Quantboys is a group of friends who for years have been developing trading models to try to outperform the market. We are not salesmen or market experts but computer and theory geeks. We have followed the market on a daily basis for over 20 years. During that time, we have had many ideas on how to outperform the market but we have come up with a one major rule. You must be able to quantivitively test the theory to verify the probably is significantly on you side. This means being able to systematically build the trading rules, backtest to prove it works and most importantly forward test without changing any variables to verify it works. Most stock market experts will talk about efficient market hypothesis and modern portfolio theory. The basis of these ideas are 1) that no one can outperform the market over long periods of time so there is no reason to try 2) they have no idea which sector or stocks are going to outperform so invest in all of them. This makes perfect sense for a money manager who collects a flat percentage fee. He does not care about out performance only underperformance and it is a whole lot less work to allocate the account once or twice per year. It is clear to us that you can outperform the market by finding stocks that are undervalued with improving fundamentals. Add this with stocks that have good relative strength and increasing volume and you have the basis for a great model. There is no stock that has all the components which makes it perfect but if you take the most important factors and add them up you can figure which are the best. Even on a daily basis these stocks have a higher expected return but it has a huge standard error rate, as your horizon gets longer the better the probability of outperforming. You also have to be willing to trade. If you are going to stay in the best stocks in the hottest sectors you most constantly reevaluate your positions. The more often you a willing to adjust to market conditions the higher you expected return. This allows you to get out of failing sectors and get into better ones.