I think the housing market in the Greater Toronto Area in Ontario, Canada, may be an area where a lot of malinvestment exists. For local residents, a loose money supply policy and record low interest rates in the past decade allowed buyers to put more money in their homes than a reasonable portion of their disposable income. The high demand and low supply pushed up prices; meanwhile, overseas capital also rushed in to the market and further boosted up demand and prices. The malfunctioning part is that, I think, the price signals does not reflect reasonable and sustainable purchasing power of most buyers, since real estate for most people requires financial input for over a few decades. The market will fluctuate drastically, and many investors will become insolvent, in the face of sudden swing of interest rates and land supply (both usually changed by the government for non-market reasons), and the ebb and flow of foreign capital.
Trumps Wall would be a great example of Malinvestment.
Building a wall on that scale would be very expensive to build, upkeep and guard.
Biggest problem is that, the wall would not help his ideology of “keeping those illegal aliens out”, people have and always will find a way around walls and other hardships.
Any company that’s now being artificially kept alive would be a malinvestment. Or like the previous housing bubble, getting a cheap loan now, buying an overpriced house while demand is probably only gonna drop. Due to the crisis there are no tourists to rent out to and a lot of people will probably not be able to buy in the near future.
What happenede recently here in Finland with the corona mask sales. Few people bought and made big bucks with the sales for the government. Then someone realized the masks are not usable by anyone, and now the sellers drive with brand new cars and are facing big charges.
Many state owned enterprises, large companies, that have stimulated large sovereign borrowing between such countries and the countries “in-development”. Note that most of the times involved the IMF and the World Bank. Eventually, majority of such scenarios became bad debt and lead to potential defaults. Unfortunately, lead to hyperinflation and the poor people were and are the ones paying the countries’ “silly” decisions (in “…” because of potential corruption).
The most obvious and extreme example of a malinvestment that comes to mind is that of the banking sector’s investment into subprime mortgages. It was a malinvestment because individuals who were far below credit worthy would clearly default on their loans after the interest rate adjusts higher. Another way of looking at it is that it was a malinvestment because the invested money did not lead to any productivity growth in the thousands of situations where the loan did not involve the building of any new properties and simply put subprime individuals into houses they could not afford.
In the perspective of pension program as investment, the pension program in Japan is a malinvestment because our current payment of pension goes to the current retired people, and we will receive the pension based on the payment of people in those time. Due to the decrease of young population, it is very optimistic to receive the full amount or more.
There have been quite a few malinvestments during 2020 with large US company’s struggling. Hertz a car rental company has seen it’s stock price rise over 400% even though the company will file Chapter 11- potentially driving the shares to zero. In addition, JCPenny an iconic department store saw it’s shares rise 162% is also positioned for a bankruptcy. So,investing in either of these companies due to the low stock price would be a malinvestments as both stocks will more than likely loose all of their value.
food companies that lie about the ingredients in there food or say that 100% organic when there not so on and so forth. or they many have a history of treating there employees real back. or dont take there sanitation for there work areas as serious as they should.
In my two countries (Slovenia, Croatia) you have like zizillion examples in government, business, even sports 
Latests one was this - government bought corona protective masks for abnormal 2mil $ value from a company that 1 month before had 0 employes and 0 income. Masks were bought at above market value.
I think one of the most obvious malinvestments of the last couple of years could be blockbuster. They went from a nearly $5 billion dollar company to basically zero because they didn’t respect technological advancements. It’s even reported that in 2000 Netflix CEO, Reed Hastings, approached Blockbuster to pitch his idea of a joint venture. Apparently, he got a meeting but was laughed out of Blockbuster HQ. Blockbuster failed to take a couple steps back and evaluate the situation. They could have seen coming that a transition was necessary much earlier.
It is surprising how Venezuela is currently an example country of bad investments, the socialist model is just a mask that has been used to implement an economic system that has only generated the worst crisis in the entire history of the country. We can mention an example of This is done through the fragmentation of capital in dozens of financial institutions with little capital and notable inefficiency. The division of state banks has been accompanied by a policy of cheap credits, which clashes with the delusional idea of the “economic war”. I mention this because if the government claims that businessmen sabotage the economy by producing less, selling dearly, and hiding their products, it is absurd and contradictory that the government finances those businessmen with millionaire loans at negative interest rates. How to justify the munificent gift to those who supposedly carry out the “economic war”? Although the Bolivarian government expanded social spending, nationalized companies, developed direct transfer policies for the poorest and granted enormous subsidies in public services, the centrality of its economic policy was nothing more than the continuation of the radicicultural appropriation of oil income and its waste, with the aggravation of the consolidation of “control” policies that only accelerated the processes of destruction of agriculture, industry and commerce in favor of the enrichment of the import-financial capital and the fattening of a military-bureaucratic caste. hyper-corrupt that loots the nation with its full hands, until it impoverishes it to levels never seen before in these latitudes.
