Charlie Munger, investment sage and close friend of Warren Buffett, has died

Billionaire Charlie Munger, the investment sage who amassed a fortune even before he became Warren Buffett’s right-hand man at Berkshire Hathaway, has died at the age of 99.

Munger died Tuesday, according to a news release from Berkshire Hathaway. The group said that Munger’s family members informed them that he died peacefully this morning in a California hospital. He would have turned 100 on New Year’s Day.

“Berkshire Hathaway could not have been built to its current position without Charlie’s inspiration, wisdom, and involvement,” Buffett said in a statement.

In addition to being vice chairman of Berkshire, Munger was a real estate lawyer, president and publisher of the Daily Journal Corp., a member of the Costco board of directors, a philanthropist and an architect.

As of early 2023, his net worth was estimated at $2.3 billion – This is an amazing amount to many people, but it is much smaller than Buffett’s unfathomable amount luckWhich is estimated at more than $100 billion.

During Berkshire’s 2021 annual shareholder meeting, the 97-year-old Munger appears to have inadvertently revealed a closely guarded secret: that Vice Chairman Greg Appel will “retain the culture” beyond the Buffett era.

Munger, who wore thick glasses, lost his left eye after complications from cataract surgery in 1980.

Munger was president and CEO of Wesco Financial from 1984 to 2011, when Buffett’s Berkshire bought remaining shares in the Pasadena, Calif.-based insurance and investment company that it did not own.

Buffett credited Munger with expanding his investment strategy from favoring distressed companies at low prices in the hope of making a profit to focusing on companies with higher quality but at lower prices than their real value.

An early example of this shift was demonstrated in 1972 by Munger’s ability to convince Buffett to sign on to Berkshire’s purchase of Berkshire. See candy For $25 million though, the California candy maker had annual pre-tax profits of only about $4 million. It has since been produced More than $2 billion In sales to Berkshire.

“It got me away from the idea of ​​buying very average companies at very cheap prices, knowing that there were some small profits in them, and looking for some really great companies that we could buy at fair prices,” Buffett said. CNBC in May 2016.

Or as Munger said at a 1998 Berkshire shareholder meeting: “It’s no fun buying a company and really hoping this idiot will liquidate before he goes bankrupt.”

Munger was often the straight man in Buffett’s lighthearted comments. “I have something to add.” That’s what he said after one of Buffett’s garrulous responses to questions at Berkshire’s annual meetings in Omaha, Nebraska. But like his friend and colleague, Munger was a fountain of wisdom in investing and in life. Like one of his heroes, Benjamin Franklin, Munger’s vision was not lacking in humor.

“I have a friend who says the first rule of fishing is to do it Fish where fish are. The second rule of fishing is to never forget the first rule. “We’ve gotten good at fishing where the fish are,” the 93-year-old Munger told thousands of people at a 2017 Berkshire meeting.

He believed in what he called it “Lollapalooza effect” A set of factors have combined to stimulate investment psychology.

Charles Thomas Munger was born in Omaha in January. January 1, 1924. His father, Alfred, was a lawyer and his momFlorence “Todi” He was from a wealthy family. Like Warren, Munger worked at Buffett’s grandfather’s grocery store as a young man, but the two future joined partners didn’t meet until years later.

At 17, Munger left Omaha for the University of Michigan. Two years later, in 1943, he enlisted in the Army Air Corps, according to Janet Lowe’s 2003 autobiography “Damn Right!”

The Army sent him to the California Institute of Technology in Pasadena to study meteorology. In California, he fell in love with Nancy Huggins, his sister’s roommate at Scripps College, and married her in 1945. Although he never completed his undergraduate degree, he graduated summa cum laude from Harvard Law School in 1948, and the couple returned To California, where he practiced real estate law. He founded the law firm Munger, Tolles & Olson in 1962 and focused on managing investments in the hedge fund Wheeler, Munger & Co., which he also founded that year.

“I’m proud to be an Omaha boy,” Munger said in a 2017 interview with . Dean Scott Dero from Michigan Ross School of Business. “Sometimes I use the old saying: ‘They got the boy out of Omaha but they never took Omaha out of the boy.'” All those old values ​​- family comes first; be in a position to help others when trouble comes; wise and reasonable; moral duty to be reasonable [is] More important than anything else – more important than being rich, more important than being important – an absolute moral imperative.

