Organizational consultants frequently engage in action research, adapting their methods with the multiple contexts of work demands and constraints. Following the organization of financial markets however, requires a different type of participant observation. I have come to think of it as “Passive Research”, attempting to interpret the ups and downs of actions by the electronic herd, while often feeling its effects in one’s personal life and circumstances.

Earlier this summer, after presenting a paper about the markets’ fearful responses to the Deepwater oil spill,  it occurred to me that we were beginning to see a different variation of the same dynamic. I formulated hypotheses, began observing, and last week, reading Martin Wolfe’s “Struggling with a great contraction” in the Financial Times, recognized anxiously, that I was on the right track.

Wolfe’s observations parallel my own on emotional finance: however, unlike the BP incident last year, when markets had a concrete object of FEAR, today, we suffer from multiple ANXIETIES- US and Eurozone debt, unemployment, Western decline— together with the heightened ups and downs of market volatility. Together, this awful mix poses for investors, a situation of open-ended anguish- without resolve at this point, barring decisive leadership in political action.

What will be? No bottoms until the markets recognize an object of fear, realized; and my own hunch, watching the accumulation of chart-watchers and pundits, is that a test of 2008-9 bottoms will suffice. Until we build again. Til then, it is passive research, our only available course of action.

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Passive Research is to Markets What Action Research is to Firms


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