US markets have hit the ground running in January. The best start of a year since 1987. What gives? Isn't Europe going to zero? Isn't the US awash in debt?

As usual, equity markets worry. But companies are doing well, raising dividends, buying back stock and getting taken over. Just this week alone, we have seen four or five takeovers, as companies realize equities might not stay cheap for long. Let's do the math: If a company can borrow at 4%, then its after-tax cost of that debt is 2.8% or so. If you--as a company--cannot earn an economic profit of 2.8% then you shouldn't even be operating a business. Why would you? Why take all that risk and get a return about the same as a Treasury Bond? You wouldn't bother. But many, many companies make far more than 2.8%. The best companies, and we will try and tell you about them, will make 30% or more on their capital. SO.......if you can borrow at 4% and make 30%, why would you NOT buy other companies, or buy back your own stock? If you are a smart executive--and trust us, they all THINK they are smart, then there should be a massive corporate takeover spree in 2012. Guess what, it has already started. Don't get talked out of the market. Things are not that bad in corporate land.