In the kingdom of Creditonia you are the Chief Investment Officer tasked with ensuring that theasset allocation decisions maximise the return of the king’s portfolio. The king is not really worriedabout risk and having seen two would-be investment managers, Mickey and Donald, on “XFactor Investing” he points you to them. They both invest in the only two meaningful assets available in the kingdom: banks’ equity and banks’ debt.
You decide to hold a competition to tell who is going to win your trust and help you invest the king’smoney: for a year they have to pick ten between bank stocks and bonds; at the end of the year the results will be made public and the decision on who is the best performer will be taken.