Higher variance is worth avoiding (under standard assumptions), but I for one was surprised by how little additional variance one takes on by allocating, say, 10% of one’s portfolio to a single arbitrary bet. In this comment I ballparked it at maybe an extra 0.5% variance.
That said, allocating one’s entire portfolio this way basically requires a rejection of the standard risk-budget assumptions.
(Disclaimer: I’m a financial professional, but I’m not anyone’s investment advisor, much less yours.)
Higher variance is worth avoiding (under standard assumptions), but I for one was surprised by how little additional variance one takes on by allocating, say, 10% of one’s portfolio to a single arbitrary bet. In this comment I ballparked it at maybe an extra 0.5% variance.
That said, allocating one’s entire portfolio this way basically requires a rejection of the standard risk-budget assumptions.
(Disclaimer: I’m a financial professional, but I’m not anyone’s investment advisor, much less yours.)