JaredL,
Thanks for your highly detailed post. You describe and bring up financial points in conversational English, and you know PLENTY about these topics. One of the issues about these topics is the lack of sufficient terminology we have to discuss them. Precise terms helps with generating collaborative discussion and can advance any art or science, such as poker theory. We are hobbled by a lack of precise terminology. Finance helps because the terminology is there to speak with precision. This is one of the main points of my article series.
The main point you raise is the potential error of giving up +EV when the BR size is sufficient. This is true, especially (as you point out) when the range of opportunities is for sizing variance to the BR (via bet/stakes sizing) are not ideal. I must agree with you here.
Remember though, I am speaking in highly theoretical terms. My basic theoretical premises are sound; adjustments to theory must fit the situation in practice. You make a
key point about adjusting that does not invalidate my poker theory thesis about Sharpe.
Secondly you raise many points about the complex interrelationships between Sharpe, EV, variance and RoR. My article series is ALL about these poker issues, spoken in financial terminology and using financial concepts.
Lastly, in terms of the potential error of giving up +EV assuming a BR that can enforce acceptable RoR, I believe that in general most players are underrolled and that most players take on massive quantities of "uncompensated volatility" when they play poker.
Thanks again for your posted reply. It is sure to attract more interest to 'Poker and Finance'.
Links:
Uncompensated Volatility
"One way to control risk drag would be to eliminate volatility entirely. But doing so provides a hollow victory because..."