 year old grandaughter lecturing me on why I should read her another story at the time! :) ) Oh, and I always knock off 1% from projected targets.
    It should be noted by just about everyone by now that the Chinese are basically acquiring worldwide assets, and I do not think domains will have missed their attention, just think of the subliminal advertising and marketing that could be carried out – both economically and politically by utilizing the internets favorite addresses.

    Reply
  15. Josh

    Been in gold and silver since late 2007. The dollar is dead. China, Russia, and parts of the middle east have already prepared for it. Gold will eventually go to a meaningless dollar number as the dollar becomes meaningless.

    Reply
  16. ScottM

    The Chinese cannot afford to let the Dollar slip too much. If the Dollar tanks China’s manufacturing economy effectively shuts down and they no longer have cash to feed and keep a billion pissed-off folks from protesting like in Egypt. If the Dollar becomes worthless then Wal-Mart and all other U.S. and other importers will cancel orders and stop buying Chinese-made merchandise — that’s about 90% of what is in a Wal-Mart store and and about 99% of what’s in a Best Buy. May China also live in interesting times.

    Reply
  17. domain guy

    long before any hyperinflation hits the market the price of treasuries will fall…this will be your signal to move to a different asset class.oil,currencies,commodities,etc.
    as for the prospect of hyperinflation has been absent for the last 25 yrs.the fed will raise the cost of the funds the prime rate so high it will choke off any inflation.it was 21% with carter in office..so any prediction of hyperinflation is out the window.
    as the worlds largest market the dollar will be the standard. as for the chinese their dollar is set artficially low.
    as the fed raises interest rates 10% 15% 20% the cost of funds
    nobody will borrow a dollar and no type of alternative asset will be in demand.i saw it, i lived through it, and all this talk is out to lunch.the federal gov owns all types of assets ,land,oil, gold,
    working interests in mines..etc…the gov will use the fed funds to
    keep all alternate values of assets in check for the govs own interest.

    Reply

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