Let us suppose that there are a set of price patterns which can predict future stock prices. For example, if we see a "cup and handle" a stock will go up in the near future, and if we see a "head and shoulders" a stock will go down. If someone understood how these price patterns worked, why wouldn't they start an investment vehicle to exploit them?

Let's say this strategy can return 20%/year. If you limit yourself to investing with your own money, you're limited to 20%/year. If you start a fund (mutual fund, hedge fund, etc.), you can charge fees on other people's money and earn 20% on your own money and 2-10% on their money. If the fund consistently returns 20%, it would be flooded with hundreds of millions of dollars, resulting in enormous management fees.

So why aren't there dozens or hundreds of funds which exploit technical analysis to beat the market? There may be some funds which claim to invest on the basis of technical analysis, but to my knowledge none have consistently beaten the market in the way that Warren Buffett or Peter Lynch have. Anyone care to enlighten me?