[slyn]

There probably are deep insights that lead to the root cause of success in both situations. Once these insights are made public or more people discover and exploit them on a widespread level, the market inefficiencies that gave the possibility for outperformance then disappear. If you don't find a new edge, you revert to the mean (or maybe rather, the "mean" catches up to you).

[wildmusings]

I think olfactory’s implication is that they get lucky at first, develop a reputation due to that luck, then revert to the mean. That there is no secret sauce at all.

It’s an interesting theory.

[ProblemFactory]

Even if others don't discover and adopt your ideas - there is a limited market size for most investment strategies.

If you are good at picking winners for some specific type of startups, but there are only 10 of them per year, then you can't grow your fund from 10 to 100 investments per year and keep the same returns.

If you discover a clever arbitrage opportunity or market inefficiency, but there is only 1M of trades happening in that market, then you can't dump 100M into the strategy and keep the same returns.