Hyperreal Finance

The Construction of a Trustworthy Investment Opportunity: Insights from the Madoff Fraud

“…Reflecting more generally on the nature of the “reality” of financial markets, we suggest that some element of illusion is inherent to the functioning of such markets, which might explain part of the difficulty of detecting a financial scam. Our paper therefore contributes also to the discussion about “hyperreal” financial markets (McGoun ; Macintosh, Shearer, Thornton, and Welker ) by highlighting the link between mechanisms of trust creation, on the one hand, and concerns with self‐referential representations, on the other hand. In particular, we identify similarities between the trust dynamics in the Madoff case with those observed in the literature on speculative bubbles.…”

“…Reality and illusion effectively become indistinguishable at this point. Their reality is a hyperreality (McGoun )…”

Has Elvis Left the Building?

“…209 celebrity fund managers, they (like other celebrities) may give the false impression that the individual matters in a mass culture in which the individual is wholly ineffective and irrelevant. Peter Lynch may appear to be calling the shots and delivering high returns to Fidelity's customers, but in reality Peter Lynch and Fidelity may be just cogs in a machine that delivers the illusion of returns as long as no one questions them (McGoun 1997). As Marshall (1997) first articulated it:…”

The Theory of Fair Markets (TFM) toward a new finance paradigm

“…I was impressed, albeit not convinced, with the ideas developed in two papers by two eminent scholars, one published and one unpublished as yet. I am referring to McGoun (1997), Mcintosh (2002). Both papers are directed toward the academic accounting readers, albeit the McGoun paper is about finance as we should know it, while the Mcintosh paper ties the connection between accounting and financial markets as we should know those.…”