I agree with most aspects of fellow Fool Brian Lawler's bullish opener. Merck
At this year's Berkshire Hathaway annual meeting, Charlie Munger recommended that "you should find something to invest in and then compare everything else against that. That's your opportunity cost. That's what you learn in freshman economics, even if it hasn't made it into modern portfolio theory. That's why modern portfolio theory is so asinine."
The part about modern portfolio theory is a bit superfluous, but I find the entire quote amusing, so have left it in its entirety. But the point about opportunity cost is important in deciding whether Merck is the best choice out of a multitude of investment alternatives.
Brian and agree that the pharma space is a solid industry in which to make an investment. Profit margins are high, patent protection can last for more than a decade, and current valuations are very reasonable for the most part. But in my mind, Merck's recent stock run and current valuation place it at a disadvantage compared with other health-care options.
I find Pfizer
I believe that, barring any major drug breakthrough at Merck, you'll be better off by going with one of the competitors at current price levels. That could change quickly, of course -- we are all well aware of Mr. Market's mood swings -- so keep Brian's bullish opening handy.
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Fool contributor Ryan Fuhrmann is long shares of Pfizer but has no financial interest in any other company mentioned. The Fool has an ironclad disclosure policy. Feel free to email him with feedback or to discuss any companies mentioned further.