Billionaire Investor Shares Two-Step Approach To Positive Returns: 'I Think I Finally Solved The Stock Market'

Billionaire investor John Arnold saw a recent social media post go viral, in which he claimed to have "solved the stock market." Here's the investment advice from the former youngest billionaire, which may be on par with Warren Buffett once saying to invest in a low cost index fund. Solving the Stock Market Arnold was once the youngest billionaire in 2007. He has since closed his hedge fund and focused on philanthropic efforts like running the Arnold Ventures fund. In a recent tweet, Arnold may have given a lifeline to investors who want to make minimal investments and not worry about trading daily, weekly or even monthly. YearXLKXLE50/50 Split2020+44% -33%+6%2021+35% +53% +44%2022-28% +64% +18% 2023+56%-1% +28% 2024+22%+6%+14% 2025+25%+8% +16%2026 YTD-8%+38%+15% Arnold's tweet shared a chart of the returns of the Select Sector SPDR ETF Technology (NYSE:XLK) and the Select Sector SPDR ETG Energy (NYSE:XLE) for each year from 2020 through year-to-date 2026. The chart also showed the return based on a 50/50 fund of both ETFs, with each year dating back to 2020 and the current year-to-date having a positive return. In six of the seven years, the overall return is double digits. Now compare that to the return of the SPDR S&P 500 ETF Trust (NYSE:SPY) and the 50/50 split of XLE and XLK outperforms four of the seven times, including having a positive return in 2022 when the SPY was negative and having a current positive year-to-date gain in 2026 versus a negative performance for the SPY. Here is the SPY performance over the last seven years, counting 2026: 2020: +16.2% 2021: +27.0% 2022: -19.5% 2023: +24.3% 2024: +23.3% 2025: +16.4% 2026 (YTD): -7.0% Outperformance Before? Here is a look at the returns of the two ETFs and 50/50 performance going back the five years prior. YearXLKXLE50/50 Split2015+5.5%-21.5%-8.0%2016+15.0% +28.0%+26.5%2017+34.3%-0.9%+16.7%2018-1.7%-18.2%-10.0%2019+49.9%+1.7%+30.8% The chart shows that the 50/50 split of XLK and XLE hasn't always returned a positive performance. In the two years it had a negative return, the two ETF method trailed the S&P 500 overall return. Two ETF Vs. Three Market Tracking ETFs Investors can experiment with various stocks, ETFs and mutual funds to see past performance and try to beat the market like Arnold. Investing in the ETFs that track the largest energy stocks and technology stocks has been a winning investment in recent years. One of the easiest ways to get exposure to the overall market is with an ETF that tracks the S&P 500 like the SPY. Investors can also invest in the SPDR Dow Jones Industrial Average ETF Trust (NYSE:DIA) for exposure to the Dow Jones Industrial Average or the Invesco QQQ Trust (NASDAQ:QQQ) for exposure to the Nasdaq 100. Here's a look at an even split between those three ETFs each year from 2020 through year-to-date 2026. YearSPYDIAQQQEven Split All 32020+16.2%+7.3%+47.6%+23.7%2021+27.0%+18.8%+26.8%+24.2%2022-19.5%-8.8%-33.1%-20.5%2023+24.3%+13.7% +53.8%+30.6%2024+23.3%+12.9%+24.8%+20.3%2025+16.4%+12.9%+20.2%+16.5%2026 (YTD)-7.0%-6.1%-8.4%-7.2% The three market tracking ETF even-split portfolio beat the XLK/XLE split approach four of the past seven years, counting 2026 year-to-date. The tradeoff is volatility and the risk, where the two ETF approach had more overall positive years and a better overall outperformance. Deep Vest CEO Joby Vest commented on Arnold's post that the two ETF portfolio was up 651.5% over the last 15 years, versus a 398.5% gain for the S&P 500. Whatever approach investors use, the chart from Arnold and a look at the S&P 500 and the three ETF approach shows that sometimes just buying and holding sector or broad market ETFs can outperform the overall market and beat active traders. Image via Shutterstock