How can you profit from the giant takeover games being played on Wall Street? Just watch the big players and buy into their stocks. Not every takeover target makes a good investment. But enough of them do to make your likely gains exceed your losses.

Why are there so many takeovers today? First, the stock market has not moved substantially ahead of its peaks of a decade ago. Many fine companies are sitting on valuable businesses whose full worth is not reflected in their market price. Takeover artists go after those companies because they think they see ways -- untapped by present management -- to get the stock price up. And they often succeed.

Second, other investments look less attractive today. Adjusted for inflation, for example, the average new house has dropped 10 percent in value since 1978, according to David Levy of Levy Economic Forecasts. As a result, a lot of big money is fleeing the inflation hedges, such as real estate, oil and precious metals, and repositioning itself in stocks.

Third, says Irwin Jacobs -- one of the major players on Wall Street today -- huge amounts of capital are now backing the takeover game. "Success makes things happen and the banks see success," he says. They're willing to lend money to help a Jacobs or a T. Boone Pickens go after a company, because experience shows these deals to be enormously profitable.

There are bitter arguments in the financial community about whether takeovers are good or bad. I'm talking here about hostile takeovers, where a would-be buyer goes over the heads of the old management to offer the shareholders a higher price.

The past record on takeovers is mixed. Sometimes the new owners do well, sometimes they don't. Sometimes a company that evades a hostile bid goes on to prosper, sometimes its old management runs it into the ground.

In general, the takeover trend is probably healthy for American industry. A company such as Walt Disney -- whose mediocre management was sitting on valuable, unexploited opportunities -- was going nowhere until it was attacked by the takeover buccaneers. Disney fought off some of the takeover attempts, but finally succumbed to an outside offer, and is a better company for the change.

"Most corporate managers don't think like shareholders," Jacobs says. "They get their stock free, through warrants or options, and they vote themselves million-dollar salaries and big perks like cars and country clubs." They make big money, whether the shareholders do or not.

But with takeover fever on the loose, every management team must look over its shoulder to see whether someone else has a better idea about how the company should be run. That competitive pressure may well be pushing companies toward finding better ideas themselves.

For employes, takeovers are more troubling, because the new owner often sells or closes part of the business. But if the business isn't taking full advantage of all its assets and opportunities, layoffs might happen eventually anyway. "You can't go after a company that has been successful for 10 years," Jacobs says. "You go for companies that have poor management or made wrong decisions."

You don't have to be a quick in-and-out stock-market trader to profit from buying the stocks bought by takeover artists. They're looking for companies with hidden, long-term values. If the new owners (or the old owners, under pressure) improve the business, it should deliver an excellent long-term gain.

You needn't even buy during the takeover frenzy itself. Just note the company, watch the stock and try to buy it at a lower price when the market calms.

Street Smart Investing (2000 Maple Hill St., Yorktown Heights, N.Y. 10598; trial subscription, $95 for six issues) follows the purchases of scores of major investors, analyzes them and recommends the companies that seem to be the strongest. Of 22 stocks discussed in its pilot issue last June, 19 are up and only three are down.