The “Oracle of Pasadena,” Charlie Munger was a well-known businessman, lawyer, and investor who spent more than 40 years as Berkshire Hathaway’s vice chairman and right-hand man to Warren Buffett. Munger, who was renowned for his keen mind, humor, and unshakable dedication to value investing ideas, made a lasting impression on the financial industry and beyond.
Early Life, Education and Legal Career
Munger, who was born in Omaha, Nebraska, in 1924, showed an early interest in commerce and law. After earning a physics and math degree from the University of Nebraska–Lincoln in 1948, he went on to Harvard Law School to earn a law degree in 1951.
Munger returned to Omaha after law school and started a prosperous legal career. Benjamin Graham, the founder of value investing, also took an early interest in him. Munger’s investing strategy was shaped for the remainder of his life by Graham’s teachings, which advocated purchasing stocks at a substantial discount to their true worth.
Joining Berkshire Hathaway and Partnership with Warren Buffett
Munger got to know young, driven investor Warren Buffett in 1968, when he was already causing a stir in the financial community. As soon as the two men gained each other’s esteem and admiration, Munger became vice chairman of Berkshire Hathaway in 1977.
Munger and Buffett’s collaboration turned out to be one of the most prosperous in the history of investing. Buffett’s aptitude for analysis and sense of value were well-matched by Munger’s caution, wisdom, and contrarian viewpoint. Together, they guided Berkshire Hathaway through many market ups and downs, accumulating a huge fortune and making the business one of the most renowned investment corporations in the world.
Munger’s Investment Principles: A Timeless Approach
Munger’s approach to investing was firmly based in value investing, with a focus on avoiding the traps of emotional investing and purchasing stocks below their real worth. Additionally, he was a strong proponent of knowing the underlying companies of the equities he bought.
Beyond Investing: Munger’s Contributions to Society
Munger’s impact was not limited to the financial sector. He was a well-liked author, public speaker, and philanthropist who shared his knowledge and understanding of many subjects, such as psychology, economics, and human behavior.
The Legacy of Charlie Munger
At the age of 99, Charlie Munger passed away in 2020, leaving a legacy of discernment, morality, and uncompromising adherence to value investing ideals. Investors all throughout the world are still motivated and guided by his observations.
Munger’s Key Takeaways for Investors
- Put value first: Make investments in businesses that are both fundamentally sound and currently trading at a substantial discount to their inherent value.
- Be patient: Both discipline and patience are necessary for value investment. Refrain from pursuing market trends and adhere to your long-term investment strategy.
- Recognize the business: Don’t merely make investments based on numbers; learn about the underlying industry, the company’s competitors, and the management team.
- Manage your emotions: Steer clear of emotionally charged investment choices motivated by greed or fear. Make thoughtful decisions based on thorough research.
- Be a lifelong learner: Keep learning new things and adjusting to the always shifting world of investing. Keep abreast on economic and market developments.
The legacy of Charlie Munger serves as a testament to the effectiveness of value investing and the significance of a methodical, disciplined approach to investment. Future generations of investors will continue to benefit from his wisdom.