The Green Lumber Fallacy

Nugget by Nassim Nicholas Taleb

Jan 30, 2026

👋 Hey friend,

Today’s insight is one of my favorite human fallacies from Taleb.

I heard it a few years back on a talk he gave at Google, and now I heard it again to refresh it — but to my surprise, I realized I haven’t shared it on Little Almanack !! So here it is.

👤 Doers

💡Nugget

🟠 Nassim Nicholas Taleb:
There is a story in both Antifragile and Skin in the Game, of a fellow who lost a million dollars trading green lumber.
He knew everything about green lumber. Everything! The economics, the mathematics, the statistics, collected data, everything…
And [yet] lost a million dollars.
And [he] wrote an account: What I Learned Losing a Million Dollars. And he reports that there's a fellow, a pit trader — I don't know if you've met pit traders, but they look like pit traders and they act like pit traders. And the fellow is making tons of money with green lumber and had been doing so consistently. Now, the narrator discovers that the fellow [who] made a lot of money on green lumber thought it was lumber painted green. He didn't know it was freshly cut lumber.
So, is it that that person knew nothing about lumber?
No. He knew a lot of stuff, but not necessarily what you think from the outside is valuable.

So, when you have skin in the game, you tend to know a lot of stuff about business, about things, that you wouldn't guess you need to know from the outside. And this is very hard to explain. This is why machine learning is successful, because machine learning has no ideas. It learns from the inside, not from the outside.
👉 Nassim Taleb’s Talk at Google

There's another illustration on his book Antifragile. It's a personal experience from Taleb, during the period when he was transitioning from his academic studies to becoming a derivatives professional — focusing on exchange rates (where he had to cohabit with foreign exchange traders).

You can read his account below...

🟠 Nassim Nicholas Taleb:
My first conversation with an expert was with a fellow called B. Something-that-ends-with-a-vowel dressed in a handmade Brioni suit. I was told that he was the biggest Swiss franc trader in the world, a legend in his day—he had predicted the big dollar collapse in the 1980s and controlled huge positions. But a short conversation with him revealed that he could not place Switzerland on the map—foolish as I was, I thought he was Swiss Italian, yet he did not know there were Italian-speaking people in Switzerland. He had never been there. When I saw that he was not the exception, I started freaking out watching all these years of education evaporating in front of my eyes. That very same day I stopped reading economic reports. I felt nauseous for a while during this enterprise of “deintellectualization”—in fact I may not have recovered yet.
👉 Book: Antifragile

Difference between experience and theory

♡ An App I’m Loving (not sponsored)

All the way back to 24th December of 2023, I learned about an app that completely changed how I pick nuggets from YouTube.

It’s called Reader, and (among other features) it lets me seemingly connect any YouTube video to it and watch it on the Reader website (and mobile app).

But… Why would I watch YouTube videos on Reader instead of YouTube?? The answer is simple:

(1) It has a more easy-to-follow transcript of the video.

(2) You can make highlights right inside the transcript! (whether in the website or the mobile app). And you can also write notes on those highlights.

Then, the Reader app will create a notebook with all your highlights and notes (from that video), and even connect automatically to Readwise (an app that aggregates highlights from Reader, Kindle, etc.).

This is how I’m building my own personal library of ideas that have resonated with me, which I can revisit at any time.

“A chief part of learning is simply knowing where you can find a thing.”
- Latin Motto

(3) Another benefit is that there are no distractions! You can focus exclusively on the information of the video. This has expanded my attention span!

“I did not succeed in life by intelligence. I succeeded because I have a long attention span.”
- Charlie Munger

There is a free trial of 30 days (after that it’s $9.99 per month), but I reached out to the team at Reader and they made a special offer for us! If you use my special link you will get a 60-day free trial (after that it’s $9.99 per month) 👉 https://readwise.io/pickingnuggets-reader