One investor asks,”4L CHIPS: Wasn’t it the best example of pump and dump?

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In 2015 the emergence of so called ugly 4L.com names started their rise. People started posting wanted threads on Namepros, “Looking for 4L.coms no a,e,i,o,u,v.”

The prices started to pick up pretty rapidly, I owned two 4L.coms and the first one I auctioned on Namepros and it sold for $335. I auctioned the other on NameJet a couple months later and that sold for $1,500.

Prices continued to pick up and a ton of interest was laser focused on the niche. Tim Schoon a domain investor and owner of PEJ.com Private Equity and Brokerage, coined the phrase “Chips.”

Frank Schilling told Domain Sherpa he sold 2,000 4L CHIPS for 3 Million dollars.

The price of Chips in 2017 are nowhere near where near they were in early 2016.

You can use Namebio and put in PPPP to hone in on just Chips and see the trends.

Recent 4L Chip sales

Looking back at 2015

So now a thread emerged on Namepros asking if 4L Chips were the best example of a Pump and Dump?

We are all now familiar with the term “PUMP and DUMP” which we daily see in crypto currency markets.

Looking backwards into the time of Chinese premium and 4L domain names reaching $2,500 and then coming back to the floor, don’t you think it was the perfect example of pump and dump?

Pumping the price continuously higher and higher and when a peak was attained, dumping it slowing back to the floor price.

My answer would be that’s too simplistic, it was much more complicated than that and things were not orchestrated on a grand scale, there was separate thought processes taking place all over the place.

There were plenty of small domainers who never made much in domaining that all of a sudden woke up to major profit. The demand coming from China and those looking to get rich quick created a bubble. Everyone likes to pick where they told everyone to stay away. Truth is some people who brag about “I knew it was hype” or “I said run for the hills” started saying that at $50 and then $500, eventually they were right to a certain degree, but if the small timers had listened to them at $100 – $300 they missed out on making a fortune.

In November of 2015 I wrote an article, There will always be someone holding the bag. People always want to get rich quick and get caught up in a speculation that’s getting frothy.

It has been a very eventful 2+ years in that niche but a LOT of people made a lot of money, and they weren’t just the biggest players. It’s been very interesting times.

About Raymond Hackney

Raymond is a writer, domain trader and consultant based in Pennsylvania. Raymond is the founder of 3Character.com and TLDInvestors.com.

Comments

  1. Joseph Peterson says

    People made money, yes. They made the money that other people lost. Wallets just moved from pocket to pocket. Those who sold on the way up from $1000 to $3000 accepted money from buyers who have now realized a commensurate loss on the way down from $3000 to $1000.

    Some new money was injected into the industry. That’s reflected in the steady-state jump from old floor prices to today’s much higher floor prices. But there has been a fairly steady deflation too.

    Let’s not gloss over what happened. People explained what was going on. People made predictions. Some people were dead wrong. Some people were spot on. Generally speaking, the critics were smeared and attacked constantly. But in the Fall of 2015, if you read what was written online and listened to the right people, you knew exactly what was going to happen in 2016 and 2017. These weren’t vague predictions, covering all bases. Some of us stuck our necks out, pointing to the down turn that was right around the corner, saying that it was right around the corner and explaining why. It’s all part of the record now, though domainers seldom pay attention to the past.

    • Raymond Hackney says

      Right Joseph but if the little domainer listened to the “critics” in 2015 they missed out on making a lot of money, if I own something at $50 and sell for $2,500 to be honest I don’t care if they go back down to $1,000. It’s about timing and risk management. Some critics started yelling sell at $50 not $1,500.

      • Joseph Peterson says

        As long as people know what they’re getting into when they ante up at the poker table. Everybody puts money in. Somebody walks away with the pot. It wasn’t entirely luck, since many domainers knew how to play the game.

        But it was a zero-sum game. Not to be confused with investment in a project (like stock) or a supply chain from wholesale to retail to end user (like the usage-based domain market).

      • Konstantinos Zournas says

        It was obvious to me that something that was worth $200 and then $2,000 it was not going to last.
        I bought at $70 long before any of this and sold at $2,200 a couple of months before the collapse. I never buy on the way up. The collapse came a few weeks after namescon.
        Yes, it was a pump and dump but mostly not controlled by the old domainers but from the Chinese.

    • Jonathan says

      True. “seldom pay attention to the past`”
      What we believe determines what we take to be trues, pass the snake oil to the chap buying the lottery ticket.

    • Mark Thorpe says

      Yes, there is a lot of pump and dump in the crypto-currency markets, daily. But some ex-domainers still have their blinders on, but instead of having them on for CHIPs, they now have them on for ICO’s and crypto-currency.

  3. VR says

    It was not a pump and dump like a penny stock deal, it was speculation, those Chinese investors wanted those domain names. Sour grapes for those who lost and you are right the critics just kept adjusting their timeframe. I owned four letter chips from 2006 that I sold for a fortune in 2016, guys on np were saying to sell at 1/10 those prices. So they can suck it.

  4. DomainNameBroker.com says

    We do not think it was a pump and dump scheme, but we may be mistaken.
    We think the domain name market is hard to manipulate and not lucrative enough to manipulate.
    This is our opinion.

  5. Samit says

    The point is, even if it was a pump and dump, it did raise the ‘floor’ prices significantly. The floor price on a chip today is, let’s say, $888 😉 – it was $10 before the pump. Even other random 4Ls floor is $200 today, you could pick up a lot of 10 for $200 in 2014!!

    Even today you can get a decent pronounceable 4L.com for $250, imho that’s still a buying opportunity basically because of the potential upside, I’m guessing those buying chips at $900+ even today have similar opportunities that we might not have access to.

    Similarly, I believe cryptos and icos are a scam, a lot of money will go into hands of the less than ethical types, but a lot of people will make money too. Ask someone who bought btc in Jan 2016 – he / she probably paid $550, it’s 10x today, in 18 months, not bad ROI. Would I invest in them today? Probably not, haven’t in the past either, because in my opinion currency is meant to be spent, it’s not a store of value as the ‘hodl’ crowd claims it is.

  6. John M says

    We own one LLLL.com and it’s Wkii.com obviously a play on “wiki” with over a billion search results but if you look back all you have to know is that Rick Schwartz was selling not buying in the later part of 2015 and in a BIG way. It’s really no difference than a stock market bubble. If there were a ” money flow index”or a “death cross” indicator for domains as there is in stocks it could have easily been spotted. That’s why at least for now we only own one. Great article Raymond-thank you for posting .

  8. Will says

    I remember watching the DomainSherpa show during the time of the Chinese buyers inflating the market and I remember Frank Schilling talking about that huge portfolio sale and suggesting to viewers to sell as well and take advantage. I am pretty sure they had an idea that the market was not always going to be like that since they have been around so long.

    The key is being able to recognize an opportunity and being able to be on the right side of the spectrum. I want to be the person that has the supply and makes profit from the surge in the demand. I do wonder if we will ever have another Chinese inflation and that type of market again.

    – Will

    • Joseph Peterson says

      Yeah. Wasn’t that the interview where Frank Schilling started the spreading the rumor that China has more millionaires that the USA has citizens? Pure nonsense, of course. But in January at NamesCon, even after the bubble was punctured, domainers were coming up to me repeating that myth about China.