Legendary Investor Charlie Munger Just Passed Away

Legendary Investor Charlie Munger Just Passed Away
Stéphane Renevier, CFA

3 months ago2 mins

Mentioned in story

What’s going on here?

Legendary investor Charlie Munger passed away at the age of 99.

What does this mean?

Warren Buffett personifies investing success today – but without right-hand man Charlie Munger’s strategic insights and partnership, Buffett’s billions may have remained a pipe dream. Munger joined Berkshire Hathaway as vice chairman in 1978, thirteen years after the duo met. But the lawyer-by-training did far more than that job title suggests, often acting as the driving force behind investments. Case in point: it was Munger who steered Buffett’s strategy away from buying decent companies at cheap prices to buying outstanding companies at reasonable prices. His no-nonsense decision-making helped lead Berkshire to average annual gains of 20% between 1965 and 2022, roughly double the pace of the S&P 500 Index. And during the process, Forbes believes Munger racked up a personal fortune of some $2.6 billion.

Berkshire vs SP500

Why should I care?

For investors: Value’s in the eye of the beholder.

Munger’s superstar status might not have rivaled Buffett’s, but the straight talker won an allegiance of fans thanks to his clear-cut, practical, and enduring investing lessons. Arguably his biggest belief, besides the importance of never-ending learning through reading, was to design a trustworthy investment strategy and stick with it. For Munger, that meant selecting first-class companies at acceptable – not necessarily cheap – prices, using careful logic and a deep understanding of how those firms work.

The bigger picture: Less losing equals more winning.

That considered approach does have drawbacks. Cautious Munger didn’t buy into tech giants like Microsoft and Google when early investors did, for example. But sometimes winning just means not losing: Munger also avoided stocking up on the tech stocks that crashed in the dot-com bubble, and passed on over-investing during heady market highs when risks peaked. At the end of the day, it’s the classic calls – Coca-Cola, American Express, and GEICO, to name a few – that underpin Berkshire’s success, not quick-win crazes.

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