Charlie Munger

At the 2014 Berkshire Hathaway meeting, I was standing on the second floor of the exhibition hall when a golf cart pulled up next to me. I glanced over and saw that Charlie Munger was sitting in the passenger seat. My eyes nearly popped out of my head like in a cartoon.

I was dumbfounded. The one thing I knew was that I didn’t want to say anything to him:

• It seemed rude to disturb him. He had better things to do than talk to a fan.
• Charlie was a no bullshit kind of guy who doesn’t have a filter. I worried that he’d say something rude. Never meet your heroes and all of that.

A moment later, other folks noticed him and asked for photos with him. Charlie said, “I don’t have time for that!” He then got into the elevator and that was that.

The Architect Of Berkshire

When I first started learning about investing, there was a large part of it that bothered me. I didn’t like it when people focused intensely on numbers like PE ratios or related metrics. Even worse were trends or charts. The trends and charts sounded like short-term, voodoo bullshit. The thought that I had was this:

Why aren’t these people paying attention to what really matters, The Business? Why aren’t they asking these questions:

• What product or service is the business selling?
• How strong is it’s moat?
• Is the leader a founder?
• Is the leadership competent?
• What are the future growth prospects?
• Will this product be relevant in 10 years?

I realized that people didn’t think about this stuff because it’s subjective and not quantifiable. It’s not easy. But if you can get this stuff right, you can make really big money.

So when I first started learning about Munger, I realized that I had found someone else who thinks like me. This is from the 2012 Berkshire shareholder letter:

More than 50 years ago, Charlie told me that it was far better to buy a wonderful business at a fair price than to buy a fair business at a wonderful price.

And this is from the 2014 letter:

What most of you do not know about Charlie is that architecture is among his passions. Though he began his career as a practicing lawyer (with his time billed at $15 per hour), Charlie made his first real money in his 30s by designing and building five apartment projects near Los Angeles. Concurrently, he designed the house that he lives in today – some 55 years later. (Like me, Charlie can’t be budged if he is happy in his surroundings.) In recent years, Charlie has designed large dorm complexes at Stanford and the University of Michigan and today, at age 91, is working on another major project.

From my perspective, though, Charlie’s most important architectural feat was the design of today’s Berkshire. The blueprint he gave me was simple: Forget what you know about buying fair businesses at wonderful prices; instead, buy wonderful businesses at fair prices.

Did you get that? Warren Buffett stated that Charlie Munger is responsible for the modern iteration of Berkshire Hathaway.

My favorite Charlie quote came at the end of one of the meetings (can’t remember which one). Someone in the audience asked a question about investing and Charlie said something like this:

We don’t care about one year, five years, or ten years. We think in decades. We’re building momentum.

Investing aside, Charlie had a lot of good life advice:

I think life is a whole series of opportunity costs. You know, you got to marry the best person who is convenient to find who will have you. Investment is much the same sort of a process.

And this:

In my whole life, I have known no wise people (over a broad subject matter area) who didn’t read all the time — none, zero. You’d be amazed at how much Warren reads — and at how much I read. My children laugh at me. They think I’m a book with a couple of legs sticking out.

This too:

Acquire worldly wisdom and adjust your behavior accordingly. If your new behavior gives you a little temporary unpopularity with your peer group then to hell with them.

What A Ride

Charlie was successful because he believed in himself and was authentic. He made his own path and didn’t care what anyone else thought.

While I’m a little sad that I won’t get to hear Charlie again, his life should be celebrated. I’ll bet he would say that he lived in a way that resulted in few regrets. That’s something.

Thanks for sharing your wisdom Charlie.