Charlie Munger, Warren Buffett confidant and investment guru, dies at 99
Wall Street billionaire and Warren Buffett confidant Charlie Munger died this week at a California hospital.
The 99-year old investment expert and trained lawyer was the right-hand man to the US business magnate and vice chairman of his firm Berkshire Hathaway.
Hailed as the brilliant mind behind Berkshire’s success, he was also one of its biggest shareholders with stock valued at about US$2.1 billion (about A$3.2 billion) as at March 2022.
Berkshire said Mr Munger died peacefully on Tuesday.
On news of his passing, Mr Buffett released a short statement crediting Mr Munger’s contributions.
“Berkshire Hathaway could not have been built to its present status without Charlie’s inspiration, wisdom, and participation,” it said.
Humble beginnings
Charlie Munger was born into a simple life in January 1924 in Nebraska.
A survivor of the Great Depression, he studied meteorology while serving in the army during the second world war before graduating from Harvard Law School.
He first met Mr Buffett in 1959 and formed his law firm Munger, Tolles & Olson in 1962.
In the same year, Mr Buffett started buying stock in Berkshire.
Mr Munger was appointed to Berkshire’s board as vice chairman in 1978.
Sharp strategies, quick wit
Mr Munger started working for Mr Buffett’s empire in 1975 where he became known for his sharp investment strategies and tongue, comparing bankers to “heroin addicts” and dismissing cryptocurrency investment as “absolutely crazy, stupid gambling.”
Over more than four decades, the pair transformed Berkshire from a textile manufacturing enterprise into a multi-billion dollar investment powerhouse with dozens of business units and an extraordinary stock market ride.
From 1965 to 2021, the firm averaged an annual gain of 20.1% — almost twice the pace of the S&P 500 stock market index, which tracks the performance of 500 of the largest US-listed companies.
Decades of compounded returns made Mr Munger and Mr Buffett billionaires and heroes to a legion of loyal investors.
‘Value investing’ philosophy
Mr Munger was credited with helping Mr Buffett choose how to invest Berkshire’s capital.
They ended up sharing the “value investing” philosophy of famed economist Benjamin Graham, looking for well-run companies with undervalued share prices.
They shunned technology companies and other businesses they claimed to not understand and avoided third-degree burns when the late-1990s dot-com bubble went up in flames.
Together the pair assembled an insurance, railroad, manufacturing and consumer goods conglomerate which posted nearly $36 billion of operating profit in 2019.
Impactful approach
In 2019, Mr Buffett talked about how Mr Munger was key to impacting his approach to investing.
“Charlie changed my views — he refined them in a huge way, in terms of looking for the quality companies and looking out for the ability to make an investment that will work out for five or 10 or 20 years as opposed to something where there might be one more puff left in the cigar,” he said.
“And that worked okay, but it was small-scale and it really doesn’t build anything satisfying… he kept forcing me in the direction of saying ‘is this really a business that we want to own for forever?’”
Low-key to the end
Mr Munger was believed to have lived a modest life and drove his own car, although he used a wheelchair in his final years.
He was also reported to be a generous philanthropist, pledging more than US$150 million in 2013 to build housing at the University of Michigan.
According to Forbes, Mr Munger had a personal fortune of around US$2.6 billion – small when compared to Mr Buffett’s US$119.6 billion net worth and position as one of the richest people on the planet.