How Benford’s Law Can Affect Your Wealth

by | Oct 26, 2000 | Archives

There are natural laws that affect our affluence yet that we can barely understand, such as Benford's Law. They make no common sense at all, yet have been so strongly mathematically proven that tax collectors (as you will see below) are trying to use them against us now. This is why we looked at approaches to attaining wealth that turn normal investing laws upside down in our recent Inspired Investing course we held at Merrily Farm. One delegate summed it up succinctly when he wrote:

“Dear Gary and Merri,

We thank you for the wonderful 3 days at the farm last weekend, for the wonderful cooking and the “feel at home” atmosphere! It was relaxing, inspiring, informative and a spiritually balanced atmosphere with all these different, same thinking like people.

The technical information I gathered was most not new to me, but I like to compliment you for putting it all in the right perspective and to make it very understandable to all. It helped my wife a great deal to get a better understanding of things where I am always talking about but where I am not that good in to express this in the understandable and structural language as you do.

What was at our opinion one of the most important gaining of these 3 days is the opening of the new world, this new circle of what you call “normal” people! ( I call us “not normal” as a matter of respect to the majority. ) But as we know, all is relative and depends at the point of view of each, his spiritual mind and his opinion about the senses of our being. We are definitely ready for further gatherings with Merri and yourself and more interesting people and we hope we get to that soon.

Further we can only compliment. The combination is just perfect; clean air and water, wonderful healthy diet, great spirituality and last but not least a gathering of so different but so likewise people! Please keep on this path! This circle can and should become very big! And we can really bring a little more to make this world a little better again!

Eric, Businessman From Belgium”

What Eric was writing about was the fact that we looked at relative investing. This means that every person should invest in different ways! In the Western world we are taught to view everything in terms of black and white, but science and reality suggest that all investments should be viewed in terms of grey. This is because the laws of relativity state that our intention changes the universe. These laws are counter intuitive and seem impossible, but have truly been proven. The real world is very upside down from what we see and feel. The spirit of our investing can make an investment successful or make it fail.

Take for example a part of quantum law called Benford's Law which states that certain digits appear show up first more often than others. Take for example the price of shares in the stock market. These prices are composed of many factors such as earnings, economic cycles, labor markets, share holder sentiment, etc. It would be natural to assume that there would be just as many numbers beginning with nine as four or one.


Benford's Law shows that a one will appear as the first non zero digit 30% of the time. Two will be the leading number 18% of the time and nine will lead off just 4.6% of the time. Zero is the most frequent second digit at 12% of the time. In random numbers this law never fails and shows us that there are very specific laws affecting all events even those we deem random.

This fact is so reliable that the IRS (along with other institutions) are working on ways to use this law to screen tax returns based on the idea that fraudulent returns are made to look random when random numbers appearing are not.

We'll look more in future message how we as individuals can use the realities of quantum mechanics to improve our investing. Until then, good Investing!

P.S. Doesn't this seem outrageous? It is not! There is an excellent article in the October 18 2000 issue of USA Today, Section D Page three which tells more about Benford's Law.