Chapter 10 - Put A " Stop-Loss" Order On Your Worries

23 April 2022

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WOULD you like to know how to make money on the Stock Exchange? Well, so would a
million other people-and if I knew the answer, this book would sell for a fabulous price.
However, there's one good idea that some successful operators use. This story was told
to me by Charles Roberts, an investment counselor with offices at 17 East 42nd Street,
New York.
"I originally came up to New York from Texas with twenty thousand dollars which my
friends had given me to invest in the stock market," Charles Roberts told me. "I
thought," he continued, "that I knew the ropes in the stock market; but I lost every
cent. True, I made a lot of profit on some deals; but I ended up by losing everything.
"I did not mind so much losing my own money," Mr. Roberts explained, "but I felt terrible
about having lost my friends' money, even though they could well afford it. I dreaded
facing them again after our venture had turned out so unfortunately, but, to my
astonishment, they not only were good sports about it, but proved to be incurable
"I knew I had been trading on a hit-or-miss basis and depending largely on luck and other
people's opinions. As H. I. Phillips said, I had been 'playing the stock market by ear'.
"I began to think over my mistakes and I determined that before I went back into the
market again, I would try to find out what it was all about. So I sought out and became
acquainted with one of the most successful speculators who ever lived: Burton S.
Castles. I believed I could learn a great deal from him because he had long enjoyed the
reputation of being successful year after year and I knew that such a career was not the
result of mere chance or luck.
"He asked me a few questions about how I had traded before and then told me what I
believe is the most important principle in trading. He said: 'I put a stop-loss order on
every market commitment I make. If I buy a stock at, say, fifty dollars a share, I
immediately place a stop-loss order on it at forty-five.' That means that when and if the
stock should decline as much as five points below its cost, it would be sold
automatically, thereby, limiting the loss to five points.
" 'If your commitments are intelligently made in the first place,' the old master
continued, 'your profits will average ten, twenty-five, or even fifty points.
Consequently, by limiting your losses to five points, you can be wrong more than half of
the time and still make plenty of money?'
"I adopted that principle immediately and have used it ever since. It has saved my
clients and me many thousands of dollars.
"After a while I realised that the stop-loss principle could be used in other ways besides
in the stock market. I began to place a stop-loss order on any and every kind of
annoyance and resentment that came to me. It has worked like magic.
"For example, I often have a luncheon date with a friend who is rarely on time. In the
old days, he used to keep me stewing around for half my lunch hour before he showed
up. Finally, I told him about my stop-loss orders on my worries. I said: 'Bill, my stop-loss
order on waiting for you is exactly ten minutes. If you arrive more than ten minutes
late, our luncheon engagement will be sold down the river-and I'll be gone.' "
Man alive! How I wish I had had the sense, years ago, to put stop-loss orders on my
impatience, on my temper, on my desire for self-justification, on my regrets, and on all
my mental and emotional strains. Why didn't I have the horse sense to size up each
situation that threatened to destroy my peace of mind and say to myself: "See here,
Dale Carnegie, this situation is worth just so much fussing about and no more"? ... Why
didn't I?
However, I must give myself credit for a little sense on one occasion, at least. And it
was a serious occasion, too-a crisis in my life-a crisis when I stood watching my dreams
and my plans for the future and the work of years vanish into thin air. It happened like
this. In my early thirties, I had decided to spend my life writing novels. I was going to be
a second Frank Norris or Jack London or Thomas Hardy. I was so in earnest that I spent
two years in Europe - where I would live cheaply with dollars during the period of wild,
printing-press money that followed the First World War. I spent two years there, writing
my magnum opus. I called it The Blizzard.
The title was a natural, for the reception it got among publishers was as cold as any
blizzard that ever howled across the plains of the Dakotas. When my literary agent told
me it was worthless, that I had no gift, no talent, for fiction, my heart almost stopped. I
left his office in a daze. I couldn't have been more stunned if he had hit me across the
head with a club. I was stupefied. I realised that I was standing at the crossroads of life,
and had to make a tremendous decision. What should I do? Which way should I turn?
Weeks passed before I came out of the daze. At that time, I had never heard of the
phrase "put a stop-loss order on your worries". But as I look back now, I can see that I
did just that. I wrote off my two years of sweating over that novel for just what they
were worth - a noble experiment - and went forward from there. I returned to my work
of organising and teaching adult-education classes, and wrote biographies in my spare
time - biographies and non-fiction books such as the one you are reading now.
Am I glad now that I made that decision? Glad? Every time I think about it now I feel like
dancing in the street for sheer joy! I can honestly say that I have never spent a day or
an hour since, lamenting the fact that I am not another Thomas Hardy.
One night a century ago, when a screech owl was screeching in the woods along the
shore of Walden Pond, Henry Thoreau dipped his goose quill into his homemade ink and
wrote in his diary: "The cost of a thing is the amount of what I call life, which is
required to be exchanged for it immediately or in the long run."
To put it another way: we are fools when we overpay for a thing in terms of what it
takes out of our very existence.
Yet that is precisely what Gilbert and Sullivan did. They knew how to create gay words
and gay music, but they knew distressingly little about how to create gaiety in their own
lives. They created some of the loveliest light operas that ever delighted the world:
Patience, Pinafore, The Mikado. But they couldn't control their tempers. They
embittered their years over nothing more than the price of a carpet! Sullivan ordered a
new carpet for the theatre they had bought. When Gilbert saw the bill, he hit the roof.
They battled it out in court, and never spoke to one another again as long as they lived.
When Sullivan wrote the music for a new production, he mailed it to Gilbert; and when
