If not you might be suffering from status quo bias.
Yep, that has occurred to me. Here are my excuses for not doing anything about it. (And yes, I’m aware that these could just be rationalizations for my bias. :)
My main email addresses are on weidai.com. It would take a lot of time to inform everyone and change my registrations on various shopping sites, etc., and I’ll probably still lose a bunch of emails.
Lots of links to my site from other sites, which I can’t change easily or at all. This wouldn’t be the case if I was considering buying weidai.com today.
weidai.com has historically produced very high returns. Selling it and putting the money into index funds might still be an improvement from a portfolio theory perspective, but I don’t think the benefits are that high (given that I already have an otherwise well-diversified investment portfolio).
I do have an emotional attachment to the domain now that I’ve owned it for so many years, so holding onto it could be considered a real preference, not just a bias.
If it is a bias, overcoming it takes effort, which might be more productively directed towards other goals, like writing a LW post about looking for the next tech gold rush, or thinking about meta-philosophy.
It would take a lot of time to inform everyone and change my registrations on various shopping sites, etc., and I’ll probably still lose a bunch of emails.
If they’re willing to pay $100k, they’re willing to forward emails for a few years.
Lots of links to my site from other sites, which I can’t change easily or at all.
Linkrot is high enough on the Internet that in a few years, all the damage will be repaired. You also have few enough pages you may be able to arrange redirects for individual pages. (I’ve read through everything on the site—it’s not that big.)
weidai.com has historically produced very high returns.
No, having a site has historically produced very high returns. Not having the exact domain name. (Unless you mean something like ‘I made a fortune off someone who told me they randomly typed in the exact domain name ‘weidai.com′ and decided to name me in their will’.)
I do have an emotional attachment to the domain now that I’ve owned it for so many years
Can’t argue with this one. On the other hand, I’d be thrilled to sell gwern.net for $100k; money makes an excellent salve for hurt feelings.
If it is a bias, overcoming it takes effort, which might be more productively directed towards other goals, like writing a LW post about looking for the next tech gold rush
How long does it take to sell a domain name and set up shop on weidai.net or whatever? Let’s say 3 or 4 weeks of nonstop work. You really think you are currently producing ~$100k of value with your current lifestyle and work patterns each 4 weeks in which you ignore selling the domain?
No, having a site has historically produced very high returns. Not having the exact domain name.
Huh? I registered the domain for <$10, last year it was worth $50,000, and now it’s worth $100k. How is that not “historically produced very high returns” just from having the exact domain name? Are you thinking of “return” as including just income and not appreciation?
You really think you are currently producing ~$100k of value with your current lifestyle and work patterns each 4 weeks in which you ignore selling the domain?
By not selling the domain, I still own it, and it’s still worth $100k. The effect of selling it is just to increase the diversification of my investment portfolio (i.e., I would no longer have a substantial chunk of my investments in a single asset), which is a good thing since I’m risk averse, but that benefit is certainly not worth $100k.
(Actually, thinking about it more, I’m not sure that selling the domain is actually good for diversification. Domain names are a different asset class from everything else I own, so ideally I ought to have some exposure to it.)
I registered the domain for <$10, last year it was worth $50,000, and now it’s worth $100k.
Oh, you meant the domain name itself as an asset, not the use you were getting out of it. Yes, I suppose it has on paper, but past performance is no guarantee of future returns. There’s no reason to hang onto it. (How much do you know about domain names? Will additional TLD releases by ICANN reduce the value of weidai.com? Or is the reason it’s worth $100k time-sensitive in any way? It seems like a boring domain name, why is it worth $100k anyway?)
The effect of selling it is just to increase the diversification of my investment portfolio (i.e., I would no longer have a substantial chunk of my investments in a single asset), which is a good thing since I’m risk averse, but that benefit is certainly not worth $100k.
