Charles Munger: A Visionary’s Odyssey Through Success and Wisdom

Charles Thomas Munger was a renowned investor, real estate lawyer, and philanthropist from the United States, who served as the vice president of Berkshire Hathaway, a conglomerate led by Warren Buffett.

In this post, you will discover the biography of Charlie Munger.

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Munger's personal life

Charlie Munger was born on January 1, 1924, in Omaha, Nebraska (United States).

This influential investor was first married to Nancy Huggins (1945-1953), and they had three children named Wendy, Molly, and Teddy (Teddy tragically died of leukaemia at the age of 9).

Additionally, Munger married Nancy Barry in 1956 (remaining married until her passing in 2010). They were blessed with four children: Charles T. Munger Jr., Emilie Munger Ogden, Barry A. Munger, and Philip R. Munger. Moreover, Munger played a vital role in raising Barry's two children from a previous marriage, William Harold Borthwick and David Borthwick.

Studies and work life of Charles Munger

In his youth, Charlie Munger worked at Buffett & Son, a grocery store owned by Buffett's grandfather.

Munger pursued studies in mathematics at the University of Michigan, the California Institute of Technology, and other universities, but did not complete his coursework at any of these institutions.

Subsequently, he enrolled at Harvard to study law, facilitated by Roscoe Pound, former dean of Harvard Law and a family friend. Excelling in his studies, he graduated magna cum laude in 1948.

During World War II, Munger served in the U.S. Army Air Corps, securing a commission as a second lieutenant despite lacking a university degree.

He obtained a degree in meteorology at Caltech in Pasadena, California, a city that would later become his home.

Following his relocation to California, Munger worked at a law firm initially known as Wright & Garrett, later rebranded as Musick, Peeler & Garrett, before establishing his own practice.

Later, he transitioned from law to real estate development.

In the early 1960s, Munger ventured into investment and gained prominence for his association with Buffett. In 1962, he became a founding partner of Munger, Tolles & Olson LLP, where he practised as a real estate lawyer.

Munger, alongside Jack Wheeler, established an investment firm called Wheeler, Munger, and Company, which was listed on the Pacific Coast Stock Exchange. Unfortunately, after accumulating losses of 32% in 1973 and 31% in 1974, they were compelled to liquidate the company in 1976.

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Friendship and work with Warren Buffett

Munger and Buffett first connected through a mutual acquaintance in 1959 in Omaha, Nebraska. Interestingly, they had both worked as teenagers at Buffett's grandfather's grocery store, though they did not cross paths during that period.

In 1978, Charlie Munger assumed the role of vice president at Berkshire Hathaway, and since then, he has collaborated closely with Buffett. Often referred to as Buffett's “right hand,” Munger's career alongside Buffett has followed this trajectory:

  • From 1984 to 2011, he served as CEO and president of Wesco Financial Corporation, now a subsidiary of Berkshire Hathaway. Operating out of Pasadena, Munger was actively involved in three main sectors: insurance, furniture rental, and steel service.
  • In addition to his role as vice president of Berkshire Hathaway, he holds the position of president at Daily Journal Corporation and serves as a director of Costco Wholesale Corporation.

Investment style

Charlie Munger is recognised as a value investor or practitioner of value investing, based on Benjamin Graham‘s style. Munger's influence led his friend and partner, Warren Buffett, to alter his investment approach. In essence, Munger's investment style can be summarised as follows:

  • Identifying companies with high intrinsic value, possessing the potential to sustain and increase that value in the long term, even if they are currently facing temporary issues that have led to a decline in their stock price. Munger advocates for selecting companies with the ability to endure and offer significant growth prospects.
  • Munger defends his strategy by stating that, “if you understand the business and, consequently, the risks and potential, a concentrated portfolio will, in the long term, yield better returns than a highly diversified portfolio.”
  • He emphasises that excessive diversification in an investment portfolio may compromise profitability.
  • Similarly, Munger underscores the importance of knowing when to exit an investment, a skill he acquired through playing cards.
  • Regarding cryptocurrencies, Munger has been highly critical, referring to Bitcoin as a speculative product capable of causing disruption in the market.

FAQs

What does Charlie Munger believe about the profitability of a concentrated investment portfolio?

Munger argues that, if one understands the business and associated risks, a concentrated portfolio will produce better returns in the long term compared to a highly diversified one.

Why is Charlie Munger critical of cryptocurrencies, particularly Bitcoin?

Munger views Bitcoin as a speculative product capable of wreaking havoc on the market, expressing scepticism about its long-term viability.

What is Charlie Munger's investment style?

Charlie Munger is a proponent of value investing strategy.

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