‘Nothing beats hard work’: Three pieces of advice for traders from a nine-time Young Rich Lister
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There is no replacement for old-fashioned hard work when it comes to making money through investing, says multimillionaire entrepreneur and investor, Mark McConnell.
Mr McConnell is the founder of IT services and security tech company Citadel Group (ASX:CGL), a nine-time Australian Financial Review Young Rich Lister and a new board member of $14 million adtech Adveritas (ASX:AV1).
Stockhead spoke to Mr McConnell earlier this week about how he worked his way up and why he decided to take a stake in Adveritas. He described a long and detailed due diligence process, which he later added was the key to being a successful investor.
SH: What work did you do before investing in Adveritas?
MM: I spent a lot of time doing due diligence. I hired third-party consultants and had a really good, long look under the covers and then got on board. Once I was satisfied there was something in it, I aligned myself with them, supported the company through a private placement at a premium and showed as much commitment to the stock as I possibly could and was then invited onto the board.
It was a big risk, because if it falls over there is the potential for blowback onto Citadel, which would be a bad look. So I had to work to mitigate that risk.
Part of the capital curve is that there are a lot of risks. I say go and find the risk and mitigate it. Get in and do the homework. Look over everything with a fine-tooth comb.
And be aware that it is going to cost money to do that level of homework.
SH: What is your advice for aspirational investors?
For a young, aspirational investor, the biggest investment you can make is in your education. Many people are looking for such quick wins, but for every unicorn there are 10,000 that die trying.
What I think is failed to realise is that there are years of modelling, paper trading [using a stock market simulator] that I did before I started putting my own money out there.
Be a boring, Buffett-style investor. Do the homework. Do your own due diligence. If the company has a product, actually research it, use it. Read their annual report. Attend the AGMs.
Nothing beats hard work.
SH: And what about when building a company? What do you look for?
Get a good board behind you early. One thing I’ve done very okay at over the last 20-odd years is surrounding myself with people who are a lot smarter than myself.
At Citadel I got a good board behind me, we listed with a global board and that has served us very well.