You’re taking on a huge amount of uncompensated risk here. Would you put $100k into a single stock? For example, buy a single share of BRK.A? No, of course not, even if that got you exposure to ‘insurance’ or ‘railroads’.
Domain names are a different asset class from everything else I own, so ideally I ought to have some exposure to it.
Unless you’re orders of magnitude wealthier than I think you are, your exposure to an opaque illiquid minor hard-to-price asset like domain names should look more like $10 than $100,000.
past performance is no guarantee of future returns
Technically, past performance is Bayesian information about future returns, which in an efficient market is already reflected in asset prices. The domain name market is not an efficient one though, given that I’m the only person who can even see the history of bids on weidai.com. But my main point was just that the domain produces returns like any other asset, so the financial cost of holding onto it can’t be the whole $100k, which is what you were assuming. I don’t know what the actual cost is. My intuitive estimate is that it’s about $10k, which does not make it worthwhile for me to sell. I don’t know how to do a more exact calculation. Do you?
Unless you’re orders of magnitude wealthier than I think you are, your exposure to an opaque illiquid minor hard-to-price asset like domain names should look more like $10 than $100,000.
“opaque illiquid minor hard-to-price” are arguments against trading in the asset, either buying or selling, since these attributes tend to increase transaction costs. I don’t see how they are arguments for keeping my holdings in the asset class to a low level, if I started off holding a big position.
The domain name market is not an efficient one though, given that I’m the only person who can even see the history of bids on weidai.com.
It may not be particularly efficient, although it’s grown up a lot since the ’90s. But being inefficient is not helpful for you, since you are not an expert on domain names and have no edge. As far as you are concerned, the domain name market is efficient. As I said: do you know how serious the offers are? Do you know why exactly weidai.com may be worth $100k? Do you know whether it’s likely to continue increasing and what the limit is ($200k? $1m? $5m?) for it? Do you know whether additional TLDs would affect it (wei.dai would be a nice domain...) or whether the use for weidai.com would be affected by any increases in adoptions of Unicode or punycode domain names? If you don’t know any of this, how on earth can you sit by and leave up to $100k of your money in such an asset? Such complacency baffles me.
My intuitive estimate is that it’s about $10k, which does not make it worthwhile for me to sell. I don’t know how to do a more exact calculation. Do you?
No, but my intuition (as a person with no sentimental attachment to the domain and not seeking excuses to not sell) is that the risk and opportunity cost are much larger than $10k. You have a bird in the hand, which you’ve never sold, don’t know why it’s valuable, and can easily replace. I would fling that away from myself like it was 2000 and I was holding $100k of Pets.com stock.
“opaque illiquid minor hard-to-price” are arguments against trading in the asset, either buying or selling, since these attributes tend to increase transaction costs. I don’t see how they are arguments for keeping my holdings in the asset class to a low level, if I started off holding a big position.
All those attributes make it a very volatile and risky asset to hold, so by regular portfolio theory, you should be holding very little of that asset and in particular, should be rebalancing away from it now that it’s recently doubled.
Part of it, which perhaps you and most other observers are not aware, is that I have enough passive income, and enough dispassion for conventional status signaling, that my marginal utility of money is pretty low compared to my disutility for doing busywork. To put it in perspective, I quit my last regular job in 2002, and stopped doing consulting for that company as well (at $100/hour) a year later when they merged with Microsoft and told me I had to do a bunch of paperwork and be hired by Microsoft’s “independent consulting company” in order to continue.
The reason for writing this post was that there seems to be opportunities “out there” for earning up to hundreds of millions of dollars (like the opportunity to mine Bitcoin at version 0.1 that I narrowly missed) while doing very little work. In comparison, doing busywork for a month to earn some unknown amount of money between $0 and $100k is not particularly motivating to me at this point.
As I said: do you know how serious the offers are? Do you know why exactly weidai.com may be worth $100k?
I’m not sure what someone who wants to buy a domain name named after its current owner is thinking of doing with it, but I think there’s a non-negligible chance it’d turn out to be something the namesake of the domain name wouldn’t like at all.
