The Era of Charlie Munger
It is a month short of Charlie Munger’s 100th birthday that he has passed away bringing an end to an era. The famous American businessman, investor, and philanthropist Charlie Munger died on November 28, 2023 at the age of 99.
It is said that Munger was Warren Buffett’s closest partner and right-hand man and he described him as the person who knew his business best. Munger was vice chairman of Berkshire Hathaway, Buffett’s conglomerate. He was also known for his ability to analyze investments, find undervalued companies, and make sound business decisions. Munger was known for his bluntness and unwavering honesty and was often Buffett’s optimistic outlook counterbalance.
Here's a little peek into his life.
Munger was born in Omaha, Nebraska on January 1, 1924. After dropping out of college, he served in the military during World War II and studied meteorology at Caltech and law at Harvard. He practiced law for a few years before becoming an investor full-time.
The late Munger was known for his wisdom, wit, and contrarian views on various topics, including bitcoin, venture capital, and stock picking. In addition to advocating a multidisciplinary approach to investing and problem-solving, he stressed the importance of lifelong learning. He often said that success comes from learning something new every day and taking risks. He encouraged people to challenge conventional wisdom and take an unconventional approach to problem-solving. He also emphasized the importance of investing in people and teams, not just in ideas. Plus, he also a generous philanthropist who donated millions of dollars to various causes, such as education, health, and science.
Charlie Munger's Remarkable Investment
Charlie Munger was a legendary investor who made many successful investments in his long career. Hence, it’s hard to say which was his most notable investment.
One of the most impressive investments that Munger made might be the one that he made in 1962 when he and a friend bought some oil royalties at an auction for $1,000 each. Munger used his legal skills to structure the deal in a tax-efficient way, and the royalties have paid him $70,000 per year ever since. If inflation is not taken into account, that means he has received over 7,000 times his initial investment.
Another remarkable investment Munger made was in 2008, when he invested in BYD, a Chinese electric car maker, through Berkshire Hathaway. Munger convinced Warren Buffett to buy 10% of the company for $230 million, and his stake has grown more than 10 times in value. BYD’s market capitalization was over $100 billion in November 2023, making Berkshire Hathaway’s stake worth over $10 billion.
Munger made perhaps his most important investment not in a company, but in a person: Warren Buffett. A great friendship and partnership formed between Munger and Buffett after they met in 1959.
‘A man of remarkable intellect and integrity,’ said Warren Buffett. ‘Charlie taught me so much.’
Munger left behind a legacy of wisdom, wealth, and generosity that will be remembered for generations.
30 Quotes and Wisdom by Charlie Munger
“You need a different checklist and different mental models for different companies.”
“I think life is a whole series of opportunity costs. You know, you got to marry the best person who is convenient to find who will have you. Investment is much the same sort of a process.” — 1997 Berkshire Hathaway Annual Meeting.
“Knowing what you don’t know is more useful than being brilliant.”
“The big money is not in the buying and selling … but in the waiting.”
“The difference between a good business and a bad business is that good businesses throw up one easy decision after another.”
“You don’t have a lot of envy, you don’t have a lot of resentment, you don’t overspend your income, you stay cheerful in spite of your troubles, you deal with reliable people and you do what you’re supposed to do. All these simple rules work so well to make your life better.” — 2019 CNBC interview
Three rules for a career: 1) Don’t sell anything you wouldn’t buy yourself; 2) Don’t work for anyone you don’t respect and admire; and 3) Work only with people you enjoy.
Develop into a lifelong self-learner through voracious reading; cultivate curiosity and strive to become a little wiser every day.
Opportunity comes to the prepared mind.
“Almost everybody that has an unusually good result has three things: They’re very intelligent, they worked very hard, and they were very lucky. It takes all three to get them on this list of the super-successful. How can you arrange to have two or three episodes of good luck? The answer is you can start early and keep trying a long time, and maybe you’ll get one or two.” — Acquired podcast, 2023
“The best way to get what you want in life is to deserve what you want. How could it be otherwise? It’s not crazy enough so that the world is looking for a lot of undeserving people to reward.” — University of Michigan lecture, 2010
“Investing is where you find a few great companies and then sit on your ass.”
“The iron rule of nature is: you get what you reward for. If you want ants to come, you put sugar on the floor. “
“Most people are too fretful, they worry to much. Success means being very patient, but aggressive when it’s time.”
“We all are learning, modifying, or destroying ideas all the time. Rapid destruction of your ideas when the time is right is one of the most valuable qualities you can acquire.”
“Great investing requires a lot of delayed gratification.”
“It’s waiting that helps you as an investor and a lot of people just can’t stand to wait. If you didn’t get the deferred-gratification gene, you’ve got to work very hard to overcome that.” — Wall Street Journal interview, 2014
“Every time you hear EBITDA, just substitute it with bullshit”.
“The very first step towards success in any occupation is to become interested in it.”
“The game of life is the game of everlasting learning. At least it is if you want to win.”
“The first rule of a happy life is low expectations. That’s one you can easily arrange. And if you have unrealistic expectations, you’re going to be miserable all your life.”
“The safest way to get what you want is to try and deserve what you want.”
“The best thing a human being can do is to help another human being know more.”
“I think part of the popularity of Berkshire Hathaway is that we look like people who have found a trick. It’s not brilliance. It’s just avoiding stupidity.”
“Invert, always invert: Turn a situation or problem upside down. Look at it backward.”
“Those who keep learning will keep rising in life.”
‘Don’t worry about the textile mills. Just look for other great companies and build around that.’ And [Buffett] did.”
“I’ve written my obituary the way I’ve lived my life. if you want to pay attention to it, it’s alright with me, and if they want to ignore it, that’s okay with me too.”
“Many hard problems are best solved when they are addressed backwards”
“Spend each day trying to be a little wise than you were when you wake up.”
Charlie Munger gave tremendous advice throughout his life and be able to live a fulfilling and successful life until 99 years old. We’ve lost one of the 20th century’s greatest investors and businessmen. I hope we take the time to keep learning how to make wonderful investment decisions in order to become as successful as he was.
“I think a life properly lived is just learn, learn, learn all the time.”
A true financial genius who changed the way investors viewed markets. May he rest in peace
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