The stock market sometimes causes many people to lose sleep. An old Wall Street proverb is to “sell down to the sleeping point”—that is, only assume the risk that can make you sleep comfortably at night, without excessive worry.
The Wall Street proverb is cited in print by at least March 1891, when Dickson G. Watts, head of the New York Cotton Exchange from 1878 to 1880, wrote an article (later reprinted as a book) on “Speculation as a Fine Art” for The Cosmopolitan magazine. The saying is sometimes (probably incorrectly) attributed to J. P. Morgan, although no early, direct print citations can be credited to him.
A similar saying, cited in print since at least 1896, has been attributed to Baron Rothschild: “If you want to dine well, go in for the first (high return investment—ed.). If you want to sleep well, invest in the second (low return investment—ed.).” In other words, one can either “sleep well” (have a high risk, high return investment) or “eat well” (have a low risk, low return investment).
Stock Market Adages
Buy to the sleeping point. [If you are troubled about making an investment but still feel the need to make it, make the smallest possible investment that leaves you feeling like you’ve ‘dealt’ with the need and can calmly sleep at night. To feel obligated to make an “all or nothing” investment.]
Sell to the sleeping point. —if you are troubled by an investment but still desire to hang onto it, sell just enough so that you can feel that you’ve ‘dealt’ with the anxiety and can calmly sleep at night, but you’ve kept enough to feel comfortable with what you have left.
March 1891, The Cosmopolitan magazine, “Speculation as a Fine Art” by D. G. Watts, pg. 593, col. 1:
Speculation as a Fine Art and Thoughts on Life
By Dickson G. Watts
New York, NY: Traders Press
Pg. 10 (LAWS ABSOLUTE):
4. Another rule is, when doubtful, reduce the amount of the interest; for either the mind is not satisfied with the position taken, or the interest is too large for (Pg. 11—ed.) safety. One man told another that he could not sleep on account of his position in the market; his friend judiciously and laconically replied: “sell down to a sleeping point.”
If a speculation keeps you awake at night, sell down to the sleeping point.
9 April 1892, Wall Street Daily News, pg. 4:
If your investments worry you so you cannot sleep, sell down to a sleeping point or close out entirely.
The A B C of Stock Speculation
By Samuel Armstrong Nelson
New York, NY: Published by S.A. Nelson
One man told another that he could not sleep on account of his position in the market; his friend judiciously and laconically replied : “Sell down to a sleeping point.”
Reminiscences of a Stock Operator
By Edwin Lefevre
New York, NY: George H. Doran Company
“Sell down to the sleeping point,” answered the friend. As a rule a man adapts himself to conditions so quickly that he loses the perspective.
25 January 1942, Dallas (TX) Morning News, “Wall Street Ideas Worth Scrutiny,” section III, pg. 12:
If your stocks worry you, sell them to the “sleeping point.”
The Big Board: a history of the New York stock market
By Robert Sobel
Published by Free Press
“Sell to the sleeping point,” was Morgan’s reply. So it was for customers of soundly run, conservative brokerages. They may not have participated in many of the more spectacular rises, but they also avoided the sharp falls—and they were able to sleep.
9 November 1967, Dallas (TX) Morning News, “Sell to the Sleeping Point” by Robert E. SPear, section B, pg. 9:
The elder J. P. Morgan was once approached by a friend who said he couldn’t sleep because of his large stock holdings. “What shall I do?” he asked. “Sell down to the sleeping point,” replied Morgan.
Buy the Rumor, Sell the Fact:
85 Maxims of Wall Street and What They Really Mean
By Michael Maiello
Published by McGraw-Hill Professional
If Investments Are Keeping You Awake at Night, Sell Down to the Sleeping Point
New York City • Banking/Finance/Insurance • (0) Comments • Thursday, October 02, 2008 • Permalink