Hedge Funds and Unconscious Fantasy
16 Pages Posted: 21 Dec 2009 Last revised: 23 Dec 2019
Date Written: November 26, 2009
Abstract
We help to explain the rapid growth in aggregate hedge fund assets under management until June 2008 followed by their collapse in terms of the conflicting emotions such investment vehicles evoke. Specifically, we describe how some high-profile hedge funds were transformed in the minds of investors, into objects of fascination and desire, with their unconscious representation dominating their original investment purpose as providers of investment returns less correlated with more traditional asset classes. Based on a psychoanalytic interpretation of financial markets, and dot.com mania in particular, we show how hedge fund investors’ search for “phantastic objects” and the associated excitement of being invested in them can become dominant, resulting in risk being ignored.
Keywords: alternative investments, investor psychology, media portrayal, phantastic objects, psychoanalysis
JEL Classification: G01, G12, G19, G28
Suggested Citation: Suggested Citation
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