Activity Lesson 4

In Italy we have the giant corporation Ferrero that was able to launch many successful products like Nutella. In 2006 they launched a new item called “Grand Soleil” (a kind of compromise ice-cream/espresso). Rumors say that this big idea was from a member of Ferrero owner family. Ten of millions spent on advertisment made of Grand Soleil probably the biggest malinvestment of the company history. People did not like at all. Finally in 2014 it was removed from the market.


Paying into the Canada Pension Plan

ohhh, I dunno

  1. forced to make contributions based on income
  2. incompetant portfolio management
  3. a dynamic prospectus
  4. a ponzi scheme
  5. the return is poor, a blind monkey throwing darts to choose stocks randomly would outperform CPP
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XRP is a great company that buying a stock would be quite worth, but buying their tokens is worthless as they keep dumping the market.

I would say that any investment that lays on top of any fiat currency is to be considered as a bad investment. It is constantly losing value over time due to inflation rate. It is important to allocate capital in a way where it’s not exposed to inflation. Scarce assets are therefor something to look for for a store of value and appreciation.

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Awesome! I totally agree and use Trinity’s answer as my own. Thanks Trinity.

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You are funny :slightly_smiling_face: and welcome!

In response to the Covid-19 crisis, the US Fed has begun buying “junk bonds”. They have lowered the requirements for assets to purchase, and in return they spend their newly printed fake money.,that%20would%20get%20scooped%20up.

In my eyes a good part of our tax money is a malinvestment since most of the time it’s a misallocation of capital done by the government.
As central banks buy bonds from the government to create new money this money is first distributed to those close to these institutions.
Bailouts that lead the whole idea of free market capitalism ad absurdum as we have seen in 2008 and are experiencing now again are going to be payed by our future selves, our children, and the generations to come since the government uses taxes to pay back these IOUs.

Argentina government bonds:

  • they regularly default;
  • the interest rate is low compare to the risk

A simple one, having a mortgage that you pay with wages

A recent UK infrastructure project; HS2, a new High Speed Rail Line, is estimated to cost the taxpayer £33 Billion, due to the high cost of the project, it is expected fares to be out of reach for most commuters, at best the project will be a convenience for the wealthy at the expense of taxpayers.
The project will destroy the environment, and goes against climate change and sustainable development objectives. It also makes zero economic sense.

The bail out of the airline Air France - KLM, France pays 10 billion, the netherlands 4 billion. But almost all aircrafts are parked for months and after the Coronacrisis it remains to be seen if consumers still want to fly in the same frequency as before the crisis. Next to that some airlines are not bailed out and will have to survive on their own. And as cherry on the pie: the CEO of the airline gets 700k Euro Bonus for doing a great job.

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All fiat currencies in the world are Malinvestment. Put them in BTC!

The US Housing Bubble is a classic example which was caused by artificially low interest rates (caused by fractional banking) and hence an artificially unsustainable increase in money supply. The incentive for people to take on mortages were artificially set by bankers who, due to this ease of money supply, set the house prices rather than an organic price being set by the people. The effect was the inevitable boom followed by bust cycle.

I think the housing bubble in 2008 is a great example. The banks manipulated the ratings of packages of bad mortgages. Meaning the once which were provided to people about who they could anticipate that they wont be able to pay it back. To be able to get rid of them by selling them to the other banks.

I think here in The Netherlands one of many big malinvestments is the recently introduced maximum speed in the whole country of 100km/h…wich costed millions and millions too accomplish,and what doesnt help against the climate at all offcourse.
Sidenote here is that in 2012 they actually increased the maximum speed from 120 too 130… :face_with_raised_eyebrow:

Lehman Brothers acquired five mortgage lenders in the 2000s specializing in high risk loans (Alt-A). They did not require proper documentation for loans, a malinvestment of funds. They easily gave loans to people without income or employment verification. Their misallocation of funds contributed to the 2008 financial crisis and housing market crash as many people were given loans who could not truly afford them.

Spend money on a rental apartment of 700 euros per month or 8400 euros per year.
While you pay 3000 euros mortgage for 100,000 euros annually and real estate only increases in value.

I can’t think of any worse investment than a car when you don’t really need it. You don’t really need a car when:

  • your work/home distance is manageable on foot or by public transport
  • the grocery store is closeby
  • your family and friends lives close enough, again, to be reached on foot or by public transport

In this case, exceptional cases in your life can be solved by renting a vehicle. An owned car often costs you enormous amounts in taxes, gas, maintenance,… all the while it depreciates in value. The only added value that a car gives you in this case is status, lazy comfort, and getting somewhere faster. But this is overshadowed by the financial costs and health costs - because you’re moving less, you’re not as healthy.

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