My thoughts on the vaccine
In today's Exponential Investor…
- How can we think more deeply about the vaccine?
- Three reasons why the speed of it shouldn't concern you
- What I'd like to do before getting it myself
The news today is that the UK will see vaccinations beginning from as early as next week.
Will you take one?
I can't quite figure out how I feel about this, to be honest. I'd love to hear any interesting views on this from you – as you're always such an excellent source of ideas and opinions.
Email me at here.
Before I find out what you all think though, I'm going to have a go at figuring out how I feel about this right here, right now.
As I write these words, I'm not sure which way I'll go or how I'll end up.
Let's find out..
In my secret life as a regular guy and not an investment analyst, I am just another incredibly attractive, well dressed, genius bloke on the street.
And in my role as an average joe who pays rent and buys groceries, I have the same regular, poorly thought out, inconsistent views as anyone else. Daniel Kahneman and Amos Tversky (in Thinking, Fast and Slow) would call these "System 1" thoughts – instinctive and automatic.
These include irrational, under-informed views such as, "It's happened too fast, so I don't trust it".
"I'd better wait and see how it goes first..."
"If everyone else takes it I don't even need to."
"What if the vaccine isn't sufficiently effective and instead leads to a super-covid that is resistant to it?"
And to be honest, who voted for all those unelected scientists anyway! Certainly not me...
Hashtag Vaxit.
Literally that's about as developed as my current views are – I don't truly believe in them, it's just I haven't got beyond that point yet.
I think I just don't feel especially comfortable about the idea of a needle in my arm injecting this stuff into my veins, next week. And so, I'm creating reasons not to, and pretending they are legitimate.
Instead, I want to reflect, and develop some slightly more thoughtful responses. Here goes.
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Quick as a flash It seems that the number one basis for concern is speed.
It's all happened rather quickly, hasn't it? My initial response is to find that concerning.
But I wonder why it's been possible to achieve three potential vaccines so quickly.
Three factors stand out for me, on reflection. Government backing, genuine urgency, and very high rewards and competition.
The first point is that the way Donald Trump's operation Warp Speed worked was a two-pronged approach. Risk of loss was essentially neutralised by excessive amounts of money helicoptered in, making the cost-benefit analysis a lot more attractive to a lot more companies.
Then it ramped up production and distribution capacity for all the best candidates, before they were even successful through rigorous scientific trials.
These meant that a lot of companies could afford to try and find a vaccine, and that as soon as they did, they could be quickly produced in bulk and distributed.
The second point is urgency – there was a global pandemic and so speed was very much of the essence. The concern about how quickly it has happened surrounds lower attention to safety. This is a valid and logical concern, but I would say two things.
The reputational risk for any company which claimed to have a vaccine which then turned out to make people start speaking Spanish at random intervals and gave them an eleventh toe five years later, would be ruinous. There is more public attention on this medical development than perhaps any other. Rushing it and getting it wrong is more harmful than being the first to market with a dodgy product.
However, there is a valid point that this is a substance developed in a lab which we are going to inject in our bodies, and we can't yet know if there will be any long-term side effects.
Nassim Taleb says that unless a disease is highly likely to kill you (more than 1% would be an unacceptable risk for many), then it's probably not worth taking an experimental new drug. Best to wait a few years or perhaps a decade until we know that the cure isn't going to be worth than the disease.
The classic example is of the thalidomide babies. The drug thalidomide was administered to pregnant women whose children many years later turned out to have underdeveloped limbs or organs.
However, to refuse to take a medicine so unanimously recommended by the medical community means you'd have had to reject many other forms of incredibly useful medical developments over the last hundred years.
As incredibly depressing as it may sound, the thalidomide cases were predominantly unlucky, rather than the victims of malpractice or evil deeds (at least from the medical profession at large – I cannot speak for the specific companies involved).
Broadly, the medical community has delivered incredible results over the last 150 years especially, and a few, very sad cases in a million of things going wrong shouldn't deter us from that larger truth.
