Charlie Munger, who was instrumental in Warren Buffett’s transformation of Berkshire Hathaway into an investment behemoth, passed away in a hospital in California. He lived to be 99 years old.
According to a statement from Berkshire Hathaway, Munger passed away on Tuesday morning in the hospital, somewhat more than a month prior to his hundredth birthday, as reported by his family to the firm.
Buffett stated, “Berkshire Hathaway could not have been built to its present status without Charlie’s inspiration, wisdom, and participation.” I couldn’t agree more. Earlier this year, the renowned investor paid tribute to Munger in part of his annual letter to Berkshire shareholders.
In addition to leading Berkshire for over half a century and serving as its vice chairman for a long time, Munger was Buffett’s investment and business decision sounding board. Even though Munger had been confined to a wheelchair for a number of years, his mind had not deteriorated.
That was on display when he spoke to an investing podcast, The Wall Street Journal, CNBC, and handled hours of questions at Berkshire and the Daily Journal Corp. annual meetings earlier this year. While Buffett took center stage at Berkshire, Munger remained in the background, frequently downplaying his own role in the company’s meteoric rise to prominence.
Still, Buffett has always given Munger the credit for encouraging him to go beyond his initial value investing tactics and instead acquire high-quality companies at affordable rates, such as See’s Candy. “Charlie has taught me a lot about valuing businesses and about human nature,” Buffett said in 2008.
A former lecturer at Columbia University, Buffett owes much of his early success to the teachings of Ben Graham. Whenever he saw a company’s stock price drop below its asset value, he would purchase shares and then sell them when the market recovered.
The New England textile mill was taken over by Munger and Buffett in 1965, and Munger and Buffett started purchasing Berkshire Hathaway shares in 1962 for $7 and $8 per share.
As time went on, the two brothers transformed Berkshire into the modern conglomerate it is today by reinvesting the profits in other firms, such as BNSF railroad and Geico insurance, and by keeping a prominent stock portfolio that included significant holdings in Apple and Coca-Cola. A lot of people got rich holding onto the stock because the share price went up to $546,869 on Tuesday.
In honor of Munger’s 100th birthday, the business network CNBC aired excerpts from an in-depth interview he did earlier this month. The key to Berkshire’s success, according to Munger, who is known for his characteristic self-deprecating style, was avoiding mistakes and keeping working into his and Buffett’s 90s.
According to Munger, they were able to remain somewhat sane and not as foolish as the majority of people, which proved to be an advantage. In a further letter he penned in 2014 to commemorate his half-century of assisting in the company’s leadership, he elaborated on the factors that contributed to Berkshire’s success.
Even though they resided over 1,500 miles (2,400 kilometers) apart during their entire time working together, Buffett claimed he would contact Munger in Pasadena or Los Angeles to consult on every big choice he made.
“He will be greatly missed by many, perhaps by nobody more than Mr. Buffett, who relied heavily on his wisdom and counsel. I was envious of their friendship. They challenged each other yet seemed to really enjoy being in each other’s company,” Edward Jones analyst Jim Shanahan said.
According to CFRA Research analyst Cathy Seifert, Berkshire will probably be alright without Munger, but his function cannot be replaced. Given Buffett’s ego, Munger might have been among the few individuals prepared to correct him. “The most pronounced impact, I think, is going to be over the next several years as we see Buffett navigate without him,” Seifert said.
Munger and Buffett both worked at the grocery business that Buffett’s grandpa and uncle managed while they were kids, but despite living just five blocks apart, the two men never met until they were adults. Buffett is seven years younger than Munger. Munger was a lawyer in Southern California and Buffett was the head of an investing partnership in Omaha when they met in 1959 at a dinner party in Omaha.
In the history of Charles T. Munger found in the seminal work “Poor Charlie’s Almanack: The Wit and Wisdom of Charles T. Munger,” Buffett and Munger struck it rich during their first meeting and remained in touch via regular phone calls and extensive letters.
In the ’60s and ’70s, the two men discussed investing strategies and would sometimes put money into the same companies. Through their joint investment in Blue Chip Stamp Co., a trading stamp manufacturer, they became the two largest stockholders and were able to acquire Wesco, See’s Candy, and the Buffalo News.
Following his appointment as vice chairman of Berkshire in 1978, Munger assumed the roles of chairman and president of Wesco Financial in 1984. Those loyal Berkshire shareholders who would gather in Omaha to hear the two men address questions at the annual meetings will never forget the curmudgeonly jokes Munger would make with Buffett.
It was common practice for Munger to state, “I have nothing to add,” following Buffett’s lengthy responses during the Berkshire meetings. For example, Munger’s 2012 guidance on how to identify a solid investment is an example of the kind of direct, to-the-point responses he frequently provided. “If it’s got a really high commission on it, don’t bother looking at it,” he said.
Whitney Tilson has been a regular attendee of the Berkshire Hathaway annual meetings for the last 26 years, eager to soak up the wisdom and investment advice shared by Munger and Buffett.
Since one’s reputation and integrity are the most precious possessions—and both are easily destroyed—Tilson cited Munger’s advice that once one has achieved success, “your whole approach to life should be how not to screw it up, how not to lose what you’ve got”—as the most important things one can do.
The key to success in the financial industry, as in one’s personal life, is avoiding the kinds of disastrous blunders that can ruin one’s track record and even one’s life, according to Tilson. According to Munger, who famously put it this way, “All I want to know is where I’m going to die so (that) I never go there.”
A lifelong study of human nature, Munger was also noted for her extensive reading habits. In order to assess possible investments, he used a wide range of models taken from fields as diverse as mathematics, physics, and psychology. While serving as a meteorologist for the Army Air Corps during WWII, Munger left his mathematics studies at the University of Michigan in the 1940s.
Despite not having completed a bachelor’s degree, he proceeded to acquire a law degree in 1948 from Harvard University. He quickly realized that investing was more his speed, so he left the law company he co-founded in Los Angeles, which is still in his name. Munger became one of the wealthiest Americans after amassing a fortune of over $2 billion.
While Munger’s wealth dwindled as he distributed his riches, the rising value of Berkshire’s stock ensured his continued affluence. Among Munger’s many charitable contributions are substantial sums to Harvard-Westlake, Stanford University Law School, Michigan, and the Huntington Library.
Following his wife’s death in 2010, he also distributed a substantial amount of his Berkshire stock to his eight children. Good Samaritan Hospital and the Los Angeles private Harvard-Westlake School were both on Munger’s board of directors. In addition to his time as chairman of the Daily Journal Corp., Munger was a board member of Costco Wholesale Corp.
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