Yayyo (YAYO): This 2019 IPO is one of the worst I have seen. They operate a fleet of cars for ride-sharing for those that don’t have cars. UBER and LYFT lose billions per year and they are the success stories in this industry. Picking a ‘shovel’ play in a money losing industry to me is mal-invetment at it’s peak. Stock is down 95%+ from all time high in 2019.
OneCoin would have been a bad investment as it was a scam.
Research an investment (could be a public company, private company, government agency, infrastructure project, etc) that you believe meets the definition of a malinvestment (past or present) and argue why you think it’s a misallocation of capital (3-5 sentences).
State bonds, the return investment rates do not cover the inflation.
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Wall Street all of it, basically your debt you earn for your time, to buy for more debt in hopes to have more, yet you lose. unless you know when the boom bust cycles are happening and usually we don’t until its to late for most. (forgive my simple answer) Please let me know if I have gist of it. Kinda feels like you could throw all companies in the air catch one, your going to get the same outcome.
Typical example of malinvestment is the airport in Radom. This investment is ineffective for several reasons. It is the third commercial airport in the region after Warsaw and Modlin. Until 2017, only one operator used this airport. In 2018, Radom Airport filed for bankruptcy, which was considered positively. Analyzes carried out by the Ministry of Infrastructure at the beginning of 2019 show that carriers critically assessed the idea of moving out of Warsaw Chopin Airport. Most carriers believe that the potential inclusion of air traffic division at Radom airport poses a threat to their operations.
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The renewable energy sector is a huge malinvestment and a waste of global government funding and tax dollars. They have spent trillions of dollars over the last 4 to 5 years in this industry yet have barely achieved anything and the windmills for this renewable energy need oi/fossil fuels to run the turbines and there is no recycle program for them. The cobalt for electric car batteries is also a joke they have not spent any money on safe mining of this while the miners’( men, women, and children), the grounds, and towns around the mines are being poisoned by metals. There is also no recycling program for these batteries, still in the works but yet the continue to produce. The carbon tax charged in Canada alone government has come out and said it has not reduced the carbon footprint. Yet the government is offering incentives for people do green upgrades and people who are actually supplying to energy grid with this “green” energy they make are subject to fees from the power companies. This whole project is very poorly designed with no actual solid evidence of an outcome and this is barely surfacing the issues with the project. The amount of money spent on this we should be much more advanced by now one would think.
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One example of a malinvestment would be the dot com bubble as well as the housing bubble. Both of these were caused by artificially low cost of credit and an unsustainable increase in money supply. I think that both of these bubbles really showed what can happen with the misallocation of capital. Bubbles like these happen when check and balances are not performed.
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Argentinian goverment giving a 60% interest rate so hold back the usd. facilitating the “financial bicicle”, draining the reserves and ending in a major “fuga de capitales” that sunk the peso and and increased inflation to more than 50%!
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I would argue purchasing shares of Movie Theatre stock such as AMC would be a bad investment. With COVID-19 all but killing off the movie theatre industry this year, one could assume that these stocks are currently undervalued and that when a vaccine is widely implemented people will go back to the theatres next year. However, it’s quite likely that movie theatre attendance will fade like drive ins did. Instead of new movies coming to theatres first, they will continue to be streamed directly to customers who can watch these shows on ultra high quality home theatre systems. Movie theatres were not totally disappear, but they will create much less revenue moving forward.
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The “Satyam Computer Services scandal” was a corporate scandal affecting India-based company Satyam Computer Services in 2009, in which chairman Byrraju Ramalinga Raju confessed that the company’s accounts had been falsified. This was similiar to Enron Scandal.
Satyam’s shares fell to Rs 11.50 (0.15 USD) on 10 January 2009, their lowest level since March 1998, compared to a high of Rs 544 (7.34 USD) in 2008.
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Research an investment (could be a public company, private company, government agency, infrastructure project, etc) that you believe meets the definition of a malinvestment (past or present) and argue why you think it’s a misallocation of capital (3-5 sentences).