Taleb's rule would probably suggest that the risk of taking a swiftly developed drug is worth accepting for older people, or those with underlying health conditions which makes them vulnerable.
However, it's worth adding that the rest of us might have a moral imperative to take it, in order to protect them. One key consideration for most people is elderly relatives, co-workers, or even just the extended social network in which we live.
We know how easily Covid-19 has spread, and even if your personal risk of dying from Covid-19 is very low, it could be worth taking the vaccine to significantly reduce your chance of passing it along the chain on the way to someone else.
Would you drink and drive? 99% of the time you won't hit anyone, but if you hit someone after a couple of pints, how could you ever live with yourself? It's a similar case here.
It's the classic relationship between probability and severity. The chance of you getting and distributing Covid-19 along a chain which leads to a death is probably very low. But when the end result is a death, the severity of the outcome is so high that taking more precautions becomes imperative.
Anyway, before I start moralising and philosophising too much let's bring it back around. I have suggested three reasons why the speed of the vaccine is logical rather than scary.
Firstly, that the nature of government support created the perfect conditions for rapid development and deployment. Secondly, that the urgency of the global situation demanded speed, and that reputational risk means that safety won't necessarily have suffered as a result.
The third point is about competition.
What we are seeing with these three vaccine candidates is not three candidates rushed through the trials because governments want to look good.
What we are seeing is that of the many candidates which entered the race to deliver a vaccine, these three teams have been the most efficient and successful.
We are not just making the best of it, we are picking the best and ignoring the rest.
It's more Darwinian natural selection than central planning. It's a market response, not a government project.
It's also just reasonable probability. More chances of success correspond to higher chances of individual success. If you take one coin and flip it five times, it's unlikely to come out 100% heads (the actual odds are 1/32). But take a hundred coins, and your odds improve.
We should see these vaccines not as "one in a million" and be sceptical. We should see them as the natural result of 100 coins being tossed five times. It's not surprising that some have been successful so quickly. In fact, it's completely natural.
Also, bear in mind that if you were a company in this race, all you knew was that the reward was huge – the whole global population is your addressable market, and that competition was fierce.
These are the most powerful conditions for rapid product development that can exist. Especially if you consider that governments bankrolled it to an unprecedented extent.
Across all three points, we can see that the conditions for vaccines to have been discovered so quickly have never been so favourable. Genuine urgency, government backing and financial support, plus fierce competition and huge potential reward.
All told, it seems that the speed is broadly to be celebrated rather than feared.
So would I take it next week? Well, I'm still just a bloke with a brain, and curse it, I might still not be first in the queue.
I'd like to look in more detail at the process, the companies involved, how the phase 1-3 trials work and how it's all happened.
Perhaps, for peace of mind above all, it would be good to speak to a trusted doctor (or medical friend) to get their views on it.
And hopefully in the coming weeks we will see other countries approve it too, hopefully ones like Germany, Switzerland, and Japan (I am biased – maybe you trust Russia more).
Is the cure really worse than the disease? People have been worrying that "the cure is worse than the disease" in terms of locking down economies to stop the spread of economies. To be honest, the effectiveness of that particular "cure" is incredibly limited, or at least up for fierce debate. It seems to merely delay the spread, and only a little.
Well now we have an alternative cure.
So what we can do is decide which we prefer. Keep locking ourselves in with dubious results, or all take the vaccine and go back to our normal lives, hoping we don't grow a second head in the meantime.
I for one, would choose the latter, but if you disagree then that's perfectly alright too.
Finally, for what it's worth, one of our own publications did actually recommend one of the smaller research companies which was responsible for one of the vaccines. Great respect to our own pharma investing expert, Gerard Pontonnier!
All the best,
Kit Winder
Editor, Southbank Investment Research
PS The race for the vaccine isn't the only major competition in the world right now. The race to roll out 5G is heating up. As you've seen with the vaccine – to the winner, the spoils.
We think we have found the winner, just like Gerard.
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