there are a lot of investment funds out there. even if none possess any skill, it is possible for a few to produce extreme risk-adjusted performance simply by chance.
- One individual or fund doing well in any particular year = random chance
- One individual or fund doing well for a decade = chance is not a possible explanation
Essentially the chance of getting a heads on a coin flip is a 50/50. If you get heads, it's a chance event.
However, if you do 10,000 coin flips and end up with 8,000 heads, either the flipper or the coin have an edge in making heads turn up. The pattern shows that it is no longer a random 50:50 chance.