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Jon Markman's Speculations

Dec. 13, 2010, 2:40 a.m. EST

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Global warming heats oil and coal sectors

GM's pitch for bigger paychecks

By Jon Markman, MarketWatch

SEATTLE (MarketWatch) "� Like the swallows returning to San Juan Capistrano signal the start of spring, the return of hostile takeovers and one-day IPO doubles heralds a return of the bull market to Wall Street.

Two years ago at this time, it was "Get me out of IBM at any price, stat!"? Now Chinese dot-coms are jumping 150% before the coffee cools, and corporate boards are hoisting the Jolly Roger to prey on wounded rivals.

This sentiment swing is much clearer than any statistical review could be. Forget that stocks have walked up and down the unchanged line in the past week like prisoners on a chain gang. The fact is that the smell of greed is in the air, raising the curtain on a new year likely to brim with excess and more excess.

Youku and Dangdang may sound like words your kid would make up, but these Chinese Internet companies are very real, as their IPOs have shown. Rex Crum reports.

Latest evidence came out of the blue late Thursday with word that Community Health Systems Inc. /quotes/comstock/13*!cyh/quotes/nls/cyh (CYH 35.89, +4.25, +13.43%)   had launched an unsolicited bid for Tenet Healthcare Corp. /quotes/comstock/13*!thc/quotes/nls/thc (THC 6.65, +2.36, +55.01%)   at $6 a share, a 43% premium over that afternoon's close.

The transaction would run $7.3 billion, with $3.3 billion in equity and $4 billion in debt. The offer was originally made in a letter to the Tenet board on November 12, and rejected on December 6. The battle became public when Community fired off another letter to Tenet late this week.

This is exciting. When was the last time we had a hostile bid on the wire? It's like the mid-1980s all over again. Gordon Gekko is in the house! It just goes to show the urgency that companies are feeling to put their cash to work, and the compulsion to consolidate to save costs. The combined company would have around $22 billion in annual revenue and own or operate 176 hospitals in 30 states with 32,830 beds.

/quotes/comstock/13*!thc/quotes/nls/thc THC 6.65, +2.36, +55.01%

Just hearing the symbol THC evoked memories of a different time and place for those who have been covering the market or trading for a couple of decades. Feast your eyes on the accompanying chart, to recollect a moment in time when hospital stocks were the hot momentum names and THC was the king of kings.

Back in the graveyard of dot-coms that was the 2000-20002 bear market, the market needed heroes and THC was it. Until, well, there was this matter of a federal investigation. And suddenly the whole group tipped over like a badly placed bedpan.

I mention this to remind that the market suffers from fads when money is loose and strays from fundamentals. A sector can get hot for six months or two years, and when it is on fire every argument in the world is mustered to explain why it will never end. And then it ends, poof, in tears, and won't come back for years. Read story on sector momentum investing strategies.

So as the coming bull cycle begins to cast its spell, remind yourself of that fact whenever you feel you are falling in love with emerging markets, or digital storage device makers, or virtualization software makers or high-energy food makers. You want to be a part of the fad, but you must be ready, mentally and physically, to grab your keys and walk.

In that context, here are some more bull market tips for those who are new at this.

Fads: They will burn a hole in the part of your brain where common sense lives. If you start to study valuation metrics that are based on anything but price, sales, or book value, check yourself into rehab.

Emerging markets: Love them when the dollar is falling. Love them while they are rising. Love them because that is where the greatest growth in the world is occurring. But soon as you hear the magic words "capital controls,"? take the next Tata out of town.

Page 1Page 2 Add Comment â?º · Recommend (2) · Post: Alert Email Print More Jon Markman's Speculations Dec. 6, 2010 Global warming heats oil and coal sectors Nov. 24, 2010 Combat-weary stocks shoulder trifecta of trouble Nov. 18, 2010 Fed's course calls all hands on deck Nov. 3, 2010 Emerging markets consumers fill their carts Oct. 26, 2010 The Fed's secret $4 trillion experiment Explore related topics Internet Hardware Internet Software Japan Community Health Systems Inc Tenet Healthcare Corp Schlumberger Limited Comments Screener About Jon Markman

Jon Markman is a money manager and investment adviser in Seattle. For more ideas like these, try a two-week trial to Markman's daily investment newsletter, Strategic Advantage, published in partnership with MarketWatch, or his daily trading newsletter, Trader's Advantage. His Twitter feed is @jdmarkman.

First Take GM's pitch for bigger paychecks

The auto maker's CEO fears a company brain drain if top executives aren't paid more.

