[MUSIC] So, our next set of videos are all going to be about the search for the elusive ALPHA. So remember what we mean by ALPHA, that's risk adjusted performance. So, can you find these investments that are beating their benchmark? That's what we're after. Are there any parts in particular of mutual fund portfolios that a priori could be more likely to reflect good information and then ex post seem to yield positive ALPHA? So when we look at mutual fund holdings as a whole, they don't beat their benchmark, but doesn't mean there aren't some pockets of the mutual funds investments that actual do meet their benchmark and has positive ALPHA. The key is can we identify those ahead of time? Are there any types of mutual funds that might perform better than others? So forget, are there parts of the portfolio that seem to do well? Can we identify certain types of mutual funds? Again, a priori that might perform better than others? Obviously, ex post, we're going to observe some mutual funds do well, some do poorly. But then the question is that due to skill or look, can we ahead of time predict mutual funds that are more likely to do better than others, kind of an average, average basis? Are there firms that are complicated enough, so that information is fully processed with a bit of a lag? So, there are some firms that's a little complicated to process the information. Some sharp investors may get it right away. The market as a whole doesn't, so maybe it provides a little profit opportunity. That's part of the search for ALPHA and then are there any modern sources of information that may help when searching for ALPHA? Think of kind of information available on the internet that maybe we could use in terms of forming our portfolio to earn some positive risk adjusted returns. These are all topics that we're going to talk about in the ensuing videos. So when you think of the search for ALPHA, I'm kind of thinking of this here sophisticated equipment. This is actually a metal detector from 1919, its purpose is to look for unexploded bombs in France right after World War I. So you may think of like hey, searching for ALPHA, come up with some complex machinery and then just kind of hope for the best trying to find this. The odds are you may be won't, particularly if you believe in efficient markets, but let's see if we can find something and then what happens when you do find ALPHA? Like you toot your horn, you've found the gold at the end of the rainbow. So, what are we going to talk about in terms of our videos regarding the search for ALPHA? So first, mutual fund disclosure. What are the rules for mutual funds. How often do they have to disclose their holdings to the public? And if they have to disclose their holdings, let's say, as of December 31st, 2016, how soon does that information get to the public? What are the SCC requirements? We'll talk about mutual funds and their local investments. In module three, we talk about individual investors and the performance of investments that they make in companies that are nearby the investor. What's the evidence regarding mutual funds? Are these investments that seem to do well for the mutual fund manager or not? How important our information networks in terms of the performance of a mutual fund manager? So, can we think of any way to see if a mutual fund manager is more or less likely to have a personal tie to the executives of the company that the mutual fund invests in. And if we can find such a tie, does it predict good performance going forward? Closet Index and Performance Persistent. So, you always want to avoid closet index funds. Why? Well, closet index funds is an actively managed fund that is really just following an index. So they are charging you a high fee, claiming the manager is trying to beat the market. But at the end of the day, they're very closely following an index. So, they're getting a high fee without kind of doing anything. If you want to just follow an index, buy a cheap index fund. Is there any evidence regarding performance persistence of mutual funds and is that at all related to funds that are closet indexers? Then we'll talk about valuing complicated firms and exploiting inattention, maybe on the part of some investors. And an extra treat will be our faculty focus episode with Josh Pollit. Hint, be sure and watch the awkward moment in that one. And then finally, are there potential modern sources of information? Maybe by looking that Google search results, looking at tradings on Amazon for products. Does that predict anything in terms of future firm performance, future firm a stock returns? And after that kind of discussion, we'll have another faculty focus episode with Jake Wen Wong regarding his research on Amazon rating. So at module four, we're pulling out all the stuffs to faculty focus episode. These are all the topics we've planned to discuss in this elusive search for ALPHA. [SOUND]