Before rising to the role of vice chairman of Warren Buffett's Berkshire Hathaway, Charlie Munger had already earned himself a fortune. Away from business, Munger was a real estate attorney, philanthropist and even architect. Buffett famously proclaimed that their minds were so in sync that it was “spooky”.
Charlie Munger, the billionaire investor and right-hand man of Warren Buffett at Berkshire Hathaway, has passed away at the age of 99. According to a press release from the conglomerate, members of Munger's family confirmed that he died peacefully this morning in a California hospital. He would have celebrated his 100th birthday on New Year's Day. Buffett commented that without Munger's influence, Berkshire wouldn't have become the successful enterprise it is today. Munger was an attorney, chairman of the Daily Journal Corp., a member of the Costco board, a philanthropist and an architect. His estimated net worth was $2.3 billion at the start of 2023, significantly smaller than Buffett's estimated fortune of over $100 billion. During Berkshire's 2021 annual shareholder meeting, the then-97-year-old Munger announced that Vice Chairman Greg Abel would continue the company's culture after Buffett's departure. Munger wore thick glasses and in 1980, he had lost his left eye due to complications arising from cataract surgery. Between 1984 and 2011, he served as chairman and CEO of Wesco Financial, which was eventually acquired by Berkshire Hathaway. Under Munger's guidance, Buffett's investment strategy changed from buying troubled companies at low prices to focussing on higher-quality but underpriced ones. A prime example of this was in 1972, when Munger convinced Buffett to purchase See's Candies for $25 million, despite the fact that the California candy maker had annual pretax earnings of just $4 million. This purchase has since yielded over $2 billion in sales for Berkshire.At the 1998 Berkshire shareholder meeting, Munger explained the changed strategy with the quote, "It's not that much fun to buy a business where you really hope this sucker liquidates before it goes broke," and Buffett himself credited Munger with this shift in strategy when he said in May 2016, "He weaned me away from the idea of buying very so-so companies at very cheap prices, knowing that there was some small profit in it, and looking for some really wonderful businesses that we could buy in fair prices."Munger was often seen as the "straight man" to Buffett's jovial commentaries, usually only responding to questions at Berkshire annual meetings with, "I have nothing to add." However, what he may have lacked in commentary, he made up for in wisdom and humor, even drawing inspiration from one of his heroes, Benjamin Franklin. This was evident by his 2017 comment at Berkshire's meeting when he said, "I have a friend who says the first rule of fishing is to fish where the fish are. The second rule of fishing is to never forget the first rule. We've gotten good at fishing where the fish are," and also by his talk of the "lollapalooza effect," a concept which was used to explain the confluence of factors driving investment psychology.
Charles Thomas Munger, who was born on January 1, 1924 in Omaha, had a lawyer father, Alfred, and a mother, Florence ‘Toody’ from an affluent family. Though he and Warren Buffett worked as youths at the latter’s grandfather’s grocery store, they didn’t meet until years later. In 1943, the 17-year-old Munger left Omaha for the University of Michigan and then enlisted in the Army Air Corps. The military sent him for study in meteorology to the California Institute of Technology in Pasadena where he met and married Nancy Huggins, his sister’s roommate. Munger graduated magna cum laude from Harvard Law School in 1948 and the couple moved back to California where he practiced real estate law. He founded the law firm Munger, Tolles & Olson in 1962 and set up another venture, the hedge fund Wheeler, Munger & Co., that same year. According to Munger, he “had five real estate projects” and achieved a wealth of $3 to 4 million in a few years. After closing Wheeler in 1975, he became Vice Chairman of Berkshire Hathaway three years later. He has always maintained that he is proud of his Omaha roots, emphasizing that the old-fashioned values he learned there are more important than money and importance. Munger also shared a close relationship with Franklin Otis Booth, the member of the founding family of Los Angeles Times, who was introduced to Buffett by Munger in 1963 and became an important investor in Berkshire.
In 1959, at the age of 35, Munger returned to Omaha to terminate his late father's law office. This is where he was introduced to the 29-year-old Buffett, who had an investor as one of his customers. The two were very compatible and maintained their relationship in spite of living a great distance away from each other. Buffett stated in an interview with Omaha World-Herald in 1977, "We think similarly to a paranormal degree. He is as smart and commendable as anyone I have ever come across."
Throughout their 60-year relationship, Buffett and Munger have never had a single disagreement. Buffett credited Munger with helping him to become a better person, offering invaluable advice over the years. With regard to investing, the pair's philosophy has been centered around value investing - selecting stocks which appear to offer a greater value than their cost. Munger's outlook on this has been succinct, saying, "All intelligent investing is value investing — acquiring more than you are paying for."
Amid the coronavirus outbreak of 2020, Berkshire witnessed a considerable $50 billion loss in the initial quarter. Munger and Buffett were much more cautious as compared to the Great Recession when they had invested in US Airlines and banking institutions such as Bank of America and Goldman Sachs that were impacted by the recession. Munger described the situation to WSJ in April 2020 as, “ We are just like the captain of a ship in the middle of a worst typhoon ever. We want to get through it safely and come out with a lot of liquidity. We are not interested in purchasing businesses with all of our reserves in this situation.”
Munger donated millions of dollars to educational institutions, such as the University of Michigan, Stanford University and Harvard Law School, often with the condition that they accept his building designs despite his lack of formal architecture training. At Los Angeles' Harvard-Westlake prep school, which Munger had been a board member of for years, he made sure that the girls' bathrooms were bigger than the boys' during the 1990s creation of the science center.
During an interview with The Wall Street Journal in 2019, Munger questioned "what kind of idiot would make the men's bathroom and the women's bathroom the same size?"
Munger had three children with his first wife before their divorce in 1953. He then married Nancy Barry whom he met two years later on a blind date. With Nancy, he had four children, and was also stepfather to two of her other boys. The couple was together 54 years until her death in 2010, and they donated $43.5 million to Stanford University to construct the Munger Graduate Residence.
During a "Squawk Box" interview on CNBC in February 2019, Munger shared his views on how to live a long and happy life - "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. And all these simple rules work so well to make your life better. And they're so trite." He concluded by saying that it is not hard to stay cheerful, and that it is impossible to do so while wrapped in deep hatred and resentment.
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