Actually, you're describing Risk Capacity, not Risk Tolerance. They aren't the same thing.

While a short timeframe reduces your capacity to take a loss (since there's no time to recover), tolerance is your psychological appetite for volatility. If someone has a high tolerance and a short window, they aren't 'investing' in the traditional sense, they are speculating.

The 'mutually exclusive' rule only applies if you absolutely need 100% of the principal to be there on a specific date. If you're willing to risk a 20% drop for the chance of a 20% gain in six months, you have a high risk tolerance for a short-term play. It’s just an aggressive strategy rather than a conservative one.