By Bryan Bottarelli

Here's a strategy for ya…

Pick a stock that's a likely takeover target.

Then buy it, cross your fingers, and hope the company you picked eventually gets taken over by a larger company.

If you adopted this strategy on Phelps Dodge (PD:NYSE), you'd be 27% richer today. The same goes for Equity Office Properties Trust (EOP:NYSE), the nation's largest public owner and manager of office properties. Today, it agreed to be acquired by Blackstone Group, which pushed the REIT 7.67% higher in today's action.

PD and EOP are not one-time events. So far in 2006, mergers and acquisitions have been the fuel driving a lot of the bullish behavior.

In 2004, for example, six M&A deals happened totaling $14.7 billion.

In 2005, nine M&A deals happened totaling $14.8 billion.

And with one month left in calendar year 2006, we have a total of 29 deals totaling a whopping $117.2 billion.

On a pure dollar basis, that's 691% above both 2004 and 2005's levels. In fact, the dollar values of this year's M&A activity is 297% above the 2004 and 2005 levels, combined!

Just today's deals totaled $60 billion.

So what does this all tell you?

For me, it's quite clear that companies are realizing that in order to take the next step in their business development process, they just join forces with colleagues or even competitors.

In the past, you didn't see as many deals like this because corporate executives would let their egos, pride, or even arrogance get in the way of making a merger that made sense. But now that's all changed.

Deals are being made. Relationships are being fostered. Enemies are becoming friends. And in the process, the best interests of shareholders are actually being considered. In a way, overcoming this mental obstacle could pave the way for extended upside gains as we lead into Christmas.