The Green Lumber Fallacy

The Green Lumber Fallacy, outlined in Nassim Taleb’s book, Antifragile: Things That Gain From Disorder, is the idea that "a supposed understanding of an investment rationale, a narrative or a theoretical model" is often more unhelpful than helpful in practical trading/investing.

From the book:

"In one of the rare non-charlatanic books in finance, descriptively called What I Learned Losing A Million Dollars, the protagonist makes a big discovery. He remarks that a fellow called Joe Siegel, the most active trader in a commodity called "green lumber" actually thought that it was lumber painted green (rather than freshly cut lumber, called green because it had not been dried). And he made a living, even a fortune trading the stuff! Meanwhile the narrator was into theories of what caused the price of commodities to move and went bust."

This is a classic mistake, being encouraged everywhere I look, by people who are "into" cryptocurrencies.

But the technology, and investing in it, are two very different things.

Word to the wise ... If you want to make money in cryptocurrency, follow the "Suits", not the "Hoodies" 😎

Kim Snider