I'm wondering, with high variance on p2pool or another somewhat smaller pool, is it possible to actually lose money? Like in the long run luck is irrelevant, but what if you have really bad luck and then the difficulty goes up 30%?
In this situation do you lose money because of high variance?
Yes you can. Consequently you can also gain money. Contrary to what people will insist on, it does NOT even out in the end because difficulty keeps rising. However luck determines if you're ahead long term or behind long term in an irretrievable way. If diff did not continually rise and rose-and-fell or stayed the same it would even out.
While your bad luck up front won't even out in the end, neither will your good luck up front. I think people that say it will "even out in the end" mean that if you were to start mining now, you are just as likely to be lucky as unlucky, so the expected value washes out so in the end (from now until you stop). Of course, that ignores everything in the past. So if I was unlucky, I lost money. Going forward, everything will even out (from now on). If I was lucky, I made money - but going forward (from now on) it will even out.