Market Commentary: How Charlie Got So Rich

Despite his fame as Warren Buffett’s right-hand man, Charlie Munger, who recently passed away at 99, maintained a remarkably low public profile, letting his vast wisdom and sharp wit speak through his investments and rare, yet profound, public statements.

Charlie was renowned for his role as the vice chairman of Berkshire Hathaway and his partnership with Warren Buffett, and he left an indelible mark on the world of investing. His death at the age of 99 marks the end of an era in the financial world.

Munger, though less in the public eye compared to Buffett, was instrumental in shaping the investment philosophy that made Berkshire Hathaway a colossal success.

How Charlie Got His Start

Born in Omaha, Nebraska, in 1924, Munger’s early life was marked by hardship and resilience. Still, he figured out how to persevere, and managed to attend the University of Michigan. Later, he served in the U.S. Army Air Corps during World War II.

In the post-war era, he graduated from Harvard Law School, setting the stage for a successful legal career. However, his interest in investing soon took precedence, leading him to establish his own investment firm before the fateful connection with Warren took place.

Munger’s partnership with Buffett, which began in the 1970s, was pivotal in shifting Berkshire Hathaway’s investment strategy away from ‘cigar-butt investing’ — buying undervalued companies to sell for a quick profit — to investing in high-quality companies at fair prices. This pivot marked a turning point in Berkshire Hathaway’s history, leading to unprecedented growth and success.

Munger’s investment philosophy centered on the concept of ‘value investing’ and emphasized the importance of understanding the business, its competitive advantages, and its long-term prospects.

Like Buffett, one of Munger’s key lessons was to invest in quality companies with a strong competitive advantage, or ‘economic moat’. He believed in the power of compounding returns from such investments over time. He also advocated for a disciplined, rational approach to investing and often warned against the influence of market trends and emotions on investment decisions, emphasizing the need for patience and clear-headed analysis.

So too did he consistently advise investors to think long-term, dismissing short-term market fluctuations as irrelevant to the true value of a well-chosen investment.

Famous Quips and Wisdom

Munger was known for his witty, often blunt, remarks on investing and life.

Some of his most famous quips include:

• “The big money is not in the buying and selling, but in the waiting.”
• “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”

These aphorisms reflect his deep-seated beliefs in patience, quality, and rationality in investing.

Influence and Legacy

Munger’s influence on Buffett and Berkshire Hathaway was profound. His wisdom helped shape Buffett’s investment strategies, steering Berkshire towards massive growth by investing in companies like Coca-Cola and Apple.

Munger’s legacy is not just in the wealth he helped create, but in the principles of investment he championed and passed on to countless investors.

His passing is, undoubtedly, a profound loss to the investment world. His wisdom, wit, and unwavering commitment to rational and value-driven investing leave a lasting legacy.

As investors and admirers mourn his passing, they also celebrate the vast knowledge and guidance he imparted. Munger’s lessons, distilled from a lifetime of investment success, continue to resonate and guide investors around the world.