In a bear market, a key to sustaining investment returns is dodging the mines. The companies that blow up, crash and burn or simply go bust hurt even the most diversified portfolio. One disaster like the implosion of Marconi, the telecommunications equipment maker, has a disproportionate impact on overall returns.

Now the cycle has turned full circle. As Graham Secker of Morgan Stanley noted this week, with the psychology of the market turning from fear to greed, the focus of investors is now more on identifying the next takeover target than the next earnings disappointment.