Here’s to Your Wealth – The Life and Legacy of Charlie Munger, Investing Maverick

On Tuesday, November 28, 2023, the business world lost a legend. Charles (Charlie) T. Munger was born in Omaha, Nebraska on January 1, 1924. He was most known as the Vice Chair of Berkshire Hathaway, the company he ran with chairman Warren Buffet. He attended both the University of Michigan and California Institute of Technology, but he did not graduate from either. After a stint in the US Army Air Corps, he enrolled at Harvard University with the help of a family friend, and eventually earned a Juris Doctor in 1948.

Charlie practiced law in California and later shifted his career to investments and real estate development. Charlie and Warren crossed paths several times over the years, and Charlie eventually joined Berkshire Hathaway in the mid 1970’s and became vice chair in 1978, a position he held for the rest of his life.                                                 Over the next four decades, the two titans of investing built a conglomerate of companies with a current market capitalization of over $700 billion, and they rewarded shareholders with 15.6% annualized returns since 1987.

Charlie had a much different way of viewing investments than Warren. Warren was influenced by Benjamin Graham and sought to purchase business at bargain prices. Charlie preferred to buy good companies and felt that future cash flows would make up for any premiums paid. In 1988, Buffet admitted that he would have been a lot less wealthy had he continued to only look for deeply discounted businesses, a nod to Munger’s influence. (Zweig & Baer, 2023, A1).

There is plenty written about the investment style and acumen of Charlie Munger. What I find more interesting is his outlook on the profession and on life. He has many great sayings though they are not quoted as often as Buffet’s. This is probably what Charlie preferred, as he was content letting Warren have the limelight. What follows are some of his best sayings.

On the importance of learning and education:

• It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.
• In my whole life, I have known no wise people (over a broad subject matter area) who didn’t read all the time – none, zero.
• Spend each day trying to be a little wiser than you were when you woke up.
• The best thing a human being can do is to help another human being know more.

Both Charlie and Warren were voracious readers. They also scheduled time in their agendas almost every day to just think. The most valuable information they had was the knowledge that there is much they did not know.

On finance and investing:

• The first rule is not to fool yourself. And you are the easiest person to fool.
• I don’t think you can get to be a really good investor over a broad range without doing a massive amount of reading.
• The desire to get rich fast is pretty dangerous.
• The big money is not in the buying and selling, but in the waiting.
• There’s a story about Charlie mocking short-term investment performance, which can attract short-minded investors. “A man walks into a fishing-tackle store and sees a bunch of gaudy, iridescent lures. “My God, they’re purple and green!” he says to the owner. “Do fish really take these lures?” The store owner answers, “Mister, I don’t sell to fish.” (Zweig, 2023).

Charlie was not one to chase the latest hot investment tip. “He often said the key to investment success was doing nothing for years, even decades…” and he felt that “every investor should be able to react with equanimity to a 50% loss in the stock market every few decades” (Zweig & Baer, 2023, A2).

On life, in general:

• The best way to get what you want is to deserve it.
• The best armor of old age is a well-spent life preceding it.
• In the end, what matters isn’t your success or your possessions. It’s about the quality of your contributions to others.

From his teenage years right up through this past November, Charlie gave his all, and not just to his work. Charlie gave hundreds of millions of dollars to various colleges, libraries, and other non-profit charities. He worked hard at his personal life as well. He had 7 children from two different wives. Following a short marriage that ended in divorce, he met and married Nancy Barry. A few years after Nancy’s death, he was asked who he would name as the person he was most grateful to, and he replied, “my second wife’s first husband. I had the ungrudging love of this magnificent woman for 60 years simply by being a somewhat less awful husband than he was,” (Zweig & Baer, 2023, A2). Through his 90 plus years, he always kept his humility and his sense of humor.

I hope you enjoyed learning about Charlie Munger. It is easy to be distracted by fad investments or doom and gloom articles designed to capture our attention. Like Charlie, we at Bank of New Hampshire Wealth Management know better. We design high quality portfolios with appropriate asset allocations to meet our clients’ unique needs. We understand the importance of patience and discipline, just like Charlie Munger.

Wishing you good health and good wealth. We also wish you and yours a safe, joyous holiday season.

References:
Zweig, J. (2023, November 29). Charlie Munger’s life was about way more than money. WSJ. https://www.wsj.com/finance/investing/charlie-munger-life-money-ae3853ad
Zweig, J., & Baer, J. (2023, November 29). Investing Legend Munger, Buffet’s Partner, Dies at 99. The Wall Street Journal, pp. A1,A2.

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