So a viable strategy would be to only buy the best 7 stocks? Like the Dogs of the Dow, but reversed? (The Gods of the Dow?)

It's only a "strategy" because you know what happened to the share price. If you can tell the future why not buy the lottery instead.

It works until it doesn't. And it can stop working very fast. Which is the scary part. But then it also depends on entry point. If you entered early even going down say 40% or 60% might not make you go red.

Yeah, investing in the top companies leads to higher returns for most periods when looking short term.

Over longer periods, the top companies by market cap tend to change though. https://www.investmentnews.com/equities/only-one-of-the-worl...

So if you want to invest in the top companies, you either need to think they won’t change anymore, or you need to find when to buy and sell. Index funds solve this problem for you, albeit with slightly lower returns in the short term.