"So, did you buy Moderna?" 20% 📈

"So, did you buy Moderna?"

Multiple people WhatsApp'd me that today.

It had something to do with this-

The stock of Moderna skyrocketed 20% 📈today on the news that they have had success in their preliminary trial for the vaccine development for COVID-19.

Two things came to my mind-

  1. Bias by headlines

  2. Resulting

Bias by the headline-

Headlines are the must-read part of a news story because they are often printed in large and bold fonts.  Headlines can be misleading, conveying excitement when the story is not exciting, expressing approval or disapproval.

The headline also exposes the bias through selection and omissions.

On clicking the headline and going through the actual story, one can learn that Moderna has had success in their vaccine; the result is based on testing on just 8 people. While that is a much needed positive news that we all need right now, one should take a step back and understand that any trial with a sample size of 8 does not mean that a vaccine is ready and we all can go back to normal. Any drug, or in this case vaccine development go through multiple rounds of randomized and independent trials with a large enough sample size, which all produce a similar result, which is statistically significant. Only then we can more confidently say we have the cure!

Until then, practice skepticism when you read overtly positive headlines, click on it, read the story, confirm it with multiple sources and then if you're still feeling confident, open your brokerage app and bet some money on it.

Yeah, that is a lot of work, but it's necessary in order to weed out biases.


I've written about resulting multiple times before. My brain re-wired after I learned about the concept.

The decision and the outcome of that decision are two separate things. They are not necessarily correlated. Suppose you choose a restaurant for dinner after looking it up on Yelp and reading all the reviews. Next day you came down with food poisoning, does that mean your decision to go to that restaurant was a bad one?

Not really, you tried looking at all the information available and make a choice; the outcome is independent of your choice. Blaming your decision after looking at the outcome is called "resulting."
Outcome = Decision + Luck

If you feel bad that you missed out on buying Moderna, that is a classic case of Resulting. Unless you had some information edge about their vaccine trials, you could have never predicted that Moderna would get positive results and shoot up 20% in a day!

There are hundreds of pharma and biotech companies; any one of them could have published similar results. It's nearly impossible that you would have picked Moderna back in Jan 2020 when it was trading at $19.

And do invert-

If you did buy Moderna before the pop, I would argue that you got lucky, and your decision to pick Moderna does not prove that you're a great stock picker. Acknowledge your luck.

It bears repeating-

Outcome = Decision + Luck