That's helpful, Jason. I believe I agree with your second point, and I believe that's the important one. Most investors--supposedly "sophisticated" institutional investors at least as much as supposedly "unsophisticated" retail investors--seem to be inordinately afraid of volatility even when they claim to be long-term investors, which would imply that they can tolerate short-term volatility and earn a significant long-term reward for doing so. For example, Robert Arnott (http://www.iijournals.com/doi/pdf/10.3905/jor.2013.1.2.013 and others) has pointed out that most of the uncertainty associated with long-term investments in volatile asset classes is UPSIDE uncertainty: that is, how much richer we'll become if we take the higher returns that are compensation for higher volatility.
I disagree with your first point, which I regard as less important; I'll write a separate response to it.