I understand what you are saying, but the equivalent to the Medallion fund would be something more akin to winning that same coin flip 30 times in a row. They have been running approximately 30 years, beating market returns by a significant margin, year after year. The 40% average is net of fees, so the overall return of their strategy has actually been higher than that. The odds that they have accomplished these returns through luck alone are astronomically low.
The trick is this: the chances that a specific fund will do well that long via luck are very low, but the chances that there exists a fund among all that exist that has done well via luck are quite high.
I can tell you haven't actually done the calculation. There's only been about 20000 hedge funds in total over history. The odds of random chance producing Medallion's track record with that many draws are actually very low.
This is true, though I don't know how many edge funds operate. I guess some people really have working strategy!
The example I gave was more of a word of caution regarding past performances as indicator of expertise, but I guess I made it sound more generalizable than needed!