5:08 p.m. Dec. 10, 2010

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"Shares in the U.K.'s Wellstream advance 5% after GE bids for the energy-equipment firm http://on.mktw.net/hwxpdh" 3:53 a.m. EST, Dec. 13, 2010 from MarketWatch

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"Shares of General Electric moved higher Friday http://bit.ly/hsFJ2g" 5:36 p.m. EST, Dec. 10, 2010 from MarketWatch

/quotes/comstock/13*!cyh/quotes/nls/cyh Community Health Systems Inc (CYH) /marketstate/country/US The market is open5:20:16 am The market is closed5:20:16 am $ 35.89 Change +4.25 +13.43% Volume 19.09m Real time quotes var embeddedchart1797581990Chart = new EmbeddedChart('#embeddedchart1797581990', NormalChartStyleNoDecimals, 190, 90, '1dy', '5mi', null, null, null, 'US:CYH'); jQuery.data($('#embeddedchart1797581990').get(0), 'embeddedchart', embeddedchart1797581990Chart); Add to portfolio CYH Find a Broker Create alert /quotes/comstock/13*!thc/quotes/nls/thc Tenet Healthcare Corp (THC) /marketstate/country/US The market is open5:20:16 am The market is closed5:20:16 am $ 6.65 Change +2.36 +55.01% Volume 189.63m Real time quotes var embeddedchart480963027Chart = new EmbeddedChart('#embeddedchart480963027', NormalChartStyleNoDecimals, 190, 90, '1dy', '5mi', null, null, null, 'US:THC'); jQuery.data($('#embeddedchart480963027').get(0), 'embeddedchart', embeddedchart480963027Chart); Add to portfolio THC Find a Broker Create alert Featured Commentary » Next: Craig Stephen's This Week in China

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More BigCharts Virtual Stock Exchange WSJ Asia WSJ Europe WSJ Americas WSJ Chinese Financial News Online SEARCH 5:20 AM EST December 13, 2010 /marketstate/country/us New York Closed /marketstate/country/uk London Open /marketstate/country/jp Tokyo Closed /marketstate/country/us   /marketstate/country/uk   /marketstate/country/jp   View All Latest News /news/latest8c077dc4-5ad2-4f73-b9c3-a381c5fece05:2561965:16a

