SAN FRANCISCO (CNN/Money) - I'm as depressed as the next guy by the recent slide in the market. But the thing that gets me is that I never understood why anyone thought things were looking up in the first place.

There've been two primary explanations for the market's sudden reversal since Jan. 14, which has pushed stocks back into negative territory.

One is the so-called "fear factor," the concern that war with Iraq is imminent and will be damaging to the economy. The other is the slug of negative earnings reports and 2003 outlooks by major companies.

Let's take the war jitters first. A massive war in the Persian Gulf is a perfectly good reason for investors to be nervous. Its expense, in human and financial terms, looks to be immense.

Its aftermath promises to be a distraction for a long time to come. And even that scenario assumes a quick victory; if the operation drags on, the effect on the economy and stocks will be much worse.

Of course, we've known all that for some time. Troop movements and presidential rhetoric haven't altered since the beginning of the year. The president was as intent on war between Jan. 2 and Jan. 14 as he is now. Investors are able to convince themselves of just about anything, it seems, such as deciding that the market was 8 percent or 9 percent undervalued for the first two weeks of the year, despite the threat of war.

As for corporate performance, cognitive dissonance seems to have been at work there too. As we came into 2003 there was precious little evidence that the business climate had improved, yet investors bid up stocks of all sorts.

Eastman Kodak (EK: down $0.92 to $32.08, Research, Estimates), for example, raced forward, perhaps because investors reckoned that the No. 1 Dow stock of 2002, sporting a healthy dividend, would be a good bet again in 2003.

Recently by Adam Lashinsky Listen to your fund manager Abbott: We'll pay later AOL: What the smart money is saying

After Kodak stunk up the joint this week, its stock slid far below its 2002 close. (That pushed up its dividend to a high 5.45 percent.) Intel (INTC: down $0.82 to $15.85, Research, Estimates) hummed along for a couple weeks too -- until it cut its capital budget by a cool billion dollars. Bye-bye stock appreciation.

So what to do? With few exceptions, stocks will just tread water or follow each other downward until it becomes very clear what's to happen in Iraq. The pundits are guessing war by mid-February. That's less than a month away. (For one of the exceptions, check out Western Digital (WDC: up $0.75 to $8.15, Research, Estimates), which I profiled in Fortune last month. Stock picking remains possible, it seems.)

Are stocks still the best bet for the long run? Sure. Should you have your near-term cash needs in safer securities? Absolutely.

I had dinner the other night with my wife and another couple at a decidedly unposh sushi house in Silicon Valley. Seated one table over was another foursome: Larry Ellison and Steve Jobs, with, I assume, their respective significant others.

You know the dinner was an impromptu get-together by two buddies because Ellison had been scheduled to be in New Zealand, until his Oracle-BMW yacht was eliminated in last weekend's America's Cup challenge. Jobs looked exactly as you'd expect: Scruffy jeans and a black turtleneck. He must have lots of each.

What was cool, in my opinion, is that the multi-billionaire and his none-too-downtrodden pal were having some Japanese food at a storefront restaurant pretty much like regular guys. Had this been Hollywood, I'm sure the two celebrities would have been hounded -- or would have been somewhere fancier. My fellow diners pretty much left Ellison and Jobs alone (and so did I).

There was a fascinating contrast between two articles in Friday's Wall Street Journal. The first, a bang-up mood piece by San Francisco-based reporter Pui-Wing Tam, was about an entrepreneur who's risking it all to start a company in Silicon Valley, having left a good job at Palm to do it.

Read the story carefully and you'll see that it's not unusual for this guy to leave his wife and four kids for weeks at a time to pursue his dreams.

Flip forward to the news that Henry Nicholas, CEO of Broadcom (BRCM: down $2.50 to $15.11, Research, Estimates), resigned Thursday to try to save his marriage -- after his wife filed for divorce. I had a memorable dinner with Nicholas in 1998, around the time his company went public, and it was clear to me then -- over much food, fine and additional cocktails -- that this guy had only one focus: His company.

Is there such a thing as a healthy balance? Examples are few and far between.

Adam Lashinsky is a senior writer for Fortune magazine. Send e-mail to Adam at lashinskysbottomline@yahoo.com.

Sign up to receive The Bottom Line by e-mail.