Fom Steven Pearlstein in the Washington Post :

Analysts at Goldman Sachs suggested Tuesday that, despite a 50 percent run-up in stock prices that has left the Dow Jones industrial average just shy of 10,000 and the S&P 500 selling at 20 times earnings, stocks are still cheap. In fact, according to Goldman, stocks are so cheap that corporations are going to start using all that cash on their balance sheets not for product development or marketing or some other productivity-enhancing investment, but for acquiring other companies.

In case you just fell off a turnip truck, you might think “Monetizing the M&A Revival” is serious research aimed at helping Goldman clients figure out how to profit from these uncertain times. The helpful analysts from Goldman even provided the names of companies they think are so underpriced that they are ripe for a takeover — companies like Devon Energy, AK Steel and Red Hat.

But those with any memory at all will probably recognize this report for what it really is: a marketing brochure for Goldman’s investment bankers, who are just itching to begin cranking up the old M&A machine and generating those big fees again. With deal flow, of course, comes an equally lucrative flow of new stock and bond issues to pay for all those ill-advised and overpriced acquisitions, along with increased volume on Goldman’s trading desk from speculators hoping to cash in on the latest takeover rumors.