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To: J Walter Jacobs who wrote (414)	1/9/1998 9:21:00 PM
From: James B. Barnes	Respond to of 915

I think you're right, we could probably figure it out from the trading log, but I don't have one either. What we would be trying to calculate was 'are market maker inventories increasing or decreasing.' I'm with you, they probably did not decrease today. Your question about "Wouldn't this strategy encourage panic selling and discourage buying" is interesting. Unfortunately there are still too many stocks with wide spreads on NASDAQ, but I wouldn't say it causes panic selling nor discourages people from buying them. Most of them have a wide spread because of low liquidity, the spread is wide in an attempt by the market makers to control their risk of losing money on the issue. I think in an environment like we saw today, one that probably had more sellers than buyers, market makers would be tempted to widen the spread, just in case it got hard to find the next buyer. I think you're right when you say "The MM always act in enlightend self interest." As a matter of fact, you're darned right. They learned, probably long before I was born, that when they're operating in a volatile market they better make sure they're making plenty of money in case they get caught on the short end of a bad deal. I must confess that I always hope I'm acting in enlightend self interest any time I buy or sell a stock. Unfortunately that's not always the case, but it's a great goal. Regards, James