Charles T. Munger, friend and co-leader of Berkshire Hathaway passed away on November 28 at the age of 99 at a hospital in California
Charles T. Munger, a champion of common-sense investing, passed away on November 28 at the age of 99 at a hospital in California, as announced by Berkshire Hathaway, the Omaha-based investment company he co-led with Warren Buffett.
Born in Omaha on January 1, 1924, Munger grew up near Buffett’s residence and worked in Buffett’s grandfather’s grocery store during the lean years after the Depression.
Munger, who initially prospered as a lawyer in Los Angeles, met his future business partner, Buffett, in 1959 at a dinner party in their mutual hometown of Omaha. He served as an Army Air Forces meteorologist during World War II and entered Harvard Law School without an undergraduate degree, facilitated by family connections. In 1962, Munger and six others formed the Los Angeles-based law firm of Munger, Tolles and Olson, representing Berkshire Hathaway. That same year, Munger started his own investment advisory firm, Wheeler, Munger & Co., expressing a passion for financial independence rather than material wealth.
Before Munger joined him, Buffett pursued an investment strategy dominated by the philosophy of Benjamin Graham, his professor at Columbia University’s business school. Graham’s philosophy emphasized buying low-priced stocks in undervalued companies identified through balance sheet analysis. Munger and Buffett, however, pioneered a different style, investing in solid, established companies at what would prove to be reasonable prices over the long term.
During the 1980s and 1990s, they combined Graham’s investment strategy with “one-decision theory,” advocating for long-term investments in good growth stocks or companies. This approach differed from the fast-trading action on Wall Street and at many hedge funds and private equity firms.
Munger strongly believed in the power of compound interest, asserting that investors who engaged in fast-trading activities missed out on this potential. Both Munger and Buffett aligned their net worth predominantly with Berkshire stock, emphasizing to shareholders that they “ate their own cooking.”
As critics of traditional investment banks and financial models, Munger and Buffett disdained the “efficient market theory” in economics, relying on their success in finding and exploiting market inefficiencies through the application of math, science, psychology, and logic.
Despite a promising professional start, Munger faced personal trauma, including the end of his first marriage in divorce and the loss of his son, Teddy, to leukemia at the age of 9 in 1955. In 1956, he married Nancy Barry Borthwick, who provided stability in his life until her death in 2010. Munger, who stepped down as an active partner in his law firm in 1965, continued to operate his investment firm until 1975, outperforming the Dow Jones Industrial Average by nearly four times during the same period.
In contrast to Buffett, who amassed wealth before pledging it to Bill Gates, Munger donated a significant portion of his money directly to institutions such as Planned Parenthood, Good Samaritan Hospital in Los Angeles, and the Stanford University law school. Despite political differences, Munger, a registered Republican, joined Buffett as an advocate for population control and abortion rights.
Desiring to be remembered as one who pursued “a fortune fairly won and wisely used,” Charles T. Munger left a lasting impact on the world of investing and finance.