Gilbert wrote the words, he mailed it back to Sullivan. Once they had to take a curtain
call together, but they stood on opposite sides of the stage and bowed in different
directions, so they wouldn't see one another. They hadn't the sense to put a stop-loss
order on their resentments, as Lincoln did.
Once, during the Civil War, when some of Lincoln's friends were denouncing his bitter
enemies, Lincoln said: "You have more of a feeling of personal resentment than I have.
Perhaps I have too little of it; but I never thought it paid. A man doesn't have the time
to spend half his life in quarrels. If any man ceases to attack me, I never remember the
past against him."
I wish an old aunt of mine-Aunt Edith-had had Lincoln's forgiving spirit. She and Uncle
Frank lived on a mortgaged farm that was infested with cockleburs and cursed with poor
soil and ditches. They had tough going-had to squeeze every nickel. But Aunt Edith
loved to buy a few curtains and other items to brighten up their bare home. She bought
these small luxuries on credit at Dan Eversole's drygoods store in Maryville, Missouri.
Uncle Frank worried about their debts. He had a farmer's horror of running up bills, so
he secretly told Dan Eversole to stop letting his wife buy on credit. When she heard
that, she hit the roof-and she was still hitting the roof about it almost fifty years after it
had happened. I have heard her tell the story-not once, but many times. The last time I
ever saw her, she was in her late seventies. I said to her; "Aunt Edith, Uncle Frank did
wrong to humiliate you; but don't you honestly feel that your complaining about it
almost half a century after it happened is infinitely worse than what he did?" (I might as
well have said it to the moon.)
Aunt Edith paid dearly for the grudge and bitter memories that she nourished. She paid
for them with her own peace of mind.
When Benjamin Franklin was seven years old, he made a mistake that he remembered
for seventy years. When he was a lad of seven, he fell in love with a whistle. He was so
excited about it that he went into the toyshop, piled all his coppers on the counter, and
demanded the whistle without even asking its price. "I then came home," he wrote to a
friend seventy years later, "and went whistling all over the house, much pleased with
my whistle." But when his older brothers and sisters found out that he had paid far more
for his whistle than he should have paid, they gave him the horse laugh; and, as he said:
"I cried with vexation."
Years later, when Franklin was a world-famous figure, and Ambassador to France, he
still remembered that the fact that he had paid too much for his whistle had caused him
"more chagrin than the whistle gave him pleasure."
But the lesson it taught Franklin was cheap in the end. "As I grew up," he said, "and
came into the world and observed the actions of men, I thought I met with many, very
many, who gave too much for the whistle. In short, I conceive that a great part of the
miseries of mankind are brought upon them by the false estimates they have made of
the value of things, and by their giving too much for their whistles.
Gilbert and Sullivan paid too much for their whistle. So did Aunt Edith. So did Dale
Carnegie-on many occasions. And so did the immortal Leo Tolstoy, author of two of the
world's greatest novels, War and Peace and Anna Karenina. According to The
Encyclopedia Britannica, Leo Tolstoy was, during the last twenty years of his life,
"probably the most venerated man in the whole world." For twenty years before he
died-from 1890 to 1910-an unending stream of admirers made pilgrimages to his home in
order to catch a glimpse of his face, to hear the sound of his voice, or even touch the
hem of his garment. Every sentence he uttered was taken down in a notebook, almost
as if it were a "divine revelation". But when it came to living-to ordinary living-well,
Tolstoy had even less sense at seventy than Franklin had at seven! He had no sense at
Here's what 1 mean. Tolstoy married a girl he loved very dearly. In fact, they were so
happy together that they used to get on their knees and pray to God to let them
continue their lives in such sheer, heavenly ecstasy. But the girl Tolstoy married was
jealous by nature. She used to dress herself up as a peasant and spy on his movements,
even out in the woods. They had fearful rows. She became so jealous, even of her own
children, that she grabbed a gun and shot a hole in her daughter's photograph. She even
rolled on the floor with an opium bottle held to her lips, and threatened to commit
suicide, while the children huddled in a corner of the room and screamed with terror.
And what did Tolstoy do? Well, I don't blame the man for up and smashing the furniturehe had good provocation. But he did far worse than that. He kept a private diary! Yes, a
diary, in which he placed all the blame on his wife! That was his "whistle"! He was
determined to make sure that coming generations would exonerate him and put the
blame on his wife. And what did his wife do, in answer to this? Why, she tore pages out
of his diary and burned them, of course. She started a diary of her own, in which she
made him the villain. She even wrote a novel, entitled Whose Fault? in which she
depicted her husband as a household fiend and herself as a martyr.
All to what end? Why did these two people turn the only home they had into what
Tolstoy himself called "a lunatic asylum"? Obviously, there were several reasons. One of
those reasons was their burning desire to impress you and me. Yes, we are the posterity
whose opinion they were worried about! Do we give a hoot in Hades about which one
was to blame? No, we are too concerned with our own problems to waste a minute
thinking about the Tolstoy's. What a price these two wretched people paid for their
whistle! Fifty years of living in a veritable hell-just because neither of them had the
sense to say: "Stop!" Because neither of them had enough judgment of values to say:
"Let's put a stop-loss order on this thing instantly. We are squandering our lives. Let's say
'Enough' now!"
Yes, I honestly believe that this is one of the greatest secrets to true peace of mind-a
decent sense of values. And I believe we could annihilate fifty per cent of all our
worries at once if we would develop a sort of private gold standard-a gold standard of
what things are worth to us in terms of our lives.
So, to break the worry habit before it breaks you, here is Rule 5:
Whenever we are tempted to throw good money after bad in terms of human living, let's
stop and ask ourselves these three Questions:
1. How much does this thing I am worrying about really matter to me?
2. At what point shall I set a "stop-loss" order on this worry -and forget it?
3. Exactly how much shall I pay for this whistle? Have I already paid more than it is

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