Re: Diversification
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On the surface, the EV of both should be the same, +10% per year.
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But shouldn't we assume there will be a payoff for taking the risk, and so the higher return/EV? The lower risk option should be more attractive if the EV's are the same.
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Now you are talking Efficient Market Mantra (greater volatility being associated with higher returns), which I don't believe in. Turn it around, if you could invested your one thousandth of your portfolio at a time in these opportunities. You'd end up with similar returns no matter whether you put your portfolio in one thousand "no risk" opportunities vs. one thousand "high risk" opportunities. Essentially over many iterations, they are offering the same "risk adjusted" return.
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