In 1896, it was reported that Baron Rothschild was asked for advice on financial transactions—one with a very large rate of interest and another with a smaller rate. Rothschild reportedly said:
“If you want to dine well, go in for the first. If you want to sleep well, invest in the second.”
Several members of the Rothschild family could have made the comment: Mayer Alphonse James Rothschild (1827-1905), Alfred Charles de Rothschild (1842-1918), Ferdinand James von Rothschild (1839-1898), or Leopold de Rothschild (1845-1917)
The “Eat Well/Sleep Well” saying means that one can choose high risk/high return investments ("eat well") or low risk/low return investments (’sleep well"). An investor cannot choose a low risk investment with high return—that is, one cannot both eat well and sleep well. A more modern version of Rothschild’s saying has it that “stocks help you eat well, but bonds let you sleep well.”
The similar Wall Street proverb “sell down to the sleeping point” dates to at least March 1891.
The Free Dictionary
Eat Well, Sleep Well
Informal; a phrase used to describe the difference between a high risk portfolio and a low risk portfolio. One with a high risk portfolio eats well because there is a possibility of a high return, granting the investor a more luxurious lifestyle. On the other hand, one with a low risk portfolio sleeps well because he/she does not need to worry about the possibility of losing one’s investment in the way one taking more risks does.
What Does Eat Well, Sleep Well Mean?
An adage that, referring to the risk/return trade-off, says that the type of security an investor chooses depends on whether he or she wants to eat well or sleep well.
4 January 1896, Jackson (MI) Citizen Patriot, pg. 5, col. 4:
A Banker’s Advice.
Baron Rothschild was asked by a friend of his to advise him in the matter of a couple of financial transactions, one of which offered a very large rate of interest, the other a smaller one.
“If you want to dine well,” the baron replied after a moment’s relfection, “go in for the first. If you want to sleep well, invest in the second.”—Figaro.
How Money Is Made in Security Investments, or, A Fortune at Fifty-Five
By Henry Hall
New York, NY: DeVinne Press
It is a saying, attributed to one of the Rothschilds, that a man must decide whether he would prefer to sleep well or eat well. If the capital be safe, even though the income be moderate, the investor will sleep well. If the income be large and enable him to eat well, he may have to spend many restless nights in consequence of a reduction of income and a shrinkage of his capital, in bad times.
March 1909, The American Review of Reviews, pg. 376:
WHAT THE ENGLISH INVESTOR EXPECTS.
A PUZZLED young fellow is said once to have sought out Lord Rothschild in Frankfort for a little investment advice. There was a very sound bond at 5 per cent. Then there was a very attractive stock paying 8 per cent. Which would Lord Rothschild recomment?
“If you want to eat well and live well,” Lord Rothschild’s answer went, “buy the 8 per cent, stock. But if you want to sleep well, — take the bond.”
July 1910, Munsey’s Magazine, “Financial Department” by John Grant Dater, pg. 579:
THE STANDARD OF SAFETY IN INVESTMENTS
BARON ROTHSCHILD, head of the Paris branch of the great financial family, in the days of the second French Empire, used to divide his investments into two groups—those which allowed him to sleep well, and those which allowed him to eat well, or which promised so to do. It is an admirable classification. It puts the case of personal investment in a nutshell. It differentiaties between safety and insecurity; between an assured and an uncertain income; between investment and speculation.
The securities that let you sleep well are the gilt-edged stocks and the high-grade bonds and mortgages. They do not return a proportionately large income.
The securities that allow you to eat well, provided nothing goes amiss, are of a different character.
Google News Archive
25 August 1959, Newberry (SC) Observer, pg. 6, col. 6 ad:
When Investing Money
Watch This Saying...
“In investing money. the amount of interest you want should depend on whether you want to eat well or sleep well.”
Investors in Newberry Federal eat and sleep well...they know their money us Insured Against every possible loss, will earn a good rate of return and is available when they need it.
Google News Archive
17 October 1981, Deseret News (Salt Lake City, UT), “Pick your investment goals” by Kathryn Clayton, pg. S4, col. 2:
“You add risk to the sleeping point,” says Lease. “When you no longer sleep, you’d better back off. You have to decide whether yuou want to eat well (with common stocks) or sleep well (with treasury bills),” he jokes.
(Ronald C. Lease, professor of finance at the University of Utah’s college of business—ed.)
New York (NY) Times
FITTING THE PLAN TO THE PERSON; Psychology of Taking Risks
By DANIEL GOLEMAN
Published: November 16, 1986
In the world of personal investing, economics and psychology intermingle. Finding the balance between smart investing Continued on the Next Page Risk Continued From Preceding Page and a sense of security, experts say, requires that you know the level of risk with which you are comfortable. And finding that level entails more than answering the quip, ‘’Do you want to eat well or sleep well?’’.
New York (NY) Times
COMPANY NEWS; Mellon Takes $130 Million Loss on Investments
By SAUL HANSELL
Published: November 29, 1994
“Like everything else in life, you have to decide early on whether you want to sleep well or eat well,” said Frank D. Souder, a director at Barclays de Zoete Wedd and author of a book on securities lending.
Mellon’s choice was to eat well, investing in securities that effectively had long maturities. As rates fell last year, this produced very high returns, but the losses mounted as rates rose sharply this year.
Clouds Over Wall Street: Hard Times Trim Young Hedgies
By Suzanne Kapner 10/14/98 - 10:44 AM EDT
There’s an old saying on Wall Street: Hedge fund managers either eat well or sleep well—but they don’t do both.
A Portfolio For A Good Night’s Sleep Even in history’s greatest bull market you need something safe in your portfolio. We name some great ways to invest for income. (And they’re not just triple-A bonds.)
By Amy Kover
August 16, 1999
(FORTUNE Magazine) – A few months ago Ted Giuliano, head of Neuberger & Berman’s bond department, went out for a dinner with his wife.
No wonder Giuliano didn’t flinch when his wife made fun of bonds. Instead, he says, “stocks help you eat well, but bonds let you sleep well.”
New York City • Banking/Finance/Insurance • (0) Comments • Friday, August 26, 2011 • Permalink