The highest expected value strategy in investing is to put all your money in the single investment that itself has the highest expected value (assuming the opportunity is large enough that your whole contribution doesn't push the project very far down its marginal utility curve so the last dollar invested will have lower return on investment than some other investment).
I wanted to comment on this example: the benefits to index funds are more than in variance. Trading costs make it a superior long-term strategy to managed funds / researching your own stock picks (the highest expected value investment will change from moment to moment), and the fact that stock prices are not independent means a well-chosen larger subset of stocks will have higher expected value than a poorly-chosen smaller subset of stocks.
To reword that last sentence (and explain what I mean by well-chosen and poorly chosen): if I sort stocks by expected return over the next month and pick the top five, my expected value is worse than or the same as if I also model the effect stock prices have on other stocks, and then pick the set of five stocks whose expected return over the next month is highest, even though I have access to the same set of stocks.
That is to say, the EV of a single stock being highest is due to the rudimentary nature of that EV. You can improve the EV without discarding that method of analysis, and without touching on utility concerns (where risk of ruin comes into play in a big way).
I agree with you that irreversibility should raise giant red flags and suggest that an EU (or however you want to abbreviate expected utility) calculation is a better choice than an EV calculation, and plans which are reversible significantly decrease the risk of ruin. But I think Bella's overall risk of ruin decreased with the transition to a vampire (and then massively increased with the transition to a revolutionary), and she had good reason to expect that would be the case.
That is interesting to think about, though, the optimal way to manage a transition like that- hmm.
This is Part 2 of the discussion of Alicorn's Twilight fanfic Luminosity.
LATE BREAKING EDIT: Part 3 exists now, so new comment threads should be started there rather than here.
In the vein of the Harry Potter and the Methods of Rationality discussion threads this is the place to discuss anything relating to Alicorn's Twilight fanfic Luminosity. The fanfic is also archived on Alicorn's own website.
Here is Part 1 of the discussion. Previous discussion is hidden so deeply within the first Methods of Rationality thread that it's difficult to find even if you already know it exists.
Similar to how Eliezer's fanfic popularizes material from his sequences Alicorn is using the insights from her Luminosity sequence.
The fic is really really good but there is a twist part way through that makes the fic even more worth reading than it already was, but that makes it hard to talk about because to even ask if someone is twist-aware with any specific hints is difficult. The twist is in the latter half of the story. If you are certainly not post-twist and want to save the surprise, then you should stop reading here and fall back to Part 1 discussion or to the fic itself.
If you think you're pretty sure you are post-twist and are safe to read the rest of this, try reading this rot13'ed hint and see if what you've read matches this high level description of the twist...
Rqjneq unf qvfpbirerq gur frperg gung Vfnoryyn jnf xrrcvat sebz uvz "sbe uvf bja tbbq" bhg bs srne bs Neb ernqvat Rqjneq'f zvaq. Va gur nsgrezngu, fbzrguvat unf punatrq nobhg gurve eryngvbafuvc gung znl unir pnhfrq lbh gb pel sbe n juvyr, naq juvpu znlor urycf gb rzbgvbanyyl qevir ubzr gur pbzovarq zrffntr bs YJ'f negvpyrf nobhg "fbzrguvat gb cebgrpg" naq "ernfba nf n zrzrgvp vzzhar qvfbeqre" naq gur jnl gurl pna fvzhygnarbhfyl nccyl gb crbcyr jub unir abguvat zber va gur jbeyq guna fbzr fvatyr crefba jub gurl ybir.
If the answer to the hint is obvious, then just to be sure that there is not a double illusion of transparency at work, here is the cutoff point spelled out explicitly:
Gur phgbss cbvag sbe cbfgvat urer vf gung lbh unir ernq hc gb puncgre svsgl svir (va gur snasvpgvba irefvba) be puncgre gjragl rvtug ba Nyvpbea'f jrofvgr jurer Rqjneq jnf cebonoyl vapvarengrq, Vfnoryyn fheivirf na nggrzcgrq vapvarengvba, naq fur unf gb ortha gb jbex bhg jung gb qb jvgu gur jerpxntr bs gur erfg bs ure "rgreany" yvsr.