A portfolio of a 300k house, a 200k mortgage, and 200k of stocks is a less risky portfolio

Could you expand on this? Why is having the mortgage less risky? Just in comparison of having no stock vs stock right?

I was quite stupid and misleading with my very vaguely mentioned stock portfolio. Its just something I didn't really factor much into the equation. I was only thinking of "mortgage vs this $100k cash in savings right here (and some extra from selling some stock)" thinking of maybe other tax considerations I was missing.

Our stock portfolio does have significant index fund allocation in addition to the briefly mentioned company stock options and it is not an unsubstantial amount, and has had very good returns. For us to pay off the mortgage we would have to sell $50k of these stocks, which was in the original posts math I suppose but not called out specifically. These current allocations are actually not uncomfortable to my wife and I, as I consider them actually low risk with a historically great return and outlook.

I suppose this comes down to our own personal perception of risk and FOMO basically. My wife's frame of mind in particular is along the lines of "decision making" risk. As in, selling these stocks is very scary because of the "risk." Yet its hard for her to recognize that doing nothing and making no decisions at all is itself a risk! Anyway, that's a whole psychological aside.

But to your overall point, you have convinced me that we definitely shouldn't sell any of these stocks just to pay off the mortgage as that would be a foolish financial decision. So, thank you very much for that.