Within minutes of the jury announcing a crushing $253 million verdict against Merck, the wallstreet reacted with a precipitous 8% decline in Merck's stock price. Today the stock price declined another 2% and is now hovering around $28.
Its an emotional reaction as any can be. Sure this was the first trial and the world was watching to see if Merck would win or loose. But loose one trial does not mean that that this is the end of the road.
Behind all of these Vioxx troubles, Merck is a solid blue chip company with an enviable track record of helping mankind through out its history. Just because Vioxx ended up in the dustbin does not mean that this company is no good. Its just the nature of the industry where companies have to assume huge risks in developing drugs, but the market place has no tolerance for risk.
While the pundits on the Wall Street would scoff at the idea of I would recommend that, now is the time to strengthen your positions in Merck. Merck will not be any cheaper than it is right now, and right now is an awsome opportunity to add to your portfolio at a bargain basement price.
And then, forget about it for the next five years. Merck will come back. And it will come back big. Then when you look back at the 5 year chart of stock price, you will be calling yourself a hero.
