Billionaire investor Charlie Munger, the Vice Chairman of Berkshire Hathaway and a long-time good friend to Warren Buffet, handed away on November 28, 2023 on the age of 99. Munger was born on January 1, 1924 and would have certainly turned 100 on the New 12 months’s Day in 2024. He was a minimum of an period in company America and investing.

Responding to his demise, Buffet acknowledged the important position performed by Charlie Munger within the success of their conglomerate. Munger performed an important position in turning Berkshire into an funding powerhouse with a market cap of $780 billion (as of November 2023).

His knowledge, inspiration and participation had been one of many main causes for the unmatchable progress of Berkshire Hathaway.

Charlie Munger’s Background:

Born in 1924 in Omaha, Munger labored at Buffett & Son grocery retailer as a young person. The shop was owned by Buffett’s grandfather.

Throughout World Conflict II, he studied arithmetic on the College of Michigan however left school to serve within the U.S. Military Air Corps as a meteorologist. He later continued to check meteorology at Caltech.

Munger then graduated magna cum laude from Harvard Regulation College in 1948 and based Munger, Tolles & Olson, a famend legislation agency.

Transition to Finance:

Warren Buffett and Charlie Munger’s friendship dates again a number of a long time.

Munger met Buffet at a cocktail party in 1959. At the moment, he was practising legislation whereas Buffet was working an funding partnership.

Munger shifted from legislation to finance on Buffett’s recommendation within the Nineteen Sixties. They grew to become good pals earlier than changing into formal enterprise companions.

Munger additionally ran his personal funding agency, attaining a compound annual return of 19.8% (1962-1975).

He later joined Berkshire Hathaway in 1978 as vice chair.

Munger’s Affect on Buffett’s Investing Philosophy:

Munger influenced Buffett to maneuver away from “cigar-butt” investing (an strategy that entails shopping for distressed enterprise). Actually, Munger performed an amazing position in altering his perspective. He emphasised shopping for nice companies at truthful costs somewhat than troubled companies at cut price costs.

He assisted Buffett in diversifying his funding strategy and emphasised on figuring out high-quality firms that had been undervalued.

Munger’s Funding Philosophy:

Excessive moral requirements had been integral to Munger’s philosophy and success.

As beforehand said, he advocated for purchasing fantastic companies at truthful costs.

Impactful Funding Choices:

One of the vital impactful selections by Munger was when he persuaded Buffett in 1972 to buy See’s Candies for $25 million.

Although the California sweet maker had annual earnings of solely about $4 million on the time, it turned out to be a extremely worthwhile funding producing greater than $2 billion in gross sales for Berkshire.

Berkshire’s “4 Giants”:

Munger, as vice chair, managed property, together with the “4 Giants” of Berkshire:

Insurance coverage Float: Subsidiary insurance coverage firms, rising from $19 million to $164 billion.

Apple, Inc: Berkshire’s 5.8% possession stake as a result of Apple’s inventory repurchase. (Although Berkshire’s proportion possession is decrease, the funding remains to be thought of nice.)

BNSF (Burlington Northern Santa Fe Company): Freight railroad community in North America.

BHE (Berkshire Hathaway Vitality): Portfolio of domestically managed companies within the utility sector.

Munger’s Views on Bitcoin:

Munger expressed skepticism and criticized Bitcoin, calling it a creation “out of skinny air” and a go-to cost technique for criminals. He was identified for contemplating cryptocurrencies as “nugatory” and had been vocal about his issues relating to their potential hurt.

Philanthropy:

Munger targeted philanthropy on schooling, making vital donations to varied universities. Throughout his lifetime, he made giant donations to the College of Michigan, Stanford College and the College of California, Santa Barbara.

Some well-known quotes of Munger

Listed below are just a few most well-known Charlie Munger’s quotes on investing and life:

“I feel a life correctly lived is simply study, study, study on a regular basis.”

“The large cash is just not within the shopping for or promoting, however within the ready.”

“There isn’t any higher instructor than historical past in figuring out the longer term… There are solutions value billions of {dollars} in a 30$ historical past guide.”

“The very best armor of previous age is a effectively spent life previous it.”

The underside line

Munger performed an important position in Berkshire’s progress into an enormous holding firm. His funding philosophy and moral requirements had been key to his success and Berkshire’s success. The ideas adopted by him shall function an funding information for generations to come back.