But one shouldn't assume that the angels that have flooded the market are all making real money. Even many of the minority who have seemingly enviable portfolios are primarily sitting on unrealized gains, and many of those have a very sizable portion of those unrealized gains concentrated in a very small portion of their portfolios.
Additionally, there are a lot of barriers to success as an angel even if you are good at picking winners. From position sizes (small) to pro rata rights (ignored or too expensive to exercise), a lot of things can conspire against optimal returns even when you invest in good companies.
My sense is that a good deal of angel capital in the Bay Area, particularly that which is frequently invested in party rounds for the most attractive early-stage startups, is recycled from folks who have done well at a previous company (or two or three) and are having fun with their monopoly money.