For me this is in the hands of the central banks, they are the biggest evil we have in the monetary structure of the world we live in. Take JP Morgan as a classic example having recently been fined 1billion for gold manipulation. They paid it, big deal, that 1billion is factored in as the price of business, they always new they would be fined it was just a matter of when, so they pay it and carry on… Nothing we can do about it, slap on the wrist.
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Saving your money in a popular usa central bank today now only offers around half a percent in APY maybe 0.6 if your lucky, and there is often fees associated with the account. Statista reports speculated inflation rate for USD in 2020 was only 0.62% but still that only matches the APY. Overall your money would still lose value. Investing your money and creating a wide portfolio is a much better option.
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Definitely the college loans. Giving so much money to people who can’t even drink a beer in some countries and expecting them to return them is always going to end bad.
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From 1996 to the first half of 1998, the Latvian banking system developed rapidly. Banks ‘assets grew and banks operated at a profit, banks’ internal risk management policies improved, and banks focused on establishing operational procedures (compared to the 1995 crisis). [1] When the Russian government announced in August 1998 that it would not be able to pay its securities on time and in full, the value of these securities fell sharply. As a result, the value of the assets of many Latvian banks decreased significantly. This created significant financial problems for the Latvian financial system, which was further exacerbated by the outflow of deposits from several Latvian banks in the context of general uncertainty. [2]
The devaluation of the Russian currency in 1998 was influenced by several factors. From external factors, this was driven by falling global oil prices as well as the Asian crisis. On the other hand, the Russian economy was undermined by huge arrears of unpaid taxes and wages. By August 1998, workers in Russia had not been paid $ 12.5 billion in wages. The situation was exacerbated by the disappearance of some $ 5 billion provided by the World Bank and the International Monetary Fund to Russia’s development projects. Foreign investors began to leave the country. The result of these and other factors was that the Russian government decided to devalue the ruble - in about a month its value fell from 6.3 rubles per US dollar to 21 rubles per US dollar. In addition, the Russian government undertook to restructure all debt bonds and take other actions
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I could talk only from the government that we have in Mexico, it’s really really corrupted.
The government it’s planning to spend millions of pesos in the “Maya train”, but can spend $300,000 in a fridge to buy covid’s vaccine.
Even though, Mexico has laws that in the perception of everyobody else, are wrong, how they implement money, taxes, it’s not quite good.
Every Mexican believes that he’s alone in this world because Mexico don’t even care about health, culture, art, etc.
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Its reported that nearly 1 in 5 publicly traded companies in the U.S. right now is a “zombie company,” being propped up by stimulus. It’s likely that the U.S. will pass a 2nd stimulus bill, which will See additional sport support for some of the vulnerable industries. While this will help hold over some companies, it leaves them heavily endebted. When things get back to normal these companies will have less earnings after interest to adapt their business models, Most of their operating income will go towards servicing debt. This means less retained earnings to spend on research and development, or marketing, less retained earnings to be distributed to shareholders, and generally less innovation in the sectors that need it most in a post pandemic World. This is less than optimal for The economy as a whole and leads to mis allocation of capital to unproductive needs. Eventually that government support will stop coming, and a collapse can happen.
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One sure mal-investment is holding cash which has a guaranteed depreciation factor.
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The Trump Administration - A New York Judge stated that President Donald Trump must pay a $2 million judgment for improperly using his Trump Foundation charity to further his 2016 presidential campaign. “Our petition detailed a [shocking pattern of illegality] involving the Trump Foundation — including unlawful coordination with the Trump presidential campaign, repeated and willful self-dealing, and much more," - Attorney General Barbara
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Investments in US homes/ mortgage backed securities circa 2008. Increased liquidity in financial markets influenced institutions to look for more opportunities to invest. Their appetite for higher risk investments grew, especially ones they could pass on to others as AAA. People buying these mortgage backed securities and mortgages, thought they were getting a good deal, without understanding how it was a monster created by lowered interest rates and corporate greed behind the scenes.