I’d be somewhat worried about this if I were selling jefftk.com or something, but “wei” and “dai” without tones could mean many things. I don’t remember much of my Chinese, but looking at a dictionary I see:
Now, not all of these combinations will mean what they look like they might mean, but there are a lot of reasonable things “wei dai” could mean aside from a person’s name.
(It also looks like “wei dai” can mean “grave danger”.)
To expand on this, there are several thousand commonly used Chinese characters, each with different meanings. These map onto about 400 possible syllables (ignoring tone). However not all combinations of two Chinese characters are valid Chinese words. My Chinese input software gives three possibilities when I type in “wei dai”.
未带: not bring
微带: microstrip
危殆: grave danger
However new Chinese words are invented all the time, using combinations of existing Chinese characters. In this case I believe the highest bidders of my domain actually want to use it for 微贷, which means microloan.
But my main point was just that the domain produces returns like any other asset, so the financial cost of holding onto it can’t be the whole $100k, which is what you were assuming.
$100k is the opportunity cost, which is very real. You could be right now re-investing that $100k in some other venture.
I think you may have misunderstood what I was saying. Gwern had asked me, “You really think you are currently producing ~$100k of value with your current lifestyle and work patterns each 4 weeks in which you ignore selling the domain?” And I was trying to point out that by doing 4 weeks of work, I’m not earning $100k, but rather earning the difference in future returns between holding weidai.com and holding some other asset, presumably an index fund, and this difference has to be worth less than 100k in current value unless there’s 100% chance that weidai.com becomes worthless.
Unless you’re orders of magnitude wealthier than I think you are, your exposure to an opaque illiquid minor hard-to-price asset like domain names should look more like $10 than $100,000.
Last I read you said you’d made more money buying bitcoins than you had doing anything else, and you still hadn’t sold any. Has that changed?
Edit: went looking for the comment I remembered reading and didn’t find it, but I did find this comment where you mention advising someone else to diversify out of bitcoins. So that makes me think either a) I misremembered what you said, b) you advised others to diversify, but stayed heavily invested yourself, or c) you had made the claims I remembered, but diversified shortly thereafter. [doesn’t double-tilde do strikethrough?]
Last I read you said you’d made more money buying bitcoins than you had doing anything else, and you still hadn’t sold any. Has that changed?
I have been periodically cashing out small quantities, since you’re right, I’m not comfortable having so much of my net worth in bitcoins. It’s not going very fast, though, since if I sell it all it’ll cause tax problems and I don’t understand taxation at all. (I’m not sure how much I can funnel through Coinbase before I trip various requirements.)
At least all the institutional interest seems to have tamped down on the volatility lately!
Do you have questions that are not answered here? My understanding is that you just pay capital gains. That’s what I did, and the IRS seemed to be happy with my tax return.
Yep, that has occurred to me. Here are my excuses for not doing anything about it. (And yes, I’m aware that these could just be rationalizations for my bias. :)
My main email addresses are on weidai.com. It would take a lot of time to inform everyone and change my registrations on various shopping sites, etc., and I’ll probably still lose a bunch of emails.
Lots of links to my site from other sites, which I can’t change easily or at all. This wouldn’t be the case if I was considering buying weidai.com today.
weidai.com has historically produced very high returns. Selling it and putting the money into index funds might still be an improvement from a portfolio theory perspective, but I don’t think the benefits are that high (given that I already have an otherwise well-diversified investment portfolio).
I do have an emotional attachment to the domain now that I’ve owned it for so many years, so holding onto it could be considered a real preference, not just a bias.
If it is a bias, overcoming it takes effort, which might be more productively directed towards other goals, like writing a LW post about looking for the next tech gold rush, or thinking about meta-philosophy.
If they’re willing to pay $100k, they’re willing to forward emails for a few years.
