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” 😎
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