The investment into the company Theranos perfectly meets the definition of a malinvestment. People of silicon valley swarmed into this project including some of the biggest names in the financial world. Theranos claimed that with a single drop of blood they could detect up to 200 diseases, far more than what the hospitals of today can detect. This is practically impossible since one drop of blood is barely any. Nevertheless, people still swarmed to invest in it. At the end, the company filed for bankruptcy and ye.
I also agree with Trinity, a malinvestment would be, putting my savings in the bank or keeping fiat money and not changing it to BTC or other cryptos
Buying a Camper new. these things loose almost 30% of their value as soon as you take posetion of them.
Or more seriously many companies. To include toys r us , enron , pets and more. Many times these companies were ran in a way that looked good to investors which drove up the share price but eventually failed due to how they were run.
Student loans:
Banks offer loans to students, resulting in more currency in circulation- even though there has been no major increase in higher education facilities.
There is also no insurance that these loans would in fact be paid, resulting in further debt/ higher interest rates for those wishing to take out a loan - causing higher education facilities to increase their fees= more money in circulation.
We have a new mall that opened up in Calgary. It is called New Horizon Mall. It was built right beside the newest mall called Cross Iron Mills. The big difference is New Horizon does not have any anchor tenants. Not one! It is probably 90 to 95 percent empty. Like out of all the stalls it seems like only 5 percent are being used. Malinvestment for the current stall owners and the developers.
German Treasury Bonds - they have a negative yield at the moment. The common belief is that this is a strong economy, very stable country and that its an honor to land to such a government 
But if speaking from a capitalism point of view - this is classified as a malinvestment - you loose money with the time.
Most businesses I see running in my extremely niche market of performing arts, are malinvestments. “HoP” is one particular example of this that crashed brutally a few years back, but I think most companies in this space are in the same boat.
They generally throw money at purchasing supplies and endless varieties/colours of material… with little knowledge of comsumer behaviour or purchasing trends, much less a real business plan. A lot of the materials they purchase in bulk fall ‘out of trend’, leaving makers with a surplus of stuff that has little-no value to anybody. Anybody who invests dollars into these small-business-esque pursuits, never regains their monetary contributions. For an already small community of folks, this misallocation of capital has big consequences. More often than not, these companies cease to exist after a few years (which has even more damaging consequences).
Not sure this perfectly fits the definition of malinvestment, given the definition including deception of interest rates… but… investing is a pretty new concept to me so I don’t have a lot of real life examples.
Mirabel International Airport, Montreal, Canada, Cost: $1.7 Billion
The location of the airport is not ideal. Airlines soon walked away after it opened and today the building no longer exists.This could be prevented by conducting thorough research beforehand. Therefore, this is a malinvestment.
Right now in The Netherlands you can (when you are a registered student) take out a loan from the government, it’s a 0% interest loan. If this is the right way to encourage studying that is debatable.
However a lot of students max out those loans and buy themselves alcohol, smokes or other consumable goods. In my personal opinion I think it’s okay to max out those loans, but only use what you have to on consumable goods and living etc. The rest of the money you loaned you can invest in stocks, bonds or cryptocurrencies.
The malinvestment would be to max out those loans and only think of your present self and let the your future self figure it out later on in life.
I am not sure about that as my only investments are in cryptocurrencies to be honest but as I remember in my country (Greece) 10 years ago banks gave to people exorbitant amounts of loans ,therefore most Greek citizens had loans and they were not aware weather they could pay off these loans and when. In fact loans had been advertised a lot from all banks so that people would take a loan with a small amount of interest. As a result, was one the issue why Greek financial system collapsed.
In my country it would be our national airline. The airline company has too many workers, not making any profit and has many people sucking the company dry. The national carrier: Surinaamse luchtvaart maatschappij has a loss of 100 million dollars. Our government is still pumping money in it every month instead of just taking it to the back of the barn and shooting it. This is tax payers money going into a dark hole.
A MAL investment that hits close to home is the Rail Project on Oahu Hawaii. It started approximately 10 years ago and as of 2021 is 1 billion dollars over budget and years away from finishing. In truth many are saying it will be scrapped soon and a complete waste/loss of the capital. ROIC = Negative …
The artificial attemptive of brazilian government of growing up a shipbuilding industry. It happened on the 70’s, then on the 80’s and lately on the 2020’s.
Of course it did not work, despite of the amount of money provided by brazilian government to finance this industry and at same time protecting them from external competition.
In this last attemptive, when the 2008 crisis came, there was no chance to keep this arradgement working. So, all the tax payers’ money was simply burned on this irresponsible adventure.
How about all these new Dex/amm launching every day. Tokens minted by providing liquidity with no utility purpose to them. Even with a fixed supply and burning mechanisms there is no demand for the token and price plummets a few days after launch when every cashes out. No reason to buy when they are given away.
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The Bernie Madoff investment scandal uncovered by the FBI in 2008 was a Ponzi scheme conducted over 30 years by Bernie Madoff and other accomplices. The amount missing from client accounts was almost $65 billion, including fabricated gains. And SIPC was able to initially recover $14.418 billion out of the $18 billion actual losses to investors with continuing search and recovery efforts, this was a very gross case of misinvestment of billions of funds that could be properly utilized to benefit the economy as valuable capital yet instead wasted by one individual and his group of accomplices through security frauds.
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).
Katatbars or later called karatgold is a good example of malinvestment next to bitconnect and one coin in crypto space. This multi-level marketing company offerred an online purchases of cards and notes with tiny “cryptonyzed” gold bars embedded in them to “affiliates” who earn a commission when they enlist other affiliates
If you have a little bit knowledge of crypto currency everything indicates that this investment was going to zero. But a lot of people and friends lost in tens of thousands of dollars.
They targeted immigrants and elderly people. I really feel sorry for them. I fought hard to stop this scam. I was a bit successful but to my dismay many bought it.
Enron overleveraged money in bad performing businesses while hiding the debt off the books thru “Special Purpose Vehicles”. Time tells the truth, so they bought more time by hiding the truth from investors, hence fraud. I believe currency printing monetary policies are also hiding the truth from the economic damage of Government over spending and transfer of wealth to the richest.
https://www.investopedia.com/updates/enron-scandal-summary/
I remember watching a video about this private company called Theranos located in Sillicon valley. The company claimed it had developed blood tests that required only very small amounts of blood and could be performed very rapidly using small automated devices that Theranos developed. They raised more than US$ 500 million with a US$ 10 billion valuation. Basically VC’s and investors were throwing money in it believing it was the next big thing. But in reality, the claims of the company were a big scam/fraud and they had not really developed blood test or devices. So they lead the investors into making a horrible investment, never showing a real product and building everything on hype and “potential”.
Hs2 rail service has to fit the bill for malinvestments.
Spiralling costs have plagued this project since the beginning and now with a fast changing post covid economy, simply put technology has forced people to work from home creating value to thousands of companies.
An example of malinvestment would be investing on a goverment retirement program. Cuz normaly you got save part of your bank paper for the future! But obviously, no matter where you live, your FIAT currence will tend to 0.