It's a little reductive to use "past performance is not an indication of future gains" as an argument. If you extrapolate that with the premises that I am using (namely, that it is possible to intentionally and consistently beat the market), there is no reason to have faith in the continued investment in anything, private or public, because you cannot use any past measure of success as guidance. But I don't care about the success in of itself, I care about the cause of that success, and intrinsically I believe there is a cause.

Facebook has done well since its IPO. But since we're throwing out its past performance entirely, we shouldn't consider it a sound investment. Venture capitalists shouldn't have faith in Uber or Snapchat, because its past performance as a private company means nothing going forward. Real estate is not a sound investment because eventually there will be another market correction. And so on and so forth.

Except there are sound arguments for investing in each of those examples (please don't nitpick them specifically...) because people naturally view their respective success as a function of purposeful action. I view certain hedge funds as possessing the same capability for success.

Ultimately, entropy consumes every existing phenomenon we can observe. What we define as "consistent success" is only coherent over slices of time for anything, not just the ability to forecast the market. The only reason why we continue to invest in anything is because we believe that someone at the helm of past success can continue to pull it off in the future. Every streak must necessarily come to an end, whether it's competing as an elite athlete or being the dominant technology company or forecasting market movements.

So yes, I'd absolutely take that bet. I don't believe in EMH; I believe that past success for firms like those has been caused by skill and strategy, which is repeatable until fundamental things change (industries evolve, markets evolve, successful managers retire, etc). I definitely believe that firms like Renaissance Technologies will continue to print money in the future because they have a profitable methodology for doing so, unless something changes. Because I do not believe the success is due to chance, this wager becomes more a question of whether or not I believe the skilled management of these firms will change in the near future or whether the market itself will fundamentally make their strategies untenable. For most of them, I'm confident in another ten years of superlative performance.

All successful investing begins with observing, modeling and capitalizing on market inefficiencies. You can do this with real estate, business ownership, securities, etc. It is clear to me that there are hedge fund managers who are playing an entirely different game than the unprofitable ones the media fixates on. They are similar only in name, but it's like the difference between counting cards and gambling. These are managers who can identify, through their own insight or the aggregate insight of their firms, inefficiencies esoteric enough that they are extremely difficult to find, but useful enough that they can be profitably traded on.

EDIT: I forgot you asked me a specific question...the reason why I feel confident taking on this bet when Protege Partners, LLC is losing is because I'm choosing a small, specific subset of the hedge fund industry that I believe in for the reasons explained above. In contrast, Buffett and Protege's bet is over a basket of funds, a "portfolio of funds of hedge funds." I am not arguing with you that most of the hedge fund industry is crap, just as I wouldn't argue that most people who start tech companies fail. I'm betting on the outliers.

If anyone can just log onto Long Bets and do this I'm happy to take the bet with you immediately.