Charles Thomas Munger, born 1 January 1924, passed away just 34 days shy of his 100th birthday. Right to the end, he lived by what he believed: “Don’t break the intelligence chain by retiring too early,” as he said at the 2007 Wesco shareholder meeting. He will be remembered for the role he played as deputy chairman of Berkshire Hathaway and for his strong opinions, but most for his ability to summarise complex situations with a few sharp words. Kokkie Kooyman was fortunate to meet him three times (the picture above is after the 2004 Berkshire Hathaway annual shareholder meeting) and to attend 23 Berkshire Hathaway annual shareholder meetings and one Wesco shareholder meeting. In this piece, Kokkie highlights some of the most memorable bits of wisdom Charlie shared through his life.
Thinking about his life this week, my notes from 2008 stand out for reflecting Charlie Munger at his best.
When Warren Buffett warned investors to expect lower returns from their investment in Berkshire Hathaway in the future, Charlie added, “Anyone who expects performance to be close to past performance should sell their stock,” and “I think you can take Warren’s promises to the bank. We are happy making less and suggest you are too.”
When questioned about their health and lifestyle in 2008:
Warren: “We love what we do, we eat a balanced diet, I have a personal trainer three times a week – the rest of the time I do what I want. We have slowed down, but we pretend we haven’t, and life is great.”
Charlie: “I wish we were poster boys for the benefits of running marathons and maintaining a very slim body state. Neither of us pays much attention to any health habits or dietary rules – and it seems to have worked pretty well so far. I don’t think we can recommend it to everybody, but I, for one, don’t plan to change.”
Warren: “If you are in a position to make choices, work for someone or a company you admire. I worked for Benjamin Graham for two years and never asked what salary I would get when I took the job. And then getting the right spouse is incredibly important.” Joking, he also said, “Charlie spent 20 years looking for the perfect woman and when he found her, unfortunately, she was looking for the perfect man”.
Charlie: “Of course, you’ll do better if you develop a passion for something you have an aptitude for. If Warren went into ballet nobody would ever have heard of him.”
Charlie’s wisdom came from his attitude of always wanting to learn and always wanting to understand:
“You need to have a passionate interest in why things are happening. That cast of mind, kept over long periods, gradually improves your ability to focus on reality. If you don’t have that cast of mind, you’re destined for failure even if you have a high I.Q.”
“If it is wisdom you’re after, you’re going to spend a lot of time on your ass reading.”
“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 at how much Warren reads – at how much I read. My children laugh at me. They think I’m a book with a couple of legs sticking out.”
“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.”
Charlie met Warren in 1959 and since then had a huge influence on him, as a friend, and as deputy chairman of Berkshire Hathaway.
But Charlie’s biggest influence on Warren was when he convinced him that “it’s better to buy a good company at a fair price than a fair company at a good price.”
He taught Warren the value of a moat of a business (a loyal and growing client base), and this led to them buying See’s Candy (1972), Coke (1987) and businesses like American Express and Gillette.
And so, over the next 58 years they changed the Berkshire Hathaway (a failing textile mill) they bought because of its attractive low price, to one of the largest conglomerates in the world and a collection of great businesses.
Under their management, Berkshire Hathaway returned a compounded annual gain of 19.8%¹ from 1965 to 2022 — roughly double the gain of the S&P 500 over the same time.
Charlie (in 2020), ever honest on their success, said, “I think part of the popularity of Berkshire Hathaway is that we look like people who have found a trick. It’s not brilliance. It’s just avoiding stupidity.” Or, as Warren put it, “We’re not clever, just sane.”
They were not only business partners and friends, but they also had deep respect for each other’s opinions. “It’s terrific to have a partner who will say: ‘Warren, you’re not thinking straight,’” Buffett said of Munger, seated next to him, at Berkshire’s 2002 meeting.
I’ll end with a great anecdote Warren shared in the 2014 shareholder letter:
“…and we sometimes don’t agree. In 56 years, however, we’ve never had an argument. When we differ, Charlie usually ends the conversation by saying: ‘Warren, think it over and you’ll agree with me because you’re smart and I’m right.’”
Charlie will be severely missed by shareholders, investors, and most of all by Warren Buffett.
Will the annual shareholder meetings continue? For sure. Will they be the same? Unfortunately, no. Although most investors attend to listen to Warren’s insights, they will miss the banter and interchanges between the two, and Charlie’s honest assessment of the situation.
Rest in peace, Charlie Munger.
Thank you for the sharing your wisdom with the world for so many years.
“The safest way to try to get what you want is to try to deserve what you want. It’s such a simple idea. It’s the golden rule. You want to deliver to the world what you would buy if you were on the other end. And there is huge pleasure in life to be obtained from getting deserved trust.” —Charlie Munger
¹ Source: Berkshire Hathaway 2022 Annual Report
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