Stop loss is a concept both in Investing and Insurance that’s used to limit the damage done by making a poor decision, or limiting your liability from a catastrophic event. In the former, it prevents you from losing everything if a company goes bankrupt.
Let’s say you bought a stock for $100/share, and set a stop loss of $30. If the company goes under and the stock goes to $0, the stock automatically gets sold when it hits $30. You’ll lose 70% of your investment, but you won’t lose everything. Similar with Stop Loss Insurance. It’s for companies that self insure their medical claims.
They’ll pay the claims up to a certain amount, let’s say $1,000,000. If claims go any higher, the insurance company pays the rest. You can use it too, to limit the loss you experience from failed business or personal relationships..
In either of those – there sometimes comes a point where you’re either not getting anything back for the time and energy you’ve invested in something, or it’s just not worth it anymore. This is going to come up a lot in life BTW, so its not just me rambling about a non-issue. It happens in everything from marriages to that training program you’ve been on for the past 6 weeks.
Not getting out of one of these relationships when its long over-due can do a lot of damage. Just ask anyone who’s been stuck in a miserable marriage with a spouse who refuses to pull their weight. Or how about starting a business that’s been losing money for years – and you’re still throwing money down that hole?
A lot of us (including me) stay too long in these type of relationships, and I think I know why. As the old saw goes, “breaking up is hard to do..”. After you’ve spent so much money on something, after you’ve believed in someone, believed in a business or just invested a lot of your time – you’re much more likely to be in denial about things.
You can’t see it, but it’s obvious to everyone around you. You should have gotten out of this months, maybe years ago… but sometimes you don’t want to hurt someone feelings. It’s all the same in the end: You lose valuable time, energy, money or some combination of all 3.
This has nothing to do with my marriage BTW, nor my business nor anything to do with SHR. It has everything to do with urging you to use Stop Loss as a tool to protect yourself in life. Know when it’s time to get out.
Set some thresholds be they some amount of time, money or energy you’ve invested in something or someone – and carefully weigh that vs. what you’re getting in return. Then, get the hell out as soon as those threshold lines are crossed.
You don’t need to be nasty about it, just let the other party know you no longer wish to continue – and this is important – never look back. If you do, you risk more time, money or energy wasted. That’s time, energy etc. that could have otherwise been used productively.
That’s called opportunity cost BTW. Or what you lost out on because you still hadn’t extracted yourself from a bad situation.
Don’t forget the words or the concept, and resolve today to use it judiciously going forward..