In California, he partnered with Franklin Otis Booth, a member of the founding family of the Los Angeles Times, in real estate. One of their early developments turned out to be profitable Apartment project On Booth’s grandfather’s property in Pasadena. (Booth, who died in 2008, was introduced to Buffett by Munger in 1963 and became one of Berkshire’s largest investors.)

“I had five real estate projects,” Munger said. Dero. “I did both things side by side for a few years, and within a very few years, I had $3 million-$4 million.”

Munger closed the hedge fund in 1975. Three years later, he became vice chairman of Berkshire Hathaway.

In 1959, when he was 35, Munger returned to Omaha to close his late father’s law practice. That’s when he was introduced to Buffett, then 29 years old By one of Buffett’s investor clients. The two hit it off and stayed in touch despite living half a continent away from each other.

“We think so much alike that it’s scary,” Buffett recalled in an interview with the Omaha World-Herald in 1977. “He’s the smartest, most high-profile man I’ve ever met.”

“We never had an argument “For the entire time we’ve known each other, which is almost 60 years now,” Buffett told CNBC’s Becky Quick in 2018. “Charlie gave me the perfect gift that anyone could give another person. He made me a better person than I otherwise would have been. … He gave me a lot of good advice over time. … I’ve lived a better life because of Charlie.” “

The merging of minds focused on value investing, where stocks are chosen because their price appears undervalued based on the company’s long-term fundamentals.

Munger once said: “All intelligent investing is value investing, that is, getting more than you pay for.” “You have to value the business in order to value the stock.”

But during the coronavirus outbreak in early 2020, when Berkshire suffered a massive $50 billion loss in the first quarter, Munger and Buffett were more conservative than they had been during the Great Recession, when they invested in US airlines and financial institutions such as Bank of America and Goldman. Saks has been hit hard by this downturn.

“Well, I would say we’re like the captain of the ship when the worst hurricane ever comes,” Munger told the Wall Street Journal in April 2020. Through the hurricaneWe prefer to exit it with a large amount of liquidity. We don’t play and say: Oh Judy, Judy, everything is going to hell, let’s reduce 100% of the reserves. [into buying businesses]”.

Munger has donated hundreds of millions of dollars to educational institutions, including the University of Michigan, Stanford University, and Harvard Law School, often on the condition that the university accept his donations. Building designsAlthough he was not formally trained as an architect.

At Harvard-Westlake Prep in Los Angeles, where Munger was a board member for decades, he made sure the girls’ bathrooms were larger than the boys’ while building the science center in the 1990s.

“Anytime you go to a football match or an event, there’s a huge line outside the women’s bathroom. Who doesn’t know that they urinate differently than men?” Munger said The Wall Street Journal In 2019. “What kind of idiot would make a men’s bathroom and a women’s bathroom the same size? The answer is, a regular architect!”

Munger and his wife had three children, daughters Wendy and Molly, and son Teddy, who died of leukemia at age nine. The Munger couple divorced in 1953.

Two years later, he married Nancy Barry, whom he met at an event Blind date At a chicken dinner restaurant. The couple had four children, Charles Jr., Emily, Barry, and Philip. He was also the stepfather of her other two sons, William Harold Borthwick and David Borthwick. The Munger family, married for 54 years until her death in 2010, contributed $43.5 million to Stanford University to help build the Munger Graduate Residence, which houses 600 law students and alumni.

Asked by Quick on CNBC’s “Squawk Box” interview in February 2019 about the secret to a long and happy life, Munger said the answer is “easy, because it’s very simple.”

“You don’t have a lot of envy, you don’t have a lot of resentment, you don’t overspend your income, you stay cheerful despite your problems. You get along with trustworthy people and you do what you’re supposed to do.” And all these simple rules work well to make your life better. And it’s so corny,” he said.

“And to remain cheerful… because it is wise. Is that so difficult? And can you be cheerful when you are completely immersed in deep hatred and resentment? Of course you cannot. So why accept it? On?”

— CNBC’s Yun Li contributed reporting.