By Leigh Gant, Education Manager
30 November 2023
“The best armour of old age is a well spent life preceding it.”
– Charlie Munger
We often comfort ourselves with the thought that certain misfortunes, be it health issues or personal calamities, are unlikely to befall us. This mindset creates a mental shield, giving us a sense of security and invulnerability.
However, life frequently reminds us of its unpredictability and impartiality.
November 28 marked one of those sobering moments.
Charlie Munger, a figure I have long admired and considered an inspiration, has left us at the age of 99, merely a month short of his centennial.
It is difficult to write an adequate tribute to a man like Charlie Munger. News outlets, investors, friends, commentators and shareholders will all pay tribute, documenting his long life and his many accomplishments. All of these articles will be inadequate when it comes to explaining the impact Munger had on countless individuals, most of whom he never knew personally. I count myself in this group.
Munger was not just an icon of the investing world, but a beacon of wisdom whose influence reshaped how many think about business, investing and life. His long journey, marked by both towering achievements and overcoming adversities, is a treasure trove of lessons for investors, entrepreneurs, and thinkers.
“Envy, resentment, revenge and self-pity are disastrous modes of thought”
Munger’s life story is one of resilience and perseverance in the face of obstacles and losses. Despite these hardships, he went on to become one of the most successful investors of his time, generously imparting his learned wisdom.
Born in Omaha, Nebraska, Munger’s journey was not a straightforward path to success. He started his career working at Buffett & Son, a grocery store owned by Warren Buffett’s grandfather. His early life took a dramatic turn when he dropped out of college in 1943 to join the World War II effort with the U.S. Army Air Corps. Despite lacking a college degree, Munger’s determination saw him become an officer and train as a meteorologist.
After the war, Munger used the GI Bill to take advanced courses and, despite an initial rejection, was admitted to Harvard Law School, graduating magna cum laude with a Juris Doctor (JD).
In 1953, Charlie Munger, at the age of 29, encountered a major life challenge when his eight-year marriage ended in divorce. This event was not only socially stigmatising at the time but also left him in a precarious financial situation, as his wife received most of their assets, including their home. This led to Munger living in significantly reduced circumstances. Despite these setbacks, he dedicated himself to work, putting in long hours to regain his financial stability.
Munger’s resilience was further tested at 31 with the loss of his 9-year-old son to leukaemia, a devastating personal tragedy, compounded by ongoing financial struggles. However, Munger chose perseverance over despair. His resolve was again put to the test at the age of 52 when he developed cataracts. A surgical complication resulted in the loss of vision in one eye. Unfazed by this adversity, Munger learned braille, showcasing his unwavering commitment to adapt and continue learning, no matter the obstacles.
“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
Charlie Munger’s influence on Warren Buffett and, by extension, the entire investing world, has been profound and enduring. As Buffett himself acknowledged, Munger’s inspiration, wisdom, and active involvement were crucial in building Berkshire Hathaway to its current stature. The duo, who met in 1959 and quickly bonded over their shared success and sense of humour, soon embarked on a partnership that would redefine the investment landscape.
“About five minutes into it, Charlie was sort of rolling on the floor laughing at his own jokes, which is exactly the same thing I did,” Buffett once told CNBC. “I thought, ‘I’m not going to find another guy like this.’ And we just hit it off.”
Munger’s vision and insights were pivotal in guiding Buffett away from his early “cigar butt” investment style, which focused on undervalued smaller companies trading at less than their liquidation value (net-nets, or Value 1.0, as described in our Models of Investing series this year).
It was Munger who encouraged Buffett to shift his strategy towards investing in high-quality businesses at reasonable prices. This approach, as Buffett reflects, helped him break free from his earlier habits, setting Berkshire on a path to become not just an investment house, but a vast conglomerate. Munger’s philosophy of buying wonderful businesses at fair prices became the cornerstone of Berkshire Hathaway’s investment strategy. This blueprint facilitated the transformation of Berkshire into a powerhouse, diversifying into various sectors including railroads, energy, confectionery, furniture and iPhones.
“Acquire worldly wisdom and adjust your behaviour accordingly. If your new behaviour gives you a little temporary unpopularity with your peer group … then to hell with them.”
Munger was renowned not only for his investment acumen but also for his voracious appetite for learning and wisdom. As Chairman of the Daily Journal Corporation and a board member of Costco, Munger cultivated a reputation that drew enthusiasts and prominent investors to his talks. His annual meetings at the Daily Journal were events of keen interest, much like those in Omaha with Berkshire Hathaway. William Green, in his book “Richer Wiser Happier,” describes how respected figures in the investment world, such as Li Lu, Mohnish Pabrai, Francois Rouchon, Whitney Tilson, Christopher Davis and Francis Chou, were drawn to Munger’s sharp wit and profound insights. These meetings were not just business gatherings but congregations of minds eager to absorb Munger’s wisdom.
Munger’s intellect and breadth of knowledge commanded respect and admiration, even from those not prone to idolisation. Bill Gates, a heavyweight of the tech industry, acknowledged Munger as “the broadest thinker I have ever encountered,” underlining the depth and versatility of Munger’s intellect. This respect was a testament to Munger’s unique ability to traverse diverse disciplines, providing insights that resonated far beyond the realms of finance and business. His wisdom was not confined to investing alone; it extended into realms of philosophy, psychology, and ethics, making him a polymath in the truest sense.
Central to Munger’s philosophy was a relentless pursuit to minimise errors in judgment and avoid what he termed “standard stupidities.” He constantly endeavoured to reduce “foolish thinking,” “idiotic behaviour,” and “unoriginal error.” This focus on reducing mistakes rather than solely seeking brilliance set Munger apart and became a cornerstone of his intellectual approach. His emphasis on rationality and clear thinking influenced not just his investment strategies but also provided a framework for effective decision-making in various aspects of life. Munger’s legacy, therefore, lies not just in the wealth he helped create but in the clarity of thought and wisdom he imparted to countless individuals across the globe.
“The best thing a human being can do is to help another human being know more.”
In reflecting upon the life and legacy of Charlie Munger, it’s clear that he was more than an iconic figure in the world of investing; he was a signal of wisdom and a moral compass. His teachings and principles have been a guiding light in my life, shaping my values and decisions. Munger’s sagacity has served as a North Star, helping navigate the complexities of both professional and personal realms. While I grieve his loss, it is with a deep sense of appreciation for the profound impact he had on my life and the lives of many others. His legacy is a testament to the enduring power of knowledge and ethical integrity.
The world has seen many public figures falter, but Munger remained steadfast, never wavering from the path that earned him respect and admiration. While I may not have agreed with every one of his views or actions, I never doubted his sincerity and integrity. In an era where positive examples are key to avoiding negativity, Munger stood as an exemplar of speaking your mind and sharing insights (regardless of whether people agree with you or not).
His passing leaves a void, but also a treasure trove of insights and principles that will continue to enlighten and guide.
As I navigate through this moment of reflection, I am reminded of Munger’s own words.
These words resonate as I ponder the wealth of knowledge he shared over a remarkable life. In honouring Munger, it is fitting to let his own insights mark the conclusion of this tribute:
“I have nothing more to add”