Losing Your Shirt

Losing your shirt is an idiom that, in the investment world, means to lose one’s money, savings, investments, resources — or more, if investments were made with borrowed funds. Losing your shirt is a 20th-century phrase that signals great financial loss. One may say, for example, “He lost his shirt in the last recession.”

This phrase implies not just loss, but ultimate loss. You may lose something important and precious; you may lose a home or a relationship; but if you have lost even the shirt off your back, then you truly have lost everything! Investing in financial assets can involve serious — for some people dangerous — levels of risk. Thus, in order to prevent losing their shirts, it is important that investors are truthful about the amount of risk that they are prepared to take.

Losing your shirt in finance suggests losing all of one’s money, investments, and resources. People use this phrase to describe very dire financial straits. When one loses the shirt off his or her back, she has virtually lost all that she has ever saved or invested. Sometimes this idiom implies that one has invested in something — a company, product, or business venture, for example — that, for whatever reason, has failed or gone bad. However, losing one’s shirt does not always need to refer to an individual loss or investment decision. At other times, the phrase can carry a broader sense that something drastic has occurred, like a market crash or economic downtrend. In any case, whatever the cause, someone who has lost his shirt has suffered total financial loss.

Although the origins of this expression are not entirely known, its first use in America dates from around 1935 — perhaps hearkening to the effects of the Wall Street Crash of 1929 — when many investors did experience this kind of devastating, life-altering loss. In 1935 in fact, America was smack in the middle of the Great Depression, still severely wounded by the 1929 crash. It was also during this time that Congress passed landmark federal legislation — the Glass-Steagall Act of 1933, Securities and Exchange Act of 1934, and the Public Utility Holding Companies Act of 1935 — in order to help ensure that we might never again lose our shirts as catastrophically as we did in 1929.

Another phenomenon that arose in America in the 1920s was the birth of the credit culture. Credit cards, at first only bank products, were rapidly adopted by retailers. Soon, large corporations felt that they could eschew banks altogether, developing their own finance divisions and offering their own credit cards. Anecdotally, in the 1970s, Sears Financial Services’ slogan was, “If you lose your shirt, we’ll sell you another!”

Losing your shirt can have a number of other connotations depending on the context. It may be used in a general (not financial) way to state that you have lost all of your material belongings, even your shirt — assuming that your shirt might be among the last things you would want to give up. In the game strip poker — in which you remove an item of clothing as you keep losing — a player can quite literally end up without his shirt. Another setting for this phrase is in the gaming industry where, if some gamblers are not careful, they can lose all of their money (shirts). Used in these circumstances, the phrase carries a slight tone of humiliation, which usually is not meant in finance. In any context though, this idiom is used only figuratively, not in ways that leave you shirtless!