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The Medallion Fund does not compound... the return is not re-invested into the principal but disseminated to investors annually. The strategy they play only works up to a certain level of capital.

They have a maximum capacity of a few billion dollars in the fund. Every year they return the money they made so the fund stays the same size. Strategies don't scale indefinitely

If you had a 10% return one year and a 90% return the next, for an average of 50%, your total principal would increase by 1.1 * 1.9 = 2.09. If you calculate by the average instead (1.5 * 1.5 = 2.25) the rate of return is higher, and that error may have compounded in your calculation.