Hedge Funds and Unconscious Fantasy

16 Pages Posted: 21 Dec 2009 Last revised: 23 Dec 2019

See all articles by Arman Eshraghi

Arman Eshraghi

Cardiff Business School

Richard Taffler

University of Warwick - Finance Group

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

Eshraghi, Arman and Taffler, Richard, Hedge Funds and Unconscious Fantasy (November 26, 2009). WBS Finance Group Research Paper No. 133. Available at SSRN: https://ssrn.com/abstract=1522486 or http://dx.doi.org/10.2139/ssrn.1522486

Arman Eshraghi (Contact Author)

Cardiff Business School ( email )

Colum Drive
Cardiff, CF10 3EU
United Kingdom

Richard Taffler

University of Warwick - Finance Group ( email )

Gibbet Hill Rd
Coventry, CV4 7AL
Great Britain
+442476524153 (Phone)
+442476523779 (Fax)

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