Billionaire Charlie Munger, the investing sage who made a fortune even before he became Warren Buffett’s right-hand man at Berkshire Hathaway, has died at age 99. Charlie Munger died Tuesday, according to a press release from Berkshire Hathaway. The conglomerate said it was advised by members of Munger’s family that he peacefully died this morning at a California hospital. He would have turned 100 on New Year’s Day.
“Berkshire Hathaway could not have been built to its present status without Charlie’s inspiration, wisdom and participation,” Buffett said in a statement.
Charlie Munger wearing many hats
In addition to being Berkshire vice chairman, Munger was a real estate attorney, chairman and publisher of the Daily Journal Corp., a member of the Costco board, a philanthropist and an architect.
Munger was chairman and CEO of Wesco Financial from 1984 to 2011, when Buffett’s Berkshire purchased the remaining shares of the Oracle of Pasadena, California-based insurance and investment company it did not own.
Charlie Munger investment tips
Charlie Munger, Warren Buffett’s righthand man for nearly six decades, was a shrewd investment genius in his own right, passing on rich Charlie Munger investment tips for generations of investors to learn from.
It was Charlie Munger who broadened Buffett’s approach to focus on quality companies, enabling Berkshire Hathaway to grow into an insurance, railroad and consumer goods conglomerate.
One of the best examples was Berkshire’s acquisition of See’s Candies in 1972 one of Charlie Munger investment tips, at a price way higher than Buffett was comfortable at paying for businesses.
“It’s not that much fun to buy a business where you really hope this sucker liquidates before it goes broke,” Munger said in 1998.
Charlie Munger did not believe in diversification
Unlike the investing philosophy in most textbooks, one of Charlie Munger investment tips was no to diversification, or mixing a wide variety of investments within a portfolio, to lower risk. In fact, the Berkshire vice chairman called it “insane” to teach that one has to diversify when investing in common stocks.
Know your strength
Much like Buffett’s theory about the “circle of competence,” Munger believed that savvy investors should focus on areas within their expertise and strength in order to avoid mistakes.
“We’re not so smart, but we kind of know where the edge of our smartness is … That is a very important part of practical intelligence,” as per Munger.
Munger particularly valued the power of strong brands and loyal customers. He said one of the best investments of his life was Costco Wholesale Corp., which he had invested in before the retailer merged with Price Club in 1993.
“I have a friend who says the first rule of fishing is to fish where the fish are. The second rule of fishing is to never forget the first rule. We’ve gotten good at fishing where the fish are,” the then-93-year-old Munger told the thousands of people at Berkshire’s 2017 meeting.
Charlie Munger on getting rich
Charlie Munger said to get rich one must invest and sit tight. It pays to wait. Munger thought that the key to stock-picking success is sometimes doing nothing for years and pulling the trigger with “aggression” when it’s time.
“The big money is not in the buying and selling, but in the waiting,” Munger once said. He added he liked the word “assiduity” because “it means sit down on your ass until you do it.”
Benefit of sitting on sidelines
The conglomerate was often questioned about its huge cash war chest and the lack of deals, when interest rates were near zero. Munger often defended Berkshire’s inaction as he always saw the virtue of sitting on the sidelines to wait for a good opportunity.
Berkshire’s massive cash pile is now earning the firm a substantial return with short-term rates topping 5%.
Charlie Munger not impressed by crypto
Munger was a longtime cryptocurrency skeptic, and he never minced words when it came to his critique. He said digital currencies are a malicious combination of fraud and delusion.
“I don’t welcome a currency that’s so useful to kidnappers and extortionists and so forth, nor do I like just shuffling out of your extra billions of billions of dollars to somebody who just invented a new financial product out of thin air,” Munger said in 2021.
He also called bitcoin a “turd,” “worthless, artificial gold” and that trading digital tokens is “just dementia.”
Munger was also against commission-free trading apps that often facilitate momentum-driven trading activity by amateur investors, such as the meme stock mania in 2021.
Charlie Munger’s mantra
As Buffett’s “right-hand man,” Munger was instrumental in the growth of Berkshire into a giant holding company with a market capitalization of more than $780 billion.
As vice chair Charlie Munger was also second-in-command of all assets, including what Buffett calls Berkshire’s “four giants”the four investments that account for the bulk of Berkshire’s value: “insurance float” from subsidiary insurance companies; Apple Inc; BNSF (Burlington Northern Santa Fe Corporation); BHE (Berkshire Hathaway Energy).
Buffett credited Munger with ensuring that Berkshire value investing adhered to Munger’s mantra: “Forget what you know about buying fair businesses at wonderful prices; instead, buy wonderful businesses at fair prices.”
Munger often stated that high ethical standards were integral to his philosophy and to his success.
