{"id":2479703,"date":"2023-11-29T11:16:57","date_gmt":"2023-11-29T16:16:57","guid":{"rendered":"https:\/\/www.valuewalk.com\/?p=2479703"},"modified":"2023-12-11T11:54:26","modified_gmt":"2023-12-11T16:54:26","slug":"life-legacy-berkshire-hathaways-charlie-munger","status":"publish","type":"post","link":"https:\/\/www.valuewalk.com\/life-legacy-berkshire-hathaways-charlie-munger\/","title":{"rendered":"The Life and Legacy of Berkshire Hathaway’s Charlie Munger"},"content":{"rendered":"\n

Charlie Munger, the man who helped Warren Buffett build Berkshire Hathaway<\/strong> (NYSE:BRK.A) (NYSE:BRK.B) into one of the largest companies in the world, died on Tuesday in California at the age of 99. He would have turned 100 on Jan. 1.<\/p>\n\n\n\n

\u201cBerkshire Hathaway could not have been built to its present status without Charlie\u2019s inspiration, wisdom and participation,\u201d Buffett said in a statement.<\/p>\n\n\n\n

Munger<\/a> grew up in Omaha, Nebraska and actually worked at a grocery store owned by Buffett\u2019s grandfather as a kid. However, the two legendary investors did not meet until 1959 at a dinner when Munger was back in Omaha to attend to matters related to his recently deceased father.<\/p>\n\n\n\n

Prior to that, he had attended the University of Michigan, served in the Army Air Corps, and graduated from Harvard Law School. In 1962, he moved to California and founded a law firm, Munger, Tolles, and Olson, and spun off an investment firm, Wheeler, Munger and Co.<\/p>\n\n\n\n

In an article he wrote for Columbia Business School Magazine in 1984 called \u201cThe Superinvestors of Graham-and-Doddsville,\u201d Buffett highlighted Munger\u2019s track record running the portfolio at Wheeler, Munger. <\/p>\n\n\n\n

\u201cI ran into him in about 1960 and told him that law was fine as a hobby, but you can do better,\u201d Buffett wrote of Munger. \u201cHis portfolio was concentrated in very few securities, and therefore, his record was much more volatile, but it was based on the same discount-from-value approach. He was willing to accept greater peaks and valleys of performance, and he happens to be a fellow whose whole psyche goes toward concentration.\u201d<\/p>\n\n\n\n

As Buffett pointed out in the piece, Munger\u2019s portfolio had an average annual return of 19.8% from 1962 to 1975, compared to the Dow Jones Industrial Average’s gain of about 3% per year.<\/p>\n\n\n\n

Sometime around 1976, Munger joined Buffett at Berkshire Hathaway<\/a>, and in 1978, he became a vice chair, a position he held until he died. Incidentally, Berkshire Hathaway\u2019s portfolio has posted an average annual return of 19.8% per year from 1965 through 2022, compared to the S&P 500\u2019s 9.9% annual return over that same period.<\/p>\n\n\n\n

The wit and wisdom of Charlie Munger in Buffett’s own words<\/strong><\/h2>\n\n\n\n

When talking about Berkshire Hathaway and their strategy, Buffett typically says \u201cCharlie and I,\u201d which shows just how close a partnership these two men had. In the 2022 annual shareholders’ letter, which came out this past February, Buffett did it multiple times. Among the many references, Buffett wrote, \u201cCharlie and I are not stock-pickers; we are business-pickers.\u201d<\/p>\n\n\n\n

In fact, Buffett credits Munger with refocusing his investing strategy early on in their partnership<\/a>, as he told CNBC in 2016.<\/p>\n\n\n\n

\u201cHe weaned me away from the idea of buying very so-so companies at very cheap prices, knowing that there was some small profit in it, and looking for some really wonderful businesses that we could buy in fair prices,\u201d Buffett told CNBC.<\/p>\n\n\n\n

In the last letter to shareholders released in February, it was fitting that Buffett offered a tribute to Munger in a section called, \u201cNothing Beats Having a Great Partner.\u201d You can find it on Berkshire Hathaway\u2019s website, but it seems appropriate to recount here today.<\/p>\n\n\n\n

\u201cCharlie and I think pretty much alike, but what it takes me a page to explain, he sums up in a sentence,” Buffett wrote. “His version, moreover, is always more clearly reasoned and also more artfully \u2014 some might add bluntly \u2014 stated. Here are a few of his thoughts, many lifted from a very recent podcast:<\/p>\n\n\n\n