Reconciling different investment tolerance

I'm not sure how this came up, but last night DH and I were discussing our different levels of tolerance for risk in our investments. I know I'm definitely on the high end of risk for investing, I'll do 85-90% stock mutual funds and 10% bonds. I also lean more conservatively however to index funds.

However last night I find out DH thinks he can always beat the market and that his risk tolerance is extremely high. How high? Well he thinks at every level of risk there are oppportunities to be made. This means we should have a diversified portfolio of individual stocks and actively managed mutual funds. He doesn't believe that index mutual funds are enough. He thinks we should ebb and move with trends and try to time the market. He's a very logical guy and extremely smart. Yet I'm not sure where he's coming from, and having difficulty reconciling the idea in my brain.

I guess my issue is that I'm okay with playing with individual stocks, but to me that money is free money. It doesn't matter if it goes away or not. To him, it's all money and if a stock goes broke then the mutual fund will also go broke. This doesn't sound feasible to me and yet I can't argue with him because yes a mutual could lose 50%. And yes a stock can make 500%.

I guess I wonder what do most people do with their spouses? How do you reconcile your different tolerance levels for investing? Does one person handle it all? Do you agree on the more conservative investments to make the conservative person happy? Do you split it in half? How do you build a portfolio with different ideas?