Original source: Wall Street Journal
Original compilation: BitpushNews Mary Liu
No business partner of this stature plays second fiddle better than Charlie Munger.
Munger, Warren Buffetts closest friend and adviser for six decades and billionaire vice chairman of Berkshire Hathaway, died peacefully in a California hospital on Tuesday. 99 years old.
In public, especially in front of the tens of thousands of attendees at Berkshires annual meeting, Munger hands the microphone and spotlight to Chairman Buffett. I have nothing to add, Munger often said in a hoarse voice.
Privately, Buffett often defers to Munger.
Munger changed Buffett
In 1971, Munger convinced him to buy Sees Candy Stores for three times the chocolate shops net worth—a high price, Buffett later recalled, well above what he was accustomed to paying for the business.
Over the next few decades, Sees will continue to generate approximately $2 billion in cumulative earnings for Berkshire.
As Buffett wrote in 2015, “This acquisition ended my pursuit of ‘cigar-butt’ investing—buying mediocre companies at ‘cheap’ prices—and began my pursuit of investing in mediocre companies at [reasonable] prices. Great business for sale. He added, Charlie has been urging me to take this course for years, but I was a slow learner.
Buffett called Munger an abominable no-man because he turned down potential investments, including some that Buffett might have made. But Munger, who is fascinated by engineering and technology, also prompted the technophobic Buffett to make big bets on electric car maker BYD and Israeli machine tool maker Iska.
Munger is an excellent investor in his own right. He began managing investment partnerships in 1962. From then until 1969, the SP 500 rose an average of 5.6% per year. Buffetts partnerships have averaged annual returns of 24.3%. Munger performed even better, averaging 24.4% annualized returns.
In 1975, shortly before he joined Berkshire as vice chairman, Munger closed his partnership. Over its 14-year history, his portfolio has gained an average of 19.8% per year; the SP 500 has grown just 5.2%.
The two men have long had different approaches to investing. Buffett, influenced by his mentor Benjamin Graham, will buy almost any business, even if its on the verge of bankruptcy, as long as its cheap enough.
One result of the cigar-butt investing philosophy is Berkshire Hathaway, which was a shabby textile manufacturer when Buffett bought it in 1965.
As Buffett transformed Berkshire Hathaway into a diversified holding company covering insurance, he was looking for mediocre businesses at cheap prices. Instead, Munger focuses on large companies at affordable prices, arguing that their ability to generate cash in the future will more than compensate for the premium paid up front.
After years of discussions, Munger convinced his partners to make the change.
Charlie influenced me tremendously, Buffett said in 1988. Gosh, if I just listened to Ben [Graham], Id probably be a lot poorer?
In 2015, Buffett wrote that Munger taught him: Forget what you know about buying mediocre businesses at great prices; instead, buy great businesses at fair prices.
Buffett added that Berkshire was built according to Charlies blueprint.
early life
Charles Thomas Munger was born on New Years Day, 1924, in Omaha, Nebraska. His mother, Florence, was a homemaker and avid reader.
Munger majored in mathematics at the University of Michigan and left school during World War II to join the U.S. Army Air Forces. The military first sent Munger to study thermodynamics and meteorology at the University of New Mexico and the California Institute of Technology, then sent him to an Air Force base in Nome, Alaska, where he served as a weather forecaster.
After the war, Munger persuaded a dean at Harvard Law School to admit him without a college degree, and he graduated with honors.
He considered joining his fathers practice in Omaha before settling in Southern California. He and several partners eventually opened their own law firm in 1962. Today, the firm, Munger, Tolles Olson, has about 200 attorneys.
His first marriage to Nancy Huggins ended in divorce. In 1956, Munger married his second wife, Nancy Barry Borthwick, who died in 2010. They have four children, two of whom are from Mungers previous marriage.
Munger also experienced great tragedy in his life: In 1955, his 9-year-old son Teddy died of leukemia.
Munger once recalled pacing desperately through the streets of Pasadena: I was losing a child little by little. More than sixty years later, he still chokes up when he thinks of the pain of losing his son.
In 1978, a surgeon made a mistake during a cataract operation that left Munger blind in one eye, which he had to have surgically removed. But he stopped short of blaming doctors, noting that complications occur in 5 percent of such surgeries. For him, as always, its the numbers that matter.
Munger taught himself Braille and then discovered that he could still see well enough to read.
In his early 90s, he was still able to drive himself, often to the consternation of friends and family.
The two Berkshire Hathaway owners met in 1959, when Munger, who had moved to Los Angeles, attended a dinner in his hometown that also included Buffett.
