Combine vermouth, whiskey, bitters and ice in a cocktail glass and stir gently. In a separate cocktail glass, fill with ice, add a cherry and strain in the whiskey mixture. Rub the cut edge of an orange peel over the rim of the glass and twist over the drink to release oils, but do not drop in.
Variations of this drink include the Perfect Manhattan, which is made using equal parts (1/2 oz) dry and sweet vermouth. There is also the Fourth Regiment, which uses 1:1 ratio of whiskey and vermouth and dashes of three different bitters (celery, orange and Peychaud's). Other variations substitute tequila, dark rum or brandy in place of whiskey.