Linkrot is high enough on the Internet that in a few years, all the damage will be repaired. You also have few enough pages you may be able to arrange redirects for individual pages. (I’ve read through everything on the site—it’s not that big.)
No, having a site has historically produced very high returns. Not having the exact domain name. (Unless you mean something like ‘I made a fortune off someone who told me they randomly typed in the exact domain name ‘weidai.com′ and decided to name me in their will’.)
Can’t argue with this one. On the other hand, I’d be thrilled to sell
gwern.netfor $100k; money makes an excellent salve for hurt feelings.How long does it take to sell a domain name and set up shop on
weidai.netor whatever? Let’s say 3 or 4 weeks of nonstop work. You really think you are currently producing ~$100k of value with your current lifestyle and work patterns each 4 weeks in which you ignore selling the domain?Huh? I registered the domain for <$10, last year it was worth $50,000, and now it’s worth $100k. How is that not “historically produced very high returns” just from having the exact domain name? Are you thinking of “return” as including just income and not appreciation?
By not selling the domain, I still own it, and it’s still worth $100k. The effect of selling it is just to increase the diversification of my investment portfolio (i.e., I would no longer have a substantial chunk of my investments in a single asset), which is a good thing since I’m risk averse, but that benefit is certainly not worth $100k.
(Actually, thinking about it more, I’m not sure that selling the domain is actually good for diversification. Domain names are a different asset class from everything else I own, so ideally I ought to have some exposure to it.)
Oh, you meant the domain name itself as an asset, not the use you were getting out of it. Yes, I suppose it has on paper, but past performance is no guarantee of future returns. There’s no reason to hang onto it. (How much do you know about domain names? Will additional TLD releases by ICANN reduce the value of weidai.com? Or is the reason it’s worth $100k time-sensitive in any way? It seems like a boring domain name, why is it worth $100k anyway?)
You’re taking on a huge amount of uncompensated risk here. Would you put $100k into a single stock? For example, buy a single share of BRK.A? No, of course not, even if that got you exposure to ‘insurance’ or ‘railroads’.
Unless you’re orders of magnitude wealthier than I think you are, your exposure to an opaque illiquid minor hard-to-price asset like domain names should look more like $10 than $100,000.
Technically, past performance is Bayesian information about future returns, which in an efficient market is already reflected in asset prices. The domain name market is not an efficient one though, given that I’m the only person who can even see the history of bids on weidai.com. But my main point was just that the domain produces returns like any other asset, so the financial cost of holding onto it can’t be the whole $100k, which is what you were assuming. I don’t know what the actual cost is. My intuitive estimate is that it’s about $10k, which does not make it worthwhile for me to sell. I don’t know how to do a more exact calculation. Do you?
“opaque illiquid minor hard-to-price” are arguments against trading in the asset, either buying or selling, since these attributes tend to increase transaction costs. I don’t see how they are arguments for keeping my holdings in the asset class to a low level, if I started off holding a big position.
It may not be particularly efficient, although it’s grown up a lot since the ’90s. But being inefficient is not helpful for you, since you are not an expert on domain names and have no edge. As far as you are concerned, the domain name market is efficient. As I said: do you know how serious the offers are? Do you know why exactly weidai.com may be worth $100k? Do you know whether it’s likely to continue increasing and what the limit is ($200k? $1m? $5m?) for it? Do you know whether additional TLDs would affect it (
wei.daiwould be a nice domain...) or whether the use for weidai.com would be affected by any increases in adoptions of Unicode or punycode domain names? If you don’t know any of this, how on earth can you sit by and leave up to $100k of your money in such an asset? Such complacency baffles me.No, but my intuition (as a person with no sentimental attachment to the domain and not seeking excuses to not sell) is that the risk and opportunity cost are much larger than $10k. You have a bird in the hand, which you’ve never sold, don’t know why it’s valuable, and can easily replace. I would fling that away from myself like it was 2000 and I was holding $100k of Pets.com stock.
