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Using London Stock Exchange data, we test the central implication of the canonical model of Ho and Stoll (1983) that relative inventory differences determine dealer behavior. We find that relative inventories explain which dealers obtain large trades and show that movements between best ask, best bid, and straddle are highly correlated with both standardized and relative inventory changes. We show that the mean reversion in inventories is highly nonlinear and increasing in inventory levels. We show that a key determinant of variations in interdealer trading is inventories and that interdealer trading plays an important role in managing large inventory positions. [ABSTRACT FROM AUTHOR]

The article focuses on King Lear's deictic reference to Edgar in the guise of Mad Tom, which is one of the few Shakespearian phrases, which have at once defied explication and, curiously, failed to provoke scholarly comment. In all likelihood, Shakespeare alludes in the phrase to the ancient philosopher Cebes of Thebes whose Tabula Vitae or Cebetis Tabula was then a commonly set text read in Latin translation if not in the original Greek, and a text often illustrated with a woodcut of a Greek mural painting depicting allegorically the education and progress of man through the stages of life.