The Law of Abundance 

The Law of Abundance is easily minunderstood. Our abundance of wealth and ability to attract wealth are determined by our emotions.

Is Excitement Your Enemy?

"Investors should remember that excitement and expenses are their enemies. And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy only when others are fearful."
- billionaire investor, Warren Buffett

Let’s simplify Mr. Buffett’s quote.  “Individual investors tend to buy when the market is excited because prices have gotten high.  And individual investors tend to sell when the market is negatively excited because prices have gotten low.”  This is why most people who try to handle their own stock investing get poor results.  Our emotions get in the way causing us to take actions that tend to lose money.  Simply put, our emotions can get in the way of abundance of wealth.

Let's stay focused on investments and the Law of Abundance.  A very simple way to profit from your investments is to avoid following the crowd.  When everyone is in a selling panic because the market has gone down, that’s your signal to buy.  When the market is flying high and everyone is still buying, that’s time to sell.  Obviously, investing is not this simple – but this is an important guideline to follow.

Researchers in the new field of ‘Behavioral Economics’ (which focuses on how the mind-body connection shapes financial decisions) say most investors are not only irrational but systematically irrational.  Individual investors make the same mistakes over and over – but we can profit from this by remaining aware of the trends.  To confirm these opportunities, let’s review a little history.

Irrational excitement caused a lot of us to invest too much in the high flying internet stocks in the late 90’s – even though none of these companies were even reporting profits!  In hindsight, it’s easy to see how silly this was.  In an attempt to protect their abundance of wealth, all the big investment firms sold off first, causing a fast 4,000 point plunge in the Dow Jones Industrial Average.  But most individual investors sold off too late – losing a bundle.

Now here’s another really big lesson:  Most of the individual dot-com investors were so emotionally devastated by their losses, they remained on the sidelines and missed the Dow’s 5,000 point climb back to the top.  This was a 'missed opportunity' of wealth creation. We waited to begin investing until it felt “safe” and missed the opportunity to regain our losses.  The Law of Abundance constantly provides opportunities.  It's just that our emotions make them difficult to see sometimes. 

We find the same self-defeating pattern - from greed to panic to revulsion - in every financial boom and bust throughout history - and not just in stock investing.  From our recent American real estate boom and bust – to the Japanese property and stock mania of the 1980s - to Wall Street's Roaring '20s – history continues to repeat itself.  Our extreme emotions impede building wealth.  When positive excitement gets too high, prices get too high.  This is when professional investment firms begin selling and experience an abundance of success.  When negative excitement over a declining market gets too intense, prices get ridiculously low.  This is when professional investment firms begin buying.  Individual investors always get hit the hardest because of the tendency to buy near the top, and sell near the bottom during extreme conditions.

When it comes to investing, don’t follow the crowd when emotions are high.  Remain calm and you'll be able to recognize wealth creation opportunities constantly provided by the Law of Abundance.  You will see what’s happening, and you will attract wealth!

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