Charlie Munger Rest in Peace

Charlie Munger – An Introduction

Born on January 1, 1924, in Omaha, Nebraska, Charlie Munger grew up during the Great Depression, shaping his views on frugality and value investing. He was a man with incredible ability, and a quick wit to match. He is known as the right-hand man of Warren Buffett, and was active in so many fields. Munger passed away on November 28, 2023, at the age of 99, leaving behind a legacy of intellectual prowess and investment acumen.

It must have been destiny, as when he was young, he worked in Buffett and Sons (Buffett’s grandfather’s store). Who would have thought that Buffett and Munger would eventually form one the most legendary partnership in corporate America, akin to Jobs and Woz, Gates and Allen, and Page and Brin

He was widely revered for his wit, wisdom, and unwavering commitment to value investing principles. His contributions to Berkshire Hathaway and the broader investment world are immeasurable, and his insights continue to inspire and guide investors worldwide.

This blog will attempt to break down his career, his beliefs and ideas, and will include some of my favourite quotations from the great man. I am sure all readers on MoneyMeetsLife, look up to Charlie, and wonder if his smart comments have amused the great almighty.

A Brilliant Mind

Munger was bright and logical, as he studied mathematics at Michigan University. He eventually dropped out to serve in the U.S. Army Air Corps and 2nd lieutenant. His IQ was tested on the Army Classification Test and he scored 149 (to enter Mensa you need a score of 136). As a result of his high score, he was ordered to study meteorology at Caltech (one of the most prestigious Universities in the US). I also believe that Munger’s willingness to invest in more technological companies is down to his educational background. This is because he can clearly understand difficult and technical concepts.

Munger was not only able to turn his mind to mathematics. He was a bit of a polymath and ended up training in law at Harvard Law School. He even graduated magna cum laude, which is one of the higher degree classes. What makes this particularly impressive was that Munger did not have an undergraduate degree in the subject.

Charlie Munger’s intellectual prowess and diverse academic background are indeed remarkable. His ability to excel in mathematics, law, philosophy (especially stoicism) and investing highlights his exceptional aptitude for rigorous study, critical thinking, and problem-solving. His lack of an undergraduate law degree further underscores his determination and self-discipline. He managed to overcome this obstacle and achieve outstanding results at Harvard Law School.

The Successful Investor as an All-rounder

Munger’s well-rounded background mirrors the multifaceted nature of successful investing. Quantitative skills and financial knowledge are crucial for analysing financial data and making investment decisions. However, qualitative factors like corporate governance, industry dynamics, and competitive landscapes are equally important. Munger’s legal training likely helped him understand complex legal documents, assess business risks, and navigate regulatory environments effectively.

Indeed, Munger’s example encourages a generalist approach to learning, where individuals embrace a wide range of knowledge and skills. This approach boosts thinking skills and understanding of the world. Being a generalist helps people navigate modern life and make informed decisions in different areas.

Charlie Munger’s Personal Life

Charlie Munger’s personal life was marked by both great success and profound loss. He was married twice and had four children, two of whom predeceased him.

Munger’s first marriage was to Mary Munger, whom he married in 1943. The couple had four children together: Teddy, Charlie Jr., Molly, and Lydia. In 1955, his son Teddy died of leukaemia at age 9. Munger recalled pacing the streets of Pasadena in tears at “losing a child inch by inch.” More than six decades later he would still choke up at the memory of his son’s suffering. However, the marriage was not happy, and the couple divorced in 1966.

In the years after Teddy’s death, Munger became increasingly interested in psychology and philosophy. He sought to understand why bad things happen to good people and how to cope with loss. He also became more active in philanthropy, donating millions of dollars to causes related to education and mental health.

Munger’s personal life was a roller coaster of emotions, but he emerged from it a stronger and more compassionate person. He learned to live with loss and to appreciate the good things in life. He also learned the importance of giving back to others.

If you like more relationship-based content. You might like to read:

https://moneymeetslifecom.wpcomstaging.com/2023/12/02/5-money-discussions-to-have-with-your-partner

Moving Forward in the Face of Tragedy

Munger’s story is a reminder that even in the darkest times, there is always hope. He found a way to cope with his grief and to live a meaningful life. His example can inspire us all to find strength in adversity. Just think about this quotation, and it tells you something about his mental resilience:

“Generally speaking, envy, resentment, revenge, and self-pity are disastrous modes of thought. Self-pity gets pretty close to paranoia… Every time you find your drifting into self-pity, I don’t care what the cause, your child could be dying from cancer, self-pity is not going to improve the situation. It’s a ridiculous way to behave.
Life will have terrible blows, horrible blows, unfair blows, it doesn’t matter. Some people recover and others don’t. There I think the attitude of Epictetus is the best. He thought that every mischance in life was an opportunity to behave well. Every mischance in life was an opportunity to learn something and that your duty was not to be immersed in self-pity, but to utilize the terrible blow in a constructive fashion.
That is a very good idea.” – Source

Munger adopts the stoic mindset and is even able to move on and achieve success, despite suffering the most terrible personal tragedy that a parent can go through.

