exactly
The people (I assume, if not, then this is what I believe) you are referring to our people trying to get into the domain biz; not end users. Artificial demand.. which is the problem I am trying to bring to light.
To speculate in something like short domains, you have to think of the following;
Let's use a prime 3 letter.com; WGM.com $10,500 1/10/2006 SnapNames
What are the odds that you sell the domain to an end user;
1%-5%; with 5% being an extremely extremely generous percent
What will you sell it for;
$25,000 max I would think; most big companies that would pay more have already bought their names. MTV.com, BBC.com, etc.
so: Would anyone in their right mind pay $10,500 with a 5% chance of making $15,000 off of their investment?
And to make this little experiment sound, we would need to take out the possibility that one could sell the domain on any domain reseller market, as that itself is fuelled by this artificial demand.
so 95% of losing $10,500 and 5% chance of you making $15,000.
A more realistic market value (but still inflated) for prime 3 letter.com's like WGM.com would be 5k; because you are more likely to find a buyer at 10k; 15k; 20k; and 25k; and then the odd chance of it selling for more than 25k
so let's say 10%-25% chance of selling to an end user for more than 10k; 25% chance of selling for $5k profit; and then whatever the odds are of selling for more.
Realistically the Market Value for a 3 letter.com to be a sound investment would be 3kish give or take (based on assumptions and perceived end user sales).
But we have a limited amount of buyers, and tons of people wanting to get into buying specifically short domains (and traffic domains), as they have a formulaic value (as opposed to a brandable name, whose value depends on the buyer). One buyer says, I want to invest in the market at Current Market Value hoping to sell for a profit. He buys the prime 3 letter.com for 3k; Another buyer comes along, the seller prices it at 4.5k thinking that's enough for him to sell; The cycle continues as there are just so many domain buyers. But what people have to realize is that the end user's are not interested in what you paid for the name. They will buy it if it is worth it to them, if not, they won't. To be honest, the appeal for most company's owning their acronym is probably a lot less than we'd hope for. The buyers that would pay anything for their acronym's cbs, abc, bbc, cnn are non-existant or highly unlikely to knock on your door.
I have owned a ton of 3 letter.com's, 4 letter.com's, a 2 number.org', a few hundred 3 number.org's, a slew of 3 char.com's, and those 2 number.ca's I guess are worth mentioning
and have only made sales to end users on about 3 4 letter.com's selling them for around $200-$400.
Hopefully this bring's some insight...
Good Luck to all.
- Jordan