This is the year of the streak. The Boston Red Sox broke their 86-year World Series drought. Jerry Rice's streak of catching a pass in 274 straight games ended. And the New England Patriots finished their winning streak at 20 games in a row. All we need is a remake of Ray Stevens' crazy song "The Streak" to round out the year.

For Fools, Legg Mason Chief Investment Officer Bill Miller's streak of beating the S&P 500 index is the one to note. Amazingly, his Legg Mason Value Trust fund has outperformed the index 13 years in a row. And since Miller will likely have to start a new streak (the fund is down about 4% relative to the index as of November 4, 2004), I think it's a great time for us to start one, too.

How are we going to do it? Great question. We'll start with four key things I took from Janet Lowe's biography of Miller, TheMan Who Beats the S&P. So if you're ready to go, grab your glasses and read on.

Tenet 1: It's a business, capice?
From The Man Who Beats the S&P, we learn that Miller never loses sight of the fact that a stock is partial ownership in a business. I can hear you now, "Wow, that's stating the obvious." But you'd be surprised how many fools don't know a thing about the businesses behind their stocks.

Do I know how Google (NASDAQ:GOOG) generates revenue? Do I know if its competitive advantage is sustainable? I think I get the gist of it, but I have not studied Google enough to completely understand it. As a result, Google is not a business in which I am ready to invest.

Do I understand how Nike (NYSE:NKE) works? I believe I do as I took the time to learn as much as I could before I started trying to analyze its value.

The most important chapter in the whole book is entitled "Numbers Are Not Enough." It stresses that before we get carried away with calculating numbers, we have to know how the business works to understand what the numbers mean. And knowing what the numbers mean is the prelude to Tenet 2.

Tenet 2: Valuation, valuation, valuation
Only when we understand how a business works can we estimate its value. If we do not know how a business creates value, how can we estimate its worth?

Philip Durell's first pick for his Inside Value newsletter was Mattel (NYSE:MAT). I have to admit that my first reaction was one of skepticism. But Philip's analysis pointed to the value drivers that showed why he thought Mattel's market value was below its intrinsic value.

Like Bill Miller, Philip and the other investment newsletter writers understand that price is what you pay for a stock and value is what you get. So regardless of whether we're looking for growth, value, or income, we have to determine a price we are willing to pay. Fortunately, the Fool's School gives us lots of tools to do so.

Tenet 3: Focus
If you take the time to learn about a business and make an estimate of its value, you have an advantage over others -- the ability to focus your investments. All money managers have to diversify their portfolios. But the great ones focus on a few outstanding opportunities and make big bets. Below is a table to illustrate my point.

Investor Company # of Shares Market Value % of Outstanding Shares Report Date
Warren Buffett Coca-Cola 200,000,000 $8,010,000,000 8.2% 06/30/04
Wally Weitz Redwood Trust 3,593,000 $203,974,610 17.2% 06/30/04
Legg Mason AES 113,103, 398 $1,056,385,737 17.8% 03/31/04

We all know about Warren Buffett's huge stake in Coca-Cola (NYSE:KO). We see that famous fund manager Wally Weitz owns 17.2% of mortgage REITRedwood Trust. And Bill Miller focused a large part of Legg Mason's portfolio on independent power producer AES. I would recommend that you look at the charts for these companies to see if these big bets have paid off.

Other successful businessmen use focus in their portfolios, too. Namely insiders who manage the businesses they created. Is it any wonder why Hidden Gems newsletter writer Tom Gardner looks for businesses with lots of insider ownership? No way -- focus creates wealth.

Tenet 4: Push the envelope
The last, and most interesting, thing to take away from Bill Miller is his willingness to push the envelope. Miller has taken the time to learn how to value businesses that most traditional value investors wouldn't touch with a 10-foot pole. In fact, many questioned whether he really was a value investor when he bought stock in (NASDAQ:AMZN) and AOL (before the merger with Time Warner).

Does it surprise you to know that Mathew Emmert's Income Investor portfolio holds Sara Lee (NYSE:SLE), which is considered to be a large-cap growth stock? It shouldn't. Mathew recognized that there was value in the business and dividend, and the company has outperformed the index since he recommended it.

By nature, David Gardner's Rule Breakers newsletter looks for stocks on the edge. He frees his mind from all that stodgy, conventional thinking to find some interesting businesses. A good example is Blue Nile (NASDAQ:NILE), a company that is changing the way people purchase diamond jewelry. Nothing says pushing the envelope like shaking up an old-school industry.

Let's do this
Well, we now have all of the tools from Bill Miller, exalted king of the market beaters, to start our own streak of outperforming the S&P 500. Are you ready for the challenge? OK, here are some risk-free ways to get started.

First, take a free 30-day trial of any of the newsletters. See how this philosophy has helped many a Fool outperform the market. The newsletters don't make many recommendations per month. Instead, you get solid research on two companies. That may not sound like much until you remember that the analysts have to find a good business and good valuation together before making a recommendation.

And while you're at it, come learn from other smart Fools (not an oxymoron) on the discussion boards. They love sharing their knowledge and ideas about how to beat the market.

Last, be patient. We can't beat the market every day. It's about using our tools and picking the right opportunities. Trust me, you can do it.

Fool contributor David Meier would love to meet Bill Miller in order to dig deeper into that great mind. David owns shares of Nike and AES but does not own shares of any of the other companies mentioned. The Motley Fool has a disclosure policy.