I would say oil related companies are malinvestments. There are 47 years left of oil at the current consumptions level and we need to work on other solutions. The world is trying to focus on renewable energies and there are a lot of alternatives to oil like Nuclear Fusion.
Combustion engines are also going to be banned in around 10 years, which will also decrease the usage of oil.
I really don’t see how oil might be a good investment.
Investing in blockbuster in the past would be a malinvestment because of the rise of netflix and other online tv/movie providers. The company did not adapt quickly enough to the different era of online streaming.
Misallocation of capital example is individual whom pay for Universal Life Insurance. vs. Paying for term and investing the difference in SPY (indexing) or BTC
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).
Essentially anything the government is involved in. More specifically from the United States, the welfare system, social security, auto bailouts, corporate bailouts of any sort, etc… Insulin and Epipens would be another ruined investment thanks to government input.
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).
One malinvestment that comes to mind is simply having alot of cash in a checking account. I look at my bank statement and see an interest rate of .05%. Because of this I never keep more than enough to pay normal bills in my account because it would not be worth having alot. BTC and stocks can be appreciating investments that beat inflation.
It may sound as a joke but right now, almost any investor living in Argentina and trying to open it’s own business could be a malinvestment. There’s a study that show that more than 80% of PyMES (“pequeñas y medianas empresas” - spanish or as it translate in english, “small and medium-sized businesses”) owners claim that it is not a good idea to try to open your own business neither to invest in one given the high amount of taxes there are.
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).
The big bank bailout of 2009 by the Fed and the U.S. government was a malinvestment because it rewarded, in many cases, criminal behavior and paid vast and exorbitant sums of money in salaries and bonuses for failures by the execs at the large banking and financial institutions. Ultimately, it was the U.S. taxpayer, i.e., you and me, who continues to pay for their greed-and-corruption-fueled mistakes. It also allows the flawed system to continue, until the next imminent forthcoming crash.
Malinvestment could be for example holding FIAT money, because with interest rate on basic account you are not even covering y-2-y inflation neither having some evaluation of your FIAT. Thats why its much better to hold your savings in form of gold, silver, bitcoin or other cryptocurrencies, which can reshape the world as we know it.
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).
Malinvestments are badly allocated business investments (artificially low cost of credit and an unsustainable increase in money supply). In the past there were several malinvestments. One of them was dot-com bubble.
Nowadays malinvestment could be saving account in the bank. Every year inflation rate is higher. In long term you will have the same amount of money but purchasing power will be lower.
I believe that the US government’s excessive spending on the Vietnam, Iraq I, Iraq II, Afghanistan and all other wars as well US military and its security apparatus is a malinvestment. Some may ask why is it a bad investment? The simply answer is: the US military does not produce anything to help grow the US economy. David Graeber in his book Debt: The first 5000 years says that the US military and its security apparatus is a dead weight on the US economy.
Totally agree. You can also add that the Federal Reserve’s quantitative easing policy (2008-2014) as well as the 2020 (Trump, GOP & Dems) and 2021 (Biden, GOP & Dems) bailouts are rewarding the same bad behavior that you pointed out for the 2009 bailout.
Ambac insurance. The company insured american municipal bonds. As it failed during the 2008 sub-prime scanda, the most toxic assets were not allowed to fail with it, to stop american cities and counties from going bankrupt.
A free market must be allowed to find its on level without interference.
keeping my hard earned savings in the bank would be an example of a malinvestment. The interest rates are so low you are not covering year on year inflation.
One of the larger US Airlines (which will I will not name) is in deep financial trouble. This started before the pandemic and is a result of poor financial management by the senior leadership who got the company heavily in debt. So with the onset of the COVID-19 pandemic and the resulting reduction in air travel, the company has threatened to lay off thousands of employees and has had to turn to and rely on government stimulus money and loans from the US Treasury in order to survive. However, the future survival of the company is still up in the air so the speak. Getting in too much debt is a misallocation of resources and makes for risky business.
I would say Blockbuster was a malinvestment. They didn’t see a huge opportunity in online streaming. They didn’t innovate enough and after some time went out of business.
My money in my savings account is a malinvestment. The interest rate is around 1%! That’s barely enough to cover inflation whilst house prices in Sydney, Australia are said to have grown 5% in the last quarter. Never going to be able to buy that house.
Keeping money in a savings account with 0.01% interest. Every year your money loses value.
Unfinished scyscrapers are a good example of malinvestments. It’s not an uncommon story. There are plenty of super-tall (over 984 feet) buildings that were proposed but never made it through to reality. One of those was Nakheel Tower, a proposed 3,300-foot-tall skyscraper with 156 planned elevators. Nakheel was designed to be the visual and economic focal point of the man-made Palm Jumeirah, the fake series of islands off of Dubai that is now experiencing extreme erosion and other environmental problems. It is one of the few big malinvestments from the finacial crisis of 2008.
The Australian government’s bail out of Holden Motor Company is an example of malinvestment.
Since Year 2001 the Australian government has been given the company incentives both in duty reduction and cash in the billions to keep automotive manufacturing in Australia.
Holden closed its Australian manufacturing operations in 2017 after 69 years of car manufacturing.
Holden Ended all operations in 2020.
Any of the companies that burst during the dot-com bubble. During that time it was very easy to raise capital through IPOs, because everybody believed these new tech companies would be very profitable in the future. Many companies though were spending excess amount of money not only for advertising but also business parties and the like, because they believed they were “invincible”. In the end, lots of them went bankrupt and people that invested in them rekt.