Investment Philosophy

Aside from amassing his fortune, Charlie Munger taught us a lot about how to be a successful investor. I’m not going to go into detail about all of his accomplishments. Instead, I’ll focus more on his time with Berkshire Hathaway.

Warren Buffett, who brought him into Berkshire Hathaway, credits Munger for helping him invest in quality companies. Before he met Munger, Buffett usually bought “Cigar Butt” quality investments. These were companies that were dead cheap and trading below book value. He had learnt to take advantage of this type of investment in his younger years under Benjamin Graham.

“The blueprint [Munger] gave me was simple: Forget what you know about buying fair businesses at wonderful prices; instead, buy wonderful businesses at fair prices,” Buffett wrote at the time. “Altering my behavior is not an easy task (ask my family). I had enjoyed reasonable success without Charlie’s input, so why should I listen to a lawyer who had never spent a day in business school (when – ahem – I had attended three). But Charlie never tired of repeating his maxims about business and investing to me, and his logic was irrefutable. Consequently, Berkshire has been built to Charlie’s blueprint. My role has been that of general contractor, with the CEOs of Berkshire’s subsidiaries doing the real work as sub-contractors.” – Berkshire’s 2015 Shareholder Letter

Munger’s peerless logical thinking, became part of the blueprint that underpins Berkshire Hathaway’s successes. Munger was also instrumental in pushing Buffett into pursuing some of his most legendary investments. Buffett credits Munger’s approach with encouraging him to invest in American Express stock, which he first bought in the 1960s.

If you’re interested in reading more about Charlie Munger:

By 1991, he owned more than $300 million dollars worth of AmEx stock. Now, he’s the company’s single largest shareholder with a stake worth an estimated $23 billion. Munger’s approach also helped Buffett invest in See’s Candies, one of Berkshire Hathaway’s most famous investments, which he bought for $25 million in 1972 and which has since earned him 8,000% returns.

If you want to watch a brilliant video about Charlie Munger and his life, definitely watch this documentary from FINAiUS:

https://youtube.com/watch?v=bx5ThG6HyZk%3Fsi%3DCMdaZIDBuH9EIlIC

My 10 Favourite Charlie Munger Quotes

“Capitalism without failure is like religion without hell.” — Tao of Charlie Munger
“We’ve had enough good sense when something is working very well to keep doing it. I’d say we’re demonstrating what might be called the fundamental algorithm of life — repeat what works.” — 2010 Berkshire Hathaway Annual Meeting
“All I want to know is where I’m going to die, so I’ll never go there. And a related thought: Early on, write your desired obituary — and then behave accordingly.”
“You can learn a lot from dead people. Read of the deceased you admire and detest.”
“I constantly see people rise in life who are not the smartest, sometimes not even the most diligent, but they are learning machines,” Munger said in a 2007 commencement address at the University of Southern California Law School. “They go to bed every night a little wiser than when they got up, and boy does that help — particularly when you have a long run ahead of you.”
“I think it’s much easier to find five than it is to find 100,” Munger said. “By the way, I call it ‘diworsification,’ which I copied from somebody. And I’m way more comfortable owning two or three stocks, which I think I know something about and where I think I have an advantage.”
“There are two kinds of businesses: The first earns 12%, and you can take it out at the end of the year. The second earns 12%, but all the excess cash must be reinvested — there’s never any cash,” Munger said at the same meeting. “It reminds me of the guy who looks at all of his equipment and says, ‘There’s all of my profit.’ We hate that kind of business.”
“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. You’d be amazed how much Warren reads–and at how much I read. My children laugh at me. They think I’m a book with a couple of legs sticking out.”
“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. You must force yourself to consider arguments on the other side.”
“The idea of caring that someone is making money faster [than you are] is one of the deadly sins. Envy is a really stupid sin because it’s the only one you could never possibly have any fun at. There’s a lot of pain and no fun. Why would you want to get on that trolley?”

I believe that Charlie’s deep understanding of the world, wisdom, and his tendency to be correct most of the time, were reasons why ought to command great respect. So much about managing money successfully is predicated on other factors that go beyond the basic mathematics of wealth building.

Check out my other blog on How to Have a Healthy Relationship with Money. This will provide tips and strategies for developing a more sustainable understanding of how to happily build your future fortune.

Goodbye Charlie Munger

Charlie Munger, the sage of Omaha, has left an indelible mark on the world of investing and beyond. His wisdom, often delivered in a whimsical and self-deprecating manner, cuts through the noise and complexity of life, offering simple yet profound insights that can guide us all.

As we bid farewell to this intellectual giant, let us not forget his playful spirit and his ability to find joy in the mundane. He once said, “I have always regarded life as a kind of comedy.” And indeed, Munger’s life was a hilarious tapestry of wit, wisdom, and the occasional hair-brained scheme.

So, as you go about your day, remember Charlie Munger’s advice: “If you’re not getting wiser, you’re getting stupider.” And if you find yourself getting a little too serious, lighten up and take a cue from Charlie – life is meant to be enjoyed, even if it’s just a little bit absurd.