If I believed electric vehicles where about to take over the majority of auto sales
Investing in a motor company that only produces gasoline engines would be a malinvestment.
Knowingly allocating funds to a lost cause is negligent and irresponsible. Making investments that benefit people, the environment and society as a whole would be a much better way to proceed.
One malinvestment project in the United Kingdom which resulted in a whopping overspend and cost to the UK taxpayer is the Defence Information Infrastructure project.
Original cost projection £2.3 billion rose to £7.1 billion. A report by MPs knew that the project would rise and cost at least £5.8 billion but poor management and insufficient research further increased the costs to £7.1 billion and a delay of over 18 months.
I watched a documentary about a company called Theranos. Basically it was a company that claimed to have created a device that can test at home rapidly for many diseases. However the device was flawed and never properly worked, and that information was withheld from investors. As such millions and millions were invested before Theranos went under completely.
Investing in hemp stocks when they were at their highest market price. It’s a speculative malinvestment because in many countries CBD and cannabis consumption is still illegal. Limiting the growth of companies working with hemp and trying to market their products.
WIRECARD. No further explenation required,
Yield farming. Risk/Potential disallocation.
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I believe that investing in office building high rises would be a bad or malinvestment. Due to the beer virus i believe that working remotely will be preferred over working in an office environment going forward. Companies will see the benefit of not having to rent office spaces and cut cost where they can.
The National Childrens Hospital in Ireland is going to cost over 2 billion euro instead of the original 1 billion euro. Is the an example of a malinvestment because the contract goes to the lowest bidders who underestimate the budget prices. Then they have to re-evaluate everything as they go along and ask for more money and more time to make all the changes necessary so it’s a bad investment for the taxpayer…
Blockbuster between the years 2000 - 2010. While the world was shifting towards the internet Blockbuster was stuck in the past and unable to accept the future. Its valuation peaked in 1994 ($8.4B) and steadily slid back down as the e-world was emerging. Going by the numbers Blockbuster appeared to be a solid choice. However poor decision making and a changing customer focus was telling the story well before the eventual bankruptcy in July 2010.
From my personal investments, I have found the term you get what you pay for to be true more often than not. If I were to go back, I would always but the most high quality items I could afford when it comes to tools, and materials for building projects. When buying low quality items I have found they don’t last or do a poor job resulting in more loss of time and money. I have found higher quality items to last longer and do a better job thus saving me time and money.
Since 1992, the MSCI China Index, the most broadly referenced indicator of Chinese market performance, is down over 40 percent, China’s GDP has rocketed 1,700 percent. This suggests that China’s listed companies have not been significant drivers of the country’s fantastic growth, and that the capital they have received from investors — some $950 billion from the Hong Kong and domestic markets over the last 20 years — has been seriously misallocated.
The underperformance of China’s listed companies is a direct consequence of Beijing’s deliberately awkward adaptation of Western-style stock markets to a command-type economy. Despite the country’s increasingly first-rate infrastructure and all the other trappings (bankers, investors, regulators, scandals) of development, China’s markets only superficially resemble markets elsewhere. A market is where the ownership of a commodity or service is exchanged, not just where securities can be traded on a daily basis. Chinese stock markets do the latter extremely well, but have nothing to do with the exchange of ownership. At a fundamental level, China’s markets do not price companies and their businesses because its listed companies are not for sale, and never have been.
Ref - Business Insider
When researching malinvestments, examples such as WeWork (or “The We Company” now) and Lyft appear to be the most popular/most unsuccessful ‘unicorn’ businesses that have gone under.
I understand how companies can manipulate investors with clever marketing and flashing big magical numbers and over-pricing IPOs. (Whilst investors standing by wallets wide open)
I also came across https://globalpi.org/research/where-is-all-the-malinvestment-in-the-us-economy/
which explains about how other industries are over-priced including shopping centres & retailers, the hotel industry, (It’s really interesting - give it a read!)
It also explains how some may be jumping the gun investing in renewable energy, with some companies investing in solar power that is going to waste. The author explains how solar power is great in hot dry climates, however does not cover costs in some parts of Europe and US.
