Dennes Lupastean: A College Senior Who Outshines the S&P 500

In Wall Street, we often hear about the legendary investors like Warren Buffet and Peter Lynch.  Most of the time, these notable investors are associated with experience, tenure, and wisdom.  However, Dennes Lupastean is challenging that common perception within Wall Street .

Dennes, one of the kaChing Genius investors, is not only outshining the S&P 500 at 130% annual return, he is one of the youngest Genius investors.  As a senior student at Chapman University, he is just getting ready to start what could be a long, successful journey of his investing career.

Lucky for us, we get to learn more about him and the factors behind his success through our interview.

“So Dennis, can you tell us more about your background? Where do you come from? What is your educational background? Help us get to know you better.”

I’m currently a senior attending Chapman University. My major is Political Science and I also have minors in Business Administration and Economics. The reason I’ve decided to go down this path is because politics, business and economics are all interrelated.  Therefore, I feel this will give me an edge over other market participants who may not fully appreciate what government actions will have on the economy over the long run.

On a typical day, I would spend six hours reading global news, researching, analyzing 10-Q forms and listening to conference calls. Of course, this is aside from my school work. This may sound like a lot of time, but I simply just love what I do and it doesn’t feel like work at all.

“Any plans in mind after graduation?”

My goal after graduation is to land a job at a hedge fund. If that doesn’t work out then I’ll keep managing my own money and let the power of compounding interest work in my favor. I plan on to start acquiring farmland in Canada to get myself ready for the end of oil imports that I predict will occur in the next decade. There will be food shortages since transporting food will be too costly and in some places there will be no food available at any price. Being one step ahead of the crowd is the key to becoming successful in life.

“How did you get into investing? Furthermore, what led you to the energy and agriculture sector in particular?”

I became fascinated with investing after watching the movie “Wall Street” by Oliver Stone. The allure of quick money and outsmarting the market was too much for me to ignore. Fortunately for me, I quickly learned that gunning for the quick buck was a losing strategy, and I only lost a small portion of my capital learning this very valuable lesson. I started reading up on legendary investors such as Warren Buffet and George Soros. What I found out about these individuals is that they took long term views on the economy to make their wealth grow for them. Also, I read a behavior economic case study showing that humans disproportionately valued the present and grossly discounted the future and this was the key to outperforming the market.

What led me to the energy and agriculture sector was realizing that they were in a global long term growth trend. World energy consumption has been increasing every year, and the world population, in particular the middle class in India and China, has been increasing which allows them to consume more protein rich diets. Learning from my economics courses, when you have a finite resource that is depleting and you have growing demand for this resource, prices will be going up!

“What do you love and hate about investing? Do you think investing is for everyone?”

What I love about investing is watching how investor’s expectations about the future change on the dime. One day, everyone will be worried about deflation and the economy.  Then the next day, they are worried about inflation. Human emotions leak into the markets and opportunities are created each day.

What I dislike about investing is how time consuming it becomes. In order to stay current with global market news and have a slight edge over other investors, countless hours must be spent each day researching and analyzing companies.

I don’t believe investing is for everyone. Most individuals may have possibly two hours a week to devote to stock research, but no way can they keep up with individuals who commit ten hours per day keeping up with all the headlines. Investing is also very stressful since real money is on the line, and most people become way too emotional to commit to an investment, especially when the markets turn against them.

“So speaking of markets turning against people, how do you go about managing risks?  From your experience, what works best in order to maximize the return while minimizing the risk? “

The best way to manage risk is having the ideal price entry for any investment. For example, buying Apple at $200 will seem like a great investment when you look back 5 years from now, but if you had patience you could have picked up shares for $80 not too long ago. Overpaying for any investment is the quickest way to lose money. Knowing what you are buying in terms of your investment is critical! I see too many people buy XYZ stock and sell out panicking once the price falls 5%.  Diversification is often advocated to manage risk, but all asset classes are correlated which was painfully clear a year ago. The only reason I diversify is to protect myself from specific firm risks such as management cooking the books, natural disaster or some event that is out of my hands. Just knowing what you are buying and knowing what you are paying for is the best way to manage risk.

“You have a long-term strategy when it comes to investing.  What is your typical holding period?  Do you also trade stocks short-term?”

I employ a long term investing thesis, and the amount of time I hold onto an investment will vary greatly. Mainly I pick a company with a great story behind it, and I give it enough time for the story to unfold and play out. If the fundamentals change for any reasons, I’ll quickly drop the investment and move on to something else.  Before I make any investment, I typically have a price target for the company with the assumption that it’ll take 5 to 7 years to reach.

I don’t usually trade stocks short-term unless the opportunity presents itself. For example, last fall, the CEO of Chesapeake Energy received a margin call on his entire stake in the company. As a result the stock was hammered to an unbelievable price and was basically a dead give away. A few weeks later, the stock was trading over 50% higher from the lows. Events like these are usually rare, but present exceptional opportunities when they are spotted.

“Lastly, what advice would you give to young aspiring investors who want to become the next Dennes?”

My advice for any young aspiring investor is to start reading and get informed! The internet has transformed humanity in the past 15 years and the information that’s available for free is simply incredible. Never get your news from TV since most of the events they talk about are insignificant or it has been censored by the producers. Always seek information from blogs and internet news outlets since they are often uncensored, but it is your sole responsibility to be objective when reading anything you see. Remember we all have 24 hours in our days; it’s what you do with the time that sets you apart from others.