The Green Lumber Problem in Betting Psychology

An Updated Guide to Green Lumber Problem

If you’re not familiar with the term, “green lumber” when used while talking about sports betting might just refer to the type of bat a Major League baseball player might be using. Instead the term green lumber is one that was coined by author Nassem Taleb in his 2012 book Antifragile about one of the world’s most successful lumber traders who actually didn’t know anything about the product he was selling. 

Many people think an in-depth knowledge of sports is the quintessential driving factor behind being a successful sports bettor. While it definitely doesn’t hurt to know players, statistics, and trends, the real reason people make money wagering on sports is because they understand risk, probabilities, randomness, and how to read the point spread and betting line. 

What is the Green Lumber Problem? 

Joe Siegel is one of the most famous lumber traders in history, and Jim Paul noted in his book “What I Learned from Losing a Million Dollars” that Siegel really didn’t know much about the product he was trading. Paul shares an anecdote in his book that one day Siegel turned to him and said, “I don’t understand why they charge such a premium for lumber that is painted green.” 

Green lumber can refer to wood that is freshly cut or also lumber that has gone through the pressure-treating process so that it is more resistant to moisture – but one thing it is definitely not is merely painted green. Paul found it fascinating that the guy (Siegel) who was trading the most lumber of anybody he knew didn’t even know the details of the product he was moving in huge quantities. 

Taleb was equally fascinated in Paul’s fascination and in turn created an entire theory called “the green lumber fallacy.” All Siegel had to know to be successful was short term information (order flow, price changes) and not even what the actual product was that he was trading. 

It’s not just lumber trading where Taleb’s theory can be put in use, it’s almost every single type of investment. The author tells another theory of a Swiss franc trader who had never been to Switzerland, knew nothing of its politics, and couldn’t even find it on a map – yet made millions betting against the currency prior to its collapse. Green lumber betting is definitely applicable when it comes to sports wagering. 

Green Lumber Fallacy and Sports Betting 

If the lumber guy and the Swiss franc guy could be successful in trading products without knowing every intricate detail about them – can people be profitable wagering on sports even if they know nothing about them? 

The green lumber fallacy as it refers to sports betting means that a knowledge of the market and risk is more important than statistics and trends. It states that sports comprehension does not equate to sports betting comprehension. 

The green lumber betting theory kind of flies in the face about everything we’ve been told about sports wagering. Pregame shows are filled with retired athletes who give their picks and we trust them because who knows better about how a game is going to turn out than somebody who played it? As it turns out if you tracked those picks over a whole season many would be lucky to be over 50% correct. 

More often than not, the people who win these DraftKings and FanDuel million dollar daily fantasy sports pools are not sports nuts. Instead they are mathematicians, data analysts, and computer programmers who create their lineups on probability and ownership percentage and not necessarily previous statistics. 

Is the Green Lumber Fallacy NOT Pertinent to Sports? 

It can be disheartening for lifelong sports fans to learn that their in-depth knowledge of the leagues and players that is their passion provides no link to betting success – especially as wagering becomes legal in more and more states. Is the green lumber betting theory wrong though? 

There are some variables in trading lumber or currencies, but nowhere near as many as there are in sports. Sure if a team is 10-2 at home this season it doesn’t mean they are going to win the next game on their own court, field, etc., but wouldn’t the probability of winning in front of their own fans be greater? 

Injuries, travel schedule, past performances against a certain team/coach have to be considered factors in a team’s probability of winning don’t they? Wouldn’t a team missing a star player be more relative to their chances of being victorious rather than how the point spread is moving or the percentage of public bets on a specific side? 

Oddsmakers Know All The Information 

The reason why the green lumber theory is relative in sports betting is because oddsmakers already know all the information (and then some) that bettors do. Sharp bettors know this, which is why they play a line and not a team. 

There’s an old saying that when a betting line looks too good to be true it probably is. The reason Las Vegas has so many fancy hotels is thanks to the public bettors who say “Dallas is only a 1 point favorite at home against the Lions? They’re going to kill them” as the Cowboys go on to lose by 10. These are what are called “trap” lines, and successful green lumber betting experts can identify these and go against them. 

Market and Risk 

The reason those well versed in the types of principles explained in green lumber betting can have success wagering on sports is because they understand market and risk. The Yankees as -342 moneyline favorites means they’re probably going to beat their opponent, but with that price tag that is too big of a risk especially in baseball where even the best teams are going to lose roughly 37% of their games. 

Market can refer to a couple different things when it comes to sports betting. It could mean the game itself which is why some sports bettors avoid Thursday night, Sunday night, and Monday night NFL games altogether. These primetime games draw more public attention and line movement, and the experts may find some better value in a Sunday afternoon Cardinals vs. Titans game that kind of flies under the radar. 

Market also refers to how an individual game is being wagered. When 80% of bettors are on a team either the point spread is off – meaning the oddsmakers got this one wrong – or the public bettors are off. Guess which one that is most of the time (hint – the public). You can use green lumber betting theories to simply be on the 20% – oftentimes called “fading the public.” 

Green Lumber Betting Summary 

There are a couple things to note about green lumber betting, first that even the best sports gamblers in the world struggle to win 55% of their wagers and also that win/loss record isn’t really that important. A person can be 1-3 on the day, but if that one win was on a +500 underdog and the three losses were priced at -110 that’s still a profitable day of betting. 

Green lumber betting means you don’t necessarily have to know sports to be good at betting – and also that a knowledge of sports doesn’t automatically correlate to success in gambling. The truth is that while that may be true, most successful sports bettors are still familiar with the players and leagues – why wouldn’t you be if it can only help your success? 

It’s possible to not know anything about the WNBA or EPL and still have success betting on it – but a lot of that comes from just knowing about sports in general and how to read a line. Some bettors take a home underdog religiously regardless of its in the NBA, MLB, cricket, or volleyball. It’s where they see the value. 

Ultimately green lumber betting’s main thesis is just like anything else with gambling – discipline. If a line looks too good to be true, it doesn’t mean you have to fade the team, just don’t play it. Joe Siegel probably passed on trading yellow or purple lumber in his day – mostly because he had no idea what the heck it was. Want to learn more about Green Lumber Problem? Follow us on Twitter

Green lumber problem FAQs

The theory of the green lumber fallacy is that it’s not important to know the specifics of a thing to make money on it as long as you know risks, probabilities, etc. While that may be true, it definitely doesn’t hurt to be up to date on injuries, recent trends, which places are harder to win at, etc. Knowing this information helps understand why a line is moving in a certain direction.

In order to read line movement you also have to know the percentage of wagers that have moved that line. 70% of bets could result in no line movement if they are mostly smaller wagers. On the other hand a single maximum bet could move the line because sportsbooks want to be set up nearly 50/50, so that any specific result doesn’t leave them too much at a liability.

It’s not always the case, but many times winners of DFS grand prize pools have knowledge of data and analytics. However, that doesn’t mean they don’t know anything about sports either. The best success in gambling is usually having a working familiarity with the sport but also experience in number crunching. 

The best advice is always to do some individual research first and then see if your read aligns with what others are seeing for a game. It’s frustrating to lose any wager, but less so when your data and information said it was the right play and not just because you blindly followed an ex NFL quarterback’s pick. 

One thing to know is that you don’t have a lot of green lumber betting experts featured on TV shows and podcasts – some, but not the majority. It’s more entertaining to hear why a former player likes a certain side for a game rather than a data analyst. Ultimately the most important detail in a pick (whoever it is from) is why? Don’t just let somebody tell you Green Bay -7 is the play, make them tell you why whether it be because of injuries, trends, line movement, percentage of public bets, etc.