A saying that was drilled in to me from a child:
Turnover = Vanity
Profit = Sanity
Just did this in personal life. A while back I was called by my bank, and offered to have some currency transferred into some newly created GIC products. This was back before I knew banks were not on my side, so I trusted the advice and had 5 GIC’s created that span 5 different time frames to maturity. I called recently to gain information about the GICs including the interest rates they were generating. NONE of them are currently out performing inflation. I suppose the tiny interest they generate slows the losses caused by currency inflation, but I still think that this qualifies as a malinvestment.
A subtle infrustructure area involves centralization of the food supply as a significant example of the malinvestment concept.
The company Monsanto (a monopoly) holds the largest US share and control of Genetically modified seeds and the largest global share of herbicides which are built directly into the seeds. The result is increasing difficulty and financial hardship for farmers who forfeit any price contorol or choice of product which deteriorates the economy.
A further “unintended” consequence has been the progressively failing health of the American population, further causing burdensome related health care costs, which has resulted in push-back and demands for organic produce and a resurgence of people growing their own food.
I know this sounds strange but the thing that i always that i always thought was a weird investment for some one to do for them self was phone insurance. when i am presented it by by my carrier store employees it was always 7.99 a month. i mean that is a pretty sweet deal plus they said the phone would get replaced since i had insurance. so if i paid $95.88 dollars a year i can get my phone replaced anytime time and not have to go out and hundred of dollars on a new phone. However when i tried to replace it i was told there would be a deductible of $150. which i wasnt told anything about until i had to file the claim and that was 5 years of having the phone. So the insurance company has taken all together was (95.88 x 5) + 150=629.40. Mind you the phone that i received was not brand new it was refurbished.
the reason i brought this story up is because phone insurance was a bad investment for me because i paid a lot of money for a used phone. when i could have just put that money a side and bought a actual new and better phone when mine breaks, or invest that money into cryptocurrencies where i could be actually be making more money
I think in this period of covid recovery investors should always consider that the tourism is changed. I’m not referring only to the airlines default and to the hotels, bars and restaurants crisis but also to the real estate sector: houses in touristic art cities are also devaluating, so now I think it’s safer to wait and watch if the travel industry will recover or has to face another lockdown.
Something that would define a malinvestment to me would be buying a brand new car. The value drops the minute you leave the showroom and continues to over time. The car will need to be maintained to a high standard to be kept on the road and would need more investment year after year.
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So i spent a day musing on what to put here and so many anti establishment ideas were in my mind that it gave me a headache. Then, it occurred to me why i could not just pick one and move on…i think they all were. So i will list a few and u can take a pick (im talking from the uk here). The HS2 rail link - a railway that has not happened and yet seems to leech money from the government (ie tax payer). The millennium dome, the london eye, the housing project in the papers recently, probably ever school and hospital ever built, the re-cladding of the tower blocks. Just a few off the top of my head without even mentioning the current fictitious pandemic, the continual loans to the banks and companies we all know are going bump the minute once the loan is siphoned off. Anyway, i will stop there and say sorry for the rant and on to the next topic.
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A great example of a malinvestment, comes from the country of Slovenia. The government decided to pay for “life-saving” ventilators 3 times more than the price on the market. Put simply, the coalition was trying to make money from taxpayers, or I can say, steal money from its own people.
Minister of Finance went to prison after a home investigation. … what a smart guy 
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At this moment of Covid-19 crisis we can observe federal banks are in efforts to boost up their economies by practicing, in my opinion, malinvestments. Instead of letting the free market decide where the capital should be allocated, they are bailing out large corporations, hoping that soon things will be going back to normal and there won’t be any eruptions in the current system. On the other hand, one can argue that saving large tax-payers and job providers is the only way to sustain the ongoing structure without an economic collapse. However, without having a foreseen future: uncertainty about the virus, emerging new cases and creation of vaccine; I believe they do not have a plan and therefore consider that a malinvestment(without the ability of printing money and decreasing the purchasing power of the dollar, their investment decisions could have been different).
There are two sides in that argument, and there might be no perfect solution. And we will face the consequences regardless of what they will do.