All those attributes make it a very volatile and risky asset to hold, so by regular portfolio theory, you should be holding very little of that asset and in particular, should be rebalancing away from it now that it’s recently doubled.
Part of it, which perhaps you and most other observers are not aware, is that I have enough passive income, and enough dispassion for conventional status signaling, that my marginal utility of money is pretty low compared to my disutility for doing busywork. To put it in perspective, I quit my last regular job in 2002, and stopped doing consulting for that company as well (at $100/hour) a year later when they merged with Microsoft and told me I had to do a bunch of paperwork and be hired by Microsoft’s “independent consulting company” in order to continue.
The reason for writing this post was that there seems to be opportunities “out there” for earning up to hundreds of millions of dollars (like the opportunity to mine Bitcoin at version 0.1 that I narrowly missed) while doing very little work. In comparison, doing busywork for a month to earn some unknown amount of money between $0 and $100k is not particularly motivating to me at this point.
You could probably spend a fraction of the $100k to hire someone to do all the busywork for you, couldn’t you?
I’m not sure what someone who wants to buy a domain name named after its current owner is thinking of doing with it, but I think there’s a non-negligible chance it’d turn out to be something the namesake of the domain name wouldn’t like at all.
‘Wei Dai’ is not that rare a name; there could easily be some Chinese businessmen or something who want the name for branding purposes.
I’d be somewhat worried about this if I were selling jefftk.com or something, but “wei” and “dai” without tones could mean many things. I don’t remember much of my Chinese, but looking at a dictionary I see:
Now, not all of these combinations will mean what they look like they might mean, but there are a lot of reasonable things “wei dai” could mean aside from a person’s name.
(It also looks like “wei dai” can mean “grave danger”.)
To expand on this, there are several thousand commonly used Chinese characters, each with different meanings. These map onto about 400 possible syllables (ignoring tone). However not all combinations of two Chinese characters are valid Chinese words. My Chinese input software gives three possibilities when I type in “wei dai”.
未带: not bring
微带: microstrip
危殆: grave danger
However new Chinese words are invented all the time, using combinations of existing Chinese characters. In this case I believe the highest bidders of my domain actually want to use it for 微贷, which means microloan.
$100k is the opportunity cost, which is very real. You could be right now re-investing that $100k in some other venture.
I think you may have misunderstood what I was saying. Gwern had asked me, “You really think you are currently producing ~$100k of value with your current lifestyle and work patterns each 4 weeks in which you ignore selling the domain?” And I was trying to point out that by doing 4 weeks of work, I’m not earning $100k, but rather earning the difference in future returns between holding weidai.com and holding some other asset, presumably an index fund, and this difference has to be worth less than 100k in current value unless there’s 100% chance that weidai.com becomes worthless.
I just want to point out that you did start this thread to get decent financial advice, and in my opinion you are getting one now.
Last I read you said you’d made more money buying bitcoins than you had doing anything else, and you still hadn’t sold any. Has that changed?
Edit: went looking for the comment I remembered reading and didn’t find it, but I did find this comment where you mention advising someone else to diversify out of bitcoins. So that makes me think either a) I misremembered what you said, b) you advised others to diversify, but stayed heavily invested yourself, or c) you had made the claims I remembered, but diversified shortly thereafter. [doesn’t double-tilde do strikethrough?]
Edit2: Found it.
I have been periodically cashing out small quantities, since you’re right, I’m not comfortable having so much of my net worth in bitcoins. It’s not going very fast, though, since if I sell it all it’ll cause tax problems and I don’t understand taxation at all. (I’m not sure how much I can funnel through Coinbase before I trip various requirements.)
At least all the institutional interest seems to have tamped down on the volatility lately!
Do you have questions that are not answered here? My understanding is that you just pay capital gains. That’s what I did, and the IRS seemed to be happy with my tax return.
You’ve convinced me :)