As an asset class angel investments can generate spectacular results both up and down. For early stage investing the generally accepted success profile is that 60% fail completely, 30% become life style companies (worst result for investor) and 10% succeed wildly (10++ times angel investment).
Diversification is the only way I know of addressing this profile. I would recommend that the Angel allocate enough money to make at least 10 investments in a 3 to 4 year period. For late stage investors, I would reduce the number to 5 investments. Typical investments amounts are $100K, $50K and $25K. Given your allocation one of these amounts will be your standard investment. For investments that are intellectually stimulating or have great potential but do not meet all of your criteria, I would recommend investing half your standard amount. If your total allocation is not large enough to meet this criteria, I would recommend investing in angel funds, micro VC funds or accelerators.
Strategically, moving up a level, the angel allocation should be only 10 to 20% of your total assets. Angel investing is somewhat counter cyclical where good investments appear in down markets and good selling opportunities appear in up markets. At the investment level, one can reduce risk by not over paying or under paying. If you overpay your return is not commensurate with the risk that was taken. If you underpay (take too much equity) you run the risk of being crammed down severely by VCs and/or Angels in a later round or have the founders depart from the company. Another way to reduce risk is to invest with other Angels. Getting concurrence and support from other Angels is desirable.