It seems that the confusion comes from misapplying the concept of variance, and the cost of variance.
As ExhibitCAA clearly stated in his post, the variance is reduced in that one particular round. What???!!! Only one round???!!!
Is that how the concept of variance is usually applied? Round per round?
Let’s recap the ploppy misconception here:
If you insure a good hand, even if you lose the insurance bet, you may still win the hand.
If you lose the hand to the dealer’s blackjack, you still win the insurance bet.
That sounds reasonable, and almost logical, but it’s only an optical illusion.
If you insure at low counts, you actually lose money because the EV is negative, which is different from not taking full advantage of a positive EV situation.
Let’s look at some other situations where variance can be reduced and analyze the cost.
If you don’t split two tens, then the winnings will be reduced, but the variance will also be reduced for that particular round. You don’t lose money here. The EV is still positive. You just don’t win as much.
If you hit 11 vs Ace instead of doubling, you will again reduce variance, but lower your EV as well, although EV is still positive.
Should we look at variance round per round, or should we look at the overall variance?
The reduction in variance locally in one particular round is irrelevant! The global variance of the shoe, the day, the trip, the month, etc., is what’s important.
Not taking full advantage of a positive EV is bad enough, but to lose money to reduce the variance locally in one round is preposterous!
By the way, did you know that someone actually wrote a book on how to win blackjack in the short-term? He states that blackjack can’t be beaten in the long-term, but his system will allow you to win in the short-term. I didn’t have time to skim through the chapters in the bookstore, but I couldn’t believe a publisher would actually print his book.
