Because out of the many thousands of funds who attempt it, some are bound to end up beating the market. You can't know in advance which funds are going to the be the best over the next two decades.
Let me illustrate: We'll assume that trading returns have a binary distribution. Traders win or lose with equal probability. This is not a great model, but it's good for making ballpark estimates, because it overestimates the odds of a track record like Renaissances.
RenTec's Medallion fund has not had a down year in the past 25. The odds of this are at most 1 in 33 million, using our binary model. Survivorship bias does not begin to explain this; there have not been anything resembling 33 million hedge funds over the course of history. I think 30000 hedge funds is a fairly generous estimate.
Exercise: Suppose Medallion's returns are at least a standard deviation above zero, every year. Calculate the odds of this happening.
This is still the wrong math. I'm not qualified to come up with a great model here, but given that the S&P 500 has only lost value in 5 of the last 25 years the chances of having no losses in the last 25 years are a lot greater.
I've been investing for almost a decade, was lucky enough to sit out the worst in 2008, and I haven't had a down year in 10 years myself. This outcome was mostly luck on my part.
Consider the probability of beating the S&P instead. Same math applies. If that doesn't convince you, look up their monthly returns and do the same calculation.
So presumably, there is a 75% chance that the Medallion fund will lose money (hedge fund = zero sum) for the first time ever, during the next few years. I don't think this interpretation of the maths is correct.