Burn the Boats

The (literal) small print: this newsletter is mostly stories, pop-psychology, and half-baked trading ideas. This is NOT financial advice. Best to think of this as a community of like-minded gamblers. If you are having a punt, make sure you restrict your trade size to whatever change you can find down the back of the couch.

Here’s two stories - one about a Chinese warlord, and one about Steve Jobs.

In 207 BCE, warlord Xiang Yu led an army across the Yellow River to fight the Qin Dynasty.

His men were outnumbered 10 to 1.

With the odds stacked against him, Xiang Yu ordered his soldiers to burn the boats that had brought them across the river.

No boats. No retreat. Now his army had no choice but to fight for survival.

And they did. Incredibly, they won nine consecutive battles.

Okay, now let’s fast forward a couple thousand years…

It’s 1997. And Steve Jobs has just returned to Apple.

The company has too many products, too many teams, too much going on. So Jobs draws a simple grid: consumer, professional, desktop, portable.

Four product lines. Cut everything else.

One year later, Apple’s gone from a $1.04B loss to a $309M profit.

So, what’s the connection between Xiang Yu and Jobs?

Well, they both understood the same thing: being focused on something is easier when you cut out other options.

Same goes for your portfolio…

Diversification of risk is good:

Owning ETFs? Good. Spreading some risk across asset classes / geographies? Also good.

But there comes a point where you can diversify too much, or over-hedge - trying to keep all options open, all the time.

Seems harmless? It isn’t.

Here’s three ways it hurts your portfolio:

Hedging is useful. But there’s a limit.

Over-hedge for every tail risk, and eventually there’s barely a trade left.

We’ve done this before: protected the downside, felt safer, and then wondered why a winning trade barely moved our portfolio.

Xiang Yu sank the boats for a reason.

Trading is effort: you need a thesis, an invalidation point, an exit.

If you own too many stocks, or have too many positions open, it gets harder to manage. And if things go south, you won’t know whether to sell, hold, or double down.

Too many open positions means you’re spread too thin, and can’t focus on your best trades.

One week it’s uranium miners. Next week it’s AI. Then FX. Crypto. Biotech. Until finally you make your way back around to miners.

Trading everything is fun. But too many strategies means less focus on the ones that actually work.

Peter Lynch (remember that guy?) coined the term “diworsification”.

He used it to describe companies making bad acquisitions, or going into industries they didn’t understand.

So, in keeping with the theme, we’re looking for the opposite:

We’re looking for a company that’s cutting out distractions, and focusing on its core business.

We want a company channeling its inner Xiang Yu (but a bit less war crime-y).

VF Corporation (NYSE: VFC)

VF Corp owns The North Face, Vans and Timberland.

It also used to own Supreme and Dickies. But not anymore.

Supreme was sold. Dickies was sold. Both in the last two years. VF is narrowing its focus. It’s burned a couple of boats.

The thesis is simple: VF is now a more focused turnaround.

The North Face and Timberland are already moving in the right direction. Both brands grew in Q3 FY2026*. VF also expanded margins, reduced debt, and beat revenue and operating income guidance.

But Vans is still the problem child. If - big IF - Vans can stabilise, things might start looking a lot better.

I’m buying: VFC outright.

*Q4 FY2026 earnings next week. Be careful out there.

There’s psychological traps everywhere in life. They shape how we think, how we make decisions, and spend money.

But enough of that - reading’s for nerds. Let’s gamify this:

💲💲A stock on your watchlist traded at $300 a year ago. Now it’s $150.

Sure, growth and revenue have slowed a bit, but... it’s half-price.

The answer - and the psychology behind it - will be revealed in the next edition.

Last Week’s Answer:

Last week’s trap was Diworsification. Just to be clear, generally speaking, careful diversification is good. But owning so many positions you can’t follow them properly? That’s less good. If you chose to cut down your portfolio to the 10 best trades, congratulations — you burned the boats.