How to beat the market

When I was a strategist at a small fund in 2013 with top of the world returns (one of two funds 110% gain, #3 i believe), a lot the performance came from just two stocks. They were immense winners, and the head trader had the experience and fortitude to hold them the whole way - on leverage. 

Modern portfolio theory might dismiss this as too risky and not diversified enough, but actually the latest research shows - the way to beat the market is heavy concentration in what is going up. It sounds obvious, and to some extent it is, but if it was easy everyone would be doing it already right?

Here's the piece on Bloomberg. "The implication, like it or not, is that a concentration of outsize gains in a minority of index members is tantamount to a death sentence for anyone who gets paid for beating a benchmark." 

Or to put it another way - most gains in the index are the results of just a few stocks, so anyone owning more than those few stocks in more equal weightings lags the benchmark. 

The solution is to relentlessly focus and concentrate upon what is performing the best, regardless of any other factor. Other "factor" here means P/E, value, market cap, revenues, margins, growth, story, blah blah blah etc etc etc. The only thing that matters is what is going UP. Only the study of price action gives any strategy in this regard. 

Key point, by up I don't just momentum, or up by percentage terms for the past 12 months, as the academics like to define it. That only tells you went up last year. Give me a break.

If The Pivotal Perspective can work this well across major index ETFs, how would it do across selecting the top 3 on Dow30, top 50 in SPX, top 10 NDX, or similar idea? Actually I never like rigid rules like this - sometimes it could be appropriate to own 10 Dow stocks, and sometimes 0 or 1. But still the point remains - the very best strategy would be to own the best stocks in the best index, on leverage when conditions support - with hedging on index futures when appropriate. 

In this regard, I have only presented the bare outlines of what is possible here.