They already know each others names: Munger worked in Buffetts grandfathers grocery store as a child. One of the first investors in Buffett Partnership gave him money because he said, You remind me of Charlie Munger.
Buffetts first wife, Susan, recalled that dinner in 1998: I think Warren felt that Charlie was the smartest man he had ever met, and Charlie felt that Warren was the smartest man he had ever met.
They hit it off immediately and soon became inseparable, often speaking on the phone several times a day.
A photo from a trip to Savannah, Georgia, in the 1980s captured the two investors striking resemblance: They spoke and walked in unison, and both wore khaki pants and open-collared blue dress shirts. From their height to their hairline, from their eyeglass frames to the pleats in their clothes, everything seems to match.
Humorous investment tycoon
Mungers hero was Benjamin Franklin, whom he admired for his curiosity, ingenuity and intelligence. Mungers own common sense, sharp humor, forthrightness and disdain for conventional wisdom have made him a celebrity among investors.
During question-and-answer sessions at Berkshires annual meetings, Munger typically remains silent while Buffett launches into tirade. Investors who know him well know Munger is about to show off his fun side.
At Berkshires 2000 annual meeting, a shareholder asked what impact speculation in Internet stocks would have on the economy, and Buffett responded in nearly 550 words.
Munger summed it up in one sentence: Even if you mix raisins with feces, they are still feces.
When a shareholder asked Berkshire at a 2004 meeting how it set executive compensation, Buffett talked for more than five minutes, and Munger drawled, Well, Id rather throw the viper in my shirt. , and are unwilling to hire a compensation consultant.”
Munger, who turned 99 in 2023, published an op-ed for the Wall Street Journal calling on the U.S. government to ban Bitcoin and other cryptocurrencies, writing that cryptocurrencies are a nearly 100% gambling contract. He has previously described Bitcoin as a scum activity and rat poison.
Talkative, amazing endurance
Mungers simple image is just a disguise he put on to avoid stealing Buffetts limelight. When Munger isnt in the spotlight with Berkshires chairman, he can be quite the talker. He could talk for hours at regular lunches and dinners with friends and family, and at the annual meeting of the Daily Journal, a small media company he chaired.
As many friends have pointed out, if he pauses to take a sip of water and someone else starts talking, Munger will raise his index finger patronizingly to prevent the other person from interjecting before he has finished his drink.
His endurance was also extraordinary.
In 2019, when Munger was 95 years old, two Wall Street Journal reporters showed up at his home in Los Angeles at 6 p.m., and he chatted almost non-stop until nearly midnight. Several times after 10 p.m., one or both reporters hesitantly stood up to leave; Munger motioned for them to sit down.
In August 2023, Munger, 99, insisted on traveling to Minnesota with his extended family, including more than a dozen grandchildren and great-grandchildren, who had been fishing every year for decades.
Munger was mentally in better shape than he had ever been, said his friend Peter Kaufman, chairman of aerospace parts maker Glenair.
Munger, content with his public image as Buffetts cantankerous sidekick, built his fortune.
He has donated to Stanford University, Good Samaritan Hospital in Los Angeles and Planned Parenthood, among others. He was also an amateur architect and lived in a house he designed himself in the 1950s. Later in life, he became obsessed with designing buildings for college and high school campuses.
In addition to investment returns, there is a cult following. Munger serves as chairman of Wesco Financial, a Berkshire subsidiary whose stock was publicly traded until its parent company fully acquired the company in 2011. Fans traveled from as far away as China and India to hear him speak at Wescos annual meeting and later at the Daily Journals annual meeting.
Kaufmans anthology of Mungers writings, Poor Charlies Almanack, became an international bestseller.
Munger has never stopped preaching traditional virtues. His two favorite words are diligence and calmness.
He said in a 2007 speech that he liked diligence because it means sitting back until you do it. He often said that the key to investment success was to lie dormant for years or even decades, waiting for a bargain. Buy aggressively when it finally comes to fruition.
He likes to be calm because it reflects his investing and life philosophy. Munger often says that every few decades the stock market drops 50%, and every investor should be able to take it in stride.
Munger maintained a sense of humor well into his 90s, even though he was nearly blind and unable to walk. His beloved wife, Nancy, died a few years before him.
Around 2016, an acquaintance asked him who he was most grateful for in his long life. Munger replied without thinking: My second wifes ex-husband, thank him for giving me the opportunity to love this woman for 60 years, just because I was a less terrible man than he was.
