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Stock quotes in this article:ADPT, FCY, SGP 

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The merger wave in pharmaceutical stocks is one of the healthiest things I see going on in the market right now. Monday brought the latest bid, when Merck (MRK) announced a $41 billion deal for Schering-Plough (SGP). I have said before that one of the ways to stop a real bear market like we have been experiencing is a merger wave. Stocks reach levels where it is just cheaper to buy assets, earnings, technologies and patents on the stock exchange as opposed to developing them yourself. The pharmas are just the first. I expect the oil and oil service stocks to be the next group to experience a rash of mergers and acquisitions in 2009. Ultimately it will be business acting in the interest of profits that ends the bear market, not government intervention or monetary policy.

I am not making a definitive bottom call; there are still a lot of problems out there. The real estate market still faces pressure from foreclosures and write-offs, and that is probably going to continue for some time. The major banks are a toxic disaster area. The automakers, particularly General Motors (GM), are in deep trouble, with no end in sight. Unemployment has not yet peaked; most think we will approach 10% unemployment before it does. There is a very real risk of the broader market continuing to fall for awhile. But stocks and the assets and earnings they represent are getting cheap.

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