Mining sector helps U.K. stocks extend rally

8c077dc4-5ad2-4f73-b9c3-a381c5fece05:2561955:03a

Moody's keeps negative outlook on Spanish banks

8c077dc4-5ad2-4f73-b9c3-a381c5fece05:2561944:30a

Fallout from Macau's own WikiLeaks

8c077dc4-5ad2-4f73-b9c3-a381c5fece05:2561934:24a

European stocks start the week with gains

8c077dc4-5ad2-4f73-b9c3-a381c5fece05:2561923:46a

Wellstream Holdings shares up 5% after GE offer

8c077dc4-5ad2-4f73-b9c3-a381c5fece05:2561913:22a

Rhodia up 4% after Credit Suisse outperform rating

8c077dc4-5ad2-4f73-b9c3-a381c5fece05:2561903:18a

Cardo shares up 47% after Assa Abloy offer

8c077dc4-5ad2-4f73-b9c3-a381c5fece05:2561893:14a

Reckitt Benckiser to pay $721M for India's Paras

8c077dc4-5ad2-4f73-b9c3-a381c5fece05:2561883:11a

European bourses open higher

8c077dc4-5ad2-4f73-b9c3-a381c5fece05:2561873:03a

German DAX 30 index opens up 0.3% to 7,028.32

8c077dc4-5ad2-4f73-b9c3-a381c5fece05:2561863:01a

FTSE 100 index opens up 0.4% to 5,833.81

8c077dc4-5ad2-4f73-b9c3-a381c5fece05:2561853:01a

France CAC 40 index opens up 0.5% to 3,875.15

8c077dc4-5ad2-4f73-b9c3-a381c5fece05:2561843:01a

Stoxx Europe 600 index opens up 0.4% to 277.18

8c077dc4-5ad2-4f73-b9c3-a381c5fece05:2561832:40a

Welcome back, bull market

8c077dc4-5ad2-4f73-b9c3-a381c5fece05:2561822:22a

Assa Abloy bids for 63.6% of shares in Cardo

8c077dc4-5ad2-4f73-b9c3-a381c5fece05:2561801:02a

Japan's Nikkei ends up 0.8% at 10,293.89

8c077dc4-5ad2-4f73-b9c3-a381c5fece05:2561811:02a

Japan's Topix climbs 1% to finish at 897.40

8c077dc4-5ad2-4f73-b9c3-a381c5fece05:25617712:18a

"?Huge' stock market decline coming, but not yet

8c077dc4-5ad2-4f73-b9c3-a381c5fece05:25617612:15a

S&P/ASX 200 index closes up 0.2% at 4,757.10

8c077dc4-5ad2-4f73-b9c3-a381c5fece05:25617912:03a

More Americans are in a giving mood again

Loading more headlines... dow /quotes/comstock/10w!i:dji/delayed 11,410 40.26 0.35% nasdaq /quotes/comstock/10y!i:comp 2,638 20.87 0.80% s&p 500 /quotes/comstock/21z!i1:in\x 1,240 7.40 0.60% Kiosk 1241294400000 1241294400000

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ETF Investing

John Spence Rally 'round financial ETFs Funds that invest in financial shares have jumped almost 10% this month, raising hopes the sector will perk up and help extend the stock-market rally. /conga/kiosk/commentary2.html 116090 1238889600000 1270425600000

Commodities Corner

Myra P. SAEFONG Sleepyheads are waking up Some commodities were a bit more unassuming than others this year, but 2011 could be the year they start to come out of hibernation. 115856 1256148000000 1256148000000

Holiday Business

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U.S. Politics

  Bloomberg rules out run New York mayor  says he won't seek presidency in 2012 as an independent, urges backers to "cease and desist" efforts to get him to run. /conga/kiosk/economy-politics.html 116107 1248753600000 1311825600000

Mutual Funds

chuck jaffe No gifts in these stockings It's time for Chuck to hand out his 15th annual Lump of Coal awards for bad behavior in the fund world and he has plenty of winners, er, losers. /conga/kiosk/funds-pages.html 116088 1242043200000 1242691200000

Investing

weekend investor Riding the winners How investing in 2010's top three sectors could pay off next year, too. "? MarketWatch investing coverage /conga/kiosk/investing.html 116153 1242691200000 1274227200000

Media

Jon Friedman's media web The world according to Kramer MarketWatch's founder weighs in on media companies in the 21st century, and the best city to foster innovations. /conga/kiosk/media.html 116144 1255370400000 1255370400000

Markets

Consorting with the rabble The S&P's Dividend Aristocrats index has been flat of late "� tax deal or not "� but investors are still clamoring for stocks that may soon hike payouts. /conga/kiosk/wildcard4.html 115627 MarketWatch.com Site Index Topics Help Feedback Newsroom Roster Media Archive Premium Products Mobile Podcasts RSS MarketWatch on Facebook MarketWatch on Twitter Company Info Code of Conduct Corrections Advertising Media Kit Advertise Locally License our Content WSJ.com Barron's Online BigCharts Virtual Stock Exchange All Things Digital MarketWatch Community Financial News Online WSJ.com Small Business FINS: Finance, IT jobs, Sales jobs

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Just hearing the symbol THC evoked memories of a different time and place for those who have been covering the market or trading for a couple of decades. Feast your eyes on the accompanying chart, to recollect a moment in time when hospital stocks were the hot momentum names and THC was the king of kings.

Back in the graveyard of dot-coms that was the 2000-20002 bear market, the market needed heroes and THC was it. Until, well, there was this matter of a federal investigation. And suddenly the whole group tipped over like a badly placed bedpan.

I mention this to remind that the market suffers from fads when money is loose and strays from fundamentals. A sector can get hot for six months or two years, and when it is on fire every argument in the world is mustered to explain why it will never end. And then it ends, poof, in tears, and won't come back for years. Read story on sector momentum investing strategies.

So as the coming bull cycle begins to cast its spell, remind yourself of that fact whenever you feel you are falling in love with emerging markets, or digital storage device makers, or virtualization software makers or high-energy food makers. You want to be a part of the fad, but you must be ready, mentally and physically, to grab your keys and walk.

In that context, here are some more bull market tips for those who are new at this.

Fads: They will burn a hole in the part of your brain where common sense lives. If you start to study valuation metrics that are based on anything but price, sales, or book value, check yourself into rehab.

Emerging markets: Love them when the dollar is falling. Love them while they are rising. Love them because that is where the greatest growth in the world is occurring. But soon as you hear the magic words "capital controls,"? take the next Tata out of town.

Jon Markman is a money manager and investment adviser in Seattle. For more ideas like these, try a two-week trial to Markman's daily investment newsletter, Strategic Advantage, published in partnership with MarketWatch, or his daily trading newsletter, Trader's Advantage. His Twitter feed is @jdmarkman.

The auto maker's CEO fears a company brain drain if top executives aren't paid more.

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