White Elephant

Not to be confused with that fun-ish Christmas-time gift game, “white elephant” in the financial world refers to an investment with an upkeep cost that makes the investment cost more than it’s worth having. For instance, if an investment is doing well, makin' some money, but the investment management fee is a tad more than what you’re making...you’re actually losing money on that investment. See: Alligator Spread.

White elephant is a pretty broad term, so it can refer to investments, property, or even businesses. What they all have in common is that it’s hard to make a profit with them.

Where did this term come from?

It comes from Thailand, which used to have a white elephant on its national flag back in the day. Rumor or not, the story runs that a monarch would give a white elephant to someone as a gift. If the elephant came with land and resources to help care for the elephant, it wasn’t so bad as a gift. If the elephant didn’t come with land or resources to help care for the elephant, then the receiver of the elephant just got a really large, expensive animal to care for.