RIP: 2/6/2004 - 4/13/2007

No, this isn't about someone who died. It's about selling a stock that I held even though it tanked after I bought it. The Buy-and-Hold Blues. Perhaps one of the usual suspects will regale us with a modified song of that name.

A little over 2 years ago, Feb 6 2004, to be exact, I bought a little bit of MRK. You know, of Vioxx fame. It was down in the mid-40s, a bit from its recent peak of about 60, so I bought in. Just a few hundred shares to get started; I planned to add more later (fortunately never did since it sort of oscillated in a narrow range). I didn't pay a lot of attention to it.

Well, we all know what happened to MRK. Come around the beginning of Oct 2004 it went over a cliff and proceeded to go down to nearly $25. But for some reason I decided to hold on to it. Can't tell you why. Little did I know it would take more than 2 years to come back! Something gnawed at me - take the loss, dummy. But I didn't. Nope, can't tell you why. Felt a bit dumb about it, actually. Watched it claw its way up, fall down, dust itself off and climb again.

Well, I said goodbye to my old friend on Friday when it gapped up on news of Vioxx trial success, several upgrades, and earnings. I was used to seeing it on the screen every day. It became an old friend. But my hand reached out, I clicked the mouse, and sold within 20 cents from the HOD (not bragging, just fortunate). My suspicion is that a lot of people will be selling it on Monday as they prime the pump via Schwab and Ameritrade websites over the weekend. So what if I'm wrong? So it goes.

But what's odd to me about how I handled this was how I anthropomorphized this stock. Maybe it was a way of deflecting the shame reaction: rationalizing my bad decision not to sell it when it originally broke down on the bad news. Because it had to be a rationalization - there was really no good reason to hold on to it.

RIP, my MRK shares. May you enliven someone else's life. You're out of mine.

Paolo Pezzutti adds:

If you like them so much you can buy them again lower on Monday! 


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