Alice was tall for her age. But this was getting ridiculous. With each sip from the DRINK ME bottle, Alice grew. Shot up like Jordan heading to the basket. And unfortunately, she was very thirsty.

Her neck stretched. Her legs were longer than a stockbroker's day. And down by her feet, which seemed a long way away, was a foot. Another foot. Three feet.

"Oh dear. I'm late," said the mouth attached to the third foot, a rabbit's foot. In betwixt, of course, some white fur and that Fool's cap. "I'm late for my specialist. Oh dear."

"Excuse me," Alice called. The rabbit pulled up short. Where was that voice coming from? "Up here."

"Who are you?" he asked.

"I'm Alice."

"Well, that hardly explains it." He turned and hopped. He hopped a few more feet.

"Why are you late?" Alice asked.

The hop stopped. "I've forgotten my portfolio at home, and I'm late for my twelve o'clock with my specialist."

"I can get it for you quickly," she said, and in just a few steps, she was there. By the time the rabbit caught up, she'd looked through the whole house. Her long strides had made her thirsty again. She'd sipped again. And the more she sipped, the more she grew. Her head stuck right through the roof. "Today's not my day for holes."

"You'll ruin my house," yelled the rabbit, "and the mortgage isn't paid yet."

"I found your portfolio," she said, and she handed it to him. "But tell me, if you're going to see a specialist... what exactly do specialists do, anyhow?"

1) They keep a constant market going in the stock they trade, giving it liquidity
2) They hold your stocks in safe keeping, which is called holding in street name
3) They lend you money to trade, which is called margin
4) They set the commission rate levels for brokers, making it possible for them to make higher commissions

The answer is 1) They keep a constant market going in the stock they trade, giving it liquidity.

The Specialist that works on one of the exchanges can work for either himself or as the agent for a firm. To qualify to trade as a specialist, he's required to have enough capital in his account to maintain a 5000 share position in each stock in which he specializes. He either provides this himself, or the firm he works for provides it, drawing from their own inventories. This is what is meant by a firm making a market in a security.

The specialist's job is to keep the market in his stock running smoothly. He does this by buying when others are selling, and selling when others are buying. For the most part, money rarely changes hands. He trades both at risk (selling short) and on margin. He also keeps all the limit, stop, and stop-limit orders straight in his book, which is one big reason his job is so important. While he does trade back and forth for his own account, he's never allowed to trade for himself ahead of a customer. The public must come first, so he often has to take lesser amounts than he gives to customers. This balance of possible losses due to that rule is made up in the commissions he makes off of the spreads.

Off the rabbit went. Then it was Alice's turn to hear a voice out of nowhere. "It's a piece of cake," it said. She looked, and peeked, and even peered, but she saw no one. But she didn't see nothing. It was something. It was a cake. The icing read, EAT ME UP NOW.

"Eat it quickly," she heard the voice say.

And she did. And she began to feel strange. A little panicky in fact. And she began to wonder what it is that she was eating.

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