The current stock market in the USA would fit such a definition. With the increase of money supply, stocks go up even tough the company is almost insolvent (example: Hertz).
Pincoin and iFan was the largest scam of the 2017 ICO bubble, taking $660M from investors before exit scamming. They promised a monthly ROI of 48% which compounds at over 10,000% per year - a return that probably should have appeared too good to be true.
I believe this was a malinvestment because it wouldn’t have been possible to pull off without the ICO bubble massively distorting investors expectations from crypto projects. I consider it a misallocation of capital because they had no plan to create value for their investors and couldn’t possibly keep apace with their promised ROI.
On 4th and 5th of June 2020 stock price of rental car company, Hertz has risen over 400% despite shares potentially going to zero. But the situation grew even more bizarre when Hertz issued a further stock offering before next trading day opening. The company’s stock price soared 68% on the news, even though the newly-issued shares could also become worthless. The company plans to capitalize on novice investor’s poor financial education and use the $1 billion dollars worth of stock to ease bondholders’ pain.
Turns out that the Federal Reserve, the U.S central bank owns $80 million dollars of Hertz’s bonds, which means that the Fed is now a major stakeholder in Hertz’s bankruptcy process, and the investors who continue to buy these potentially worthless shares are basically bailing out the Fed’s failed junk bond purchase… Incredible 
In the UK there is the HS2 railway which is being built. It is costing an inordinate amount of money to link London to Birmingham, cutting thorugh some of the beautiful English countryside. The end result will be a vanity high speed railway that reduces the journey time by about 20 minutes and will ladden the taxpayer with huge debts. Clearly if the natural market forces were driving the improvement in railways then this would not be an economical option and would be very unappealing to would be investors.
The liquidated VBS mutual, a former South African bank was in my observed opinion a malinvestmant. The former bank was a real political South African scandal, it was heavily invested by lending from the SARB (South African Reserve bank ). The bank was allegedly extorted and robbed by political party leaders. using funds to by furnish family and friends by taking out huge loans that with manipulated and overlooked required documents.
Issued “business” cards to slush funds to pay for events, entertainments and recreational consumables to gain position in state.
When local municipalities who had government accounts came to withdraw their funds, the bank did not have the funds to pay them. (https://businesstech.co.za/news/banking/231009/all-the-south-african-banks-that-have-failed-in-the-past-30-years/)
Once suspected of the illegal misuse, more “borrowed” funds were spent on the legal protection of these individuals.
Among many Many other cases of outrageous illegal spending the bank was finally put under curatorship of the SARB after a loss of 2 Billion Rand since 2018 prime suspects have still not been arrested.
For a tragic historical perspective, checkout An Example of the Misallocation of Capital in the Soviet Union
The article explains how the Bolsheviks overprinted currency to compensate for lack of capitol to run the state. Farmers had to continue to sell their grain to the state without adjusting for inflation, which meant the farmers were basically giving away their grain to the state.
This led to: farmers not growing more than their own consumption resulting in a national famine, authorities taking control of land and implementing collective farming through forceful tactics, and hundreds of thousands of farmers who rebelled,the kulaks, being worked to death in state projects.
The state tried to remedy lack of capitol through a disguised tax on its citizens which led to famine. They tried to remedy the famine through collective farming, but many farmers rebelled by killing and consuming their livestock.The state then tried to remedy lack of horse-power to plow the fields by purchasing a tractor manufacturing plant from Henry Ford. All the while, hundreds of thousands of kulaks were worked to death because of not having the necessary tools to safely take down trees to make way for canal systems. In summary,
“So Stalin got his tractor factory but at great cost in terms of the capital that the Soviet Union had to work with. It was a capital-intensive plant in a country that was desparately short of capital. One project that was desparately short of capital in the form of simple tools was the project building the Baltic-White Sea Canal. The allocation of capital between the tractor factory and canal-building project was a tragic misallocation of capital.”
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).
I think a good example of a malinvestment would be me in the uk going to put my money in the bank. I would be far better of buying the dip on some BTC or venturing in to the alt coin forest in search of hidden gems.