One of my favourite words in the English language is the word boatswain [ˈboʊsən]. It’s one of these quintessential English words that nobody will ever pronounce right, unless they have heard a native speaker say it. I just love shit like that. It makes English interesting to learn.
When I was just deleting some old drafts that I will never finish out of the file structure for this website and commiting the changes to my version control system, I titled the commit “cutting my losses”. I began to wonder where that expression came from. Well, I looked it up and I’m here to share the knowledge with you. According to the English Language Stack Exchange, the expression to cut one’s losses dates back to the early days of the London Stock Exchange, which was founded in 1801:
The original form was “cut short your losses” and was popularly attributed to the economist David Ricardo (1772–1823), though this maxim never appeared in any of his published works. He had what he called his own three golden rules; the observance of which he used to press on his private friends. These were:
“Never to refuse an option when you can get it.
“Cut short your loses.
“Let your profits run on.”
By cutting short one’s losses, Mr. Ricardo meant that, when a member had made a purchase of stock, and prices were falling, he ought to resell immediately. These are indeed golden rules, and may be applied with advantage to innumerable transactions other than those connected with the Stock Exchange. – “A Practical Treatise on Business,” The Merchants' Magazine and Commercial Review, vol. 27, New York, 1852, p. 436f.
Divorced from any mention of Ricardo, the maxim could vary: “Cut your losses. Your profits will take care of themselves. (Provided you let them.)” An NGram shows that around 1900, cut your losses short began to be more frequent, most likely because of the more pleasing rhythm.
At the same time, more and more speakers were, as the 1852 Merchant’s Magazine article suggests, applying the maxim “with advantage to innumerable transactions other than those connected with the Stock Exchange.” The saying has entered general use divorced from any connection to stock trading and can describe getting out of any bad situation before it gets even worse.