Tribute to Charlie Munger

Charlie Munger passed away this week at the age of 99.

The Vice Chairman of Berkshire Hathaway has been eulogized and reminisced by many financial publications and individual admirers alike. In honor of him I would like to commit to paper (or pixel) some of my own reflections on Munger, Buffett, and Berkshire Hathaway.

My exposure to Mr. Munger began as a young high school student browsing my local bookstore. The goal of this particular trip to the bookstore was to find a book that would teach me the secret ways of money. My friends were all getting cars on the eves of their 16th birthdays and I, driven by envy (the emotion that runs the world, not greed mind you), aimed to earn enough money to get a car of my own.

Although my savings were modest, I hoped to compound my nest egg through some wisely selected investment vehicles. My hope was that this bookstore contained the treasure map that would lead me to the investment that could unlock my grand dreams of purchasing my own car.

While browsing the aisles, my eye caught on a thick book whose cover was royal red with dull gold lettering. I am sure many of you know the book by that description alone but for those who don’t it was The Intelligent Investor by Ben Graham. The title of the book was sexy and held mass appeal, afterall, who doesn’t consider themselves intelligent and who isn’t looking to get rich?

The book’s cover looked eerily similar in format to the red bibles I had seen in the pews at church on Sundays, immediately invoking the “investing bible” title before I had even heard someone describe it as such. Its appearance and title gelled with my impression of what an investor was at the time. Someone of great intellect who lounges away at their desk, puffing away at a cigar while they read the wall street journal, with a quiet confidence about them and an assured erudite that immediately implies they knew better than most but weren’t pompous enough to tell you explicitly. 

As the years went on my understanding of what an investor is hasn’t strayed much from this in that most investors do just sit at their desks and read all day, but the image did lose some of its glean when I realized what the investors were reading were income statements, balance sheets, trade journals and the like.

As soon as I brought this book home, my parents raised impressed eyebrows and I felt a sense of pride merely for having selected it, even before reading a single page. The forward was written by Jason Zweig, a columnist for the Wall Street Journal whom my father had much respect for and read frequently.

With eagerness in my heart and dollar signs in my eyes I trudged up the stairs to my room and sat down at my desk, ready to have the roadmap to riches revealed before my eyes. Shortly after reading a few pages, the dollar signs in my eyes faded only to be replaced by glazed looks of boredom. My dreams of riches, and a car to show off to my friends, were quickly crushed by net asset value equations and liability to asset ratios.

I was unaware when I picked up The Intelligent Investor that my family’s history with Berkshire dates back further than I’ve been alive. My grandfather, similar to Charlie and countless others, experienced severe setbacks at a early age as his father died young leaving himself, his mother, and sister to fend for themselves with little resources. He faced these setbacks with a stiff upper lip and diligently worked towards a law degree financed by the GI bill after serving his country during World War 2. After earning his degree, he was a lawyer for the rest of his life. 

Though he never made huge amounts of money, he always saved diligently, and kept his nose to the ground searching for investment opportunities. He even went to such measures as taking family trips to destinations that aligned with investment ideas he wanted to research like theme parks or food chains. My grandfather took after Buffett in his ability to distill complex topics to their core, explaining to his son (my uncle) that owning a single share in an amusement park was a bit like owning one little piece of the rail track that guided the carts on the park rides.

It was this constant sleuthing that led my grandfather to Berkshire in the early days. He invested, attended shareholder meetings, devoured the annual reports, and found kindred souls in Buffett and Munger whose moral values and attitudes rang true to his Midwesterner sensibilities. Buffett and Munger informed much of my grandfather’s investing philosophy and he was fortunate to meet them at an annual meeting decades ago.

My grandfather also held an eerily similar disposition to that of Munger, something his children often teased him about. My grandfather was never bashful about telling people the truth even especially if the truth were to offend a party close within ear shot. My grandfather held strong beliefs that he defended with ferocity. My grandfather also had a wicked sharp sense of humor and enjoyed the company of interesting people from a diverse set of backgrounds. He lived a remarkably high quality of life that was not predicated upon spending gobs of money and was always a decent man who held a moral compass he was very much in tune with. All of these traits he held in common with Munger.

Buffett and Munger’s service to the shareholders of Berkshire Hathaway financially rewarded my family many times over. Although this story is not a unique one, many other families built significant wealth riding on the coattails of Buffett and Co., it is nonetheless a meaningful one to my family and I. As my grandfather grew older and his taste for risk waned, he took some chips off the table by cashing out his Berkshire A shares in exchange for Berkshire B shares. He always held some reservations about entrusting such a significant amount of his capital to a man who ate McDonald’s hamburgers followed by a heavy dose of cherry coke each day, never concerned about Buffett’s intellect but rather his ultimate longevity and succession plan (I guess Buffett got the final laugh here). My mother holds these B shares to this day and gifted me one this year. I was hoping to attend a Berkshire meeting in 2024 to catch a glimpse of the Oracle and the Abominable No Man before they passed but it seems I will only be able to catch one half of the Warren and Charlie show now.

The Intelligent Investor was my first introduction to the world of Ben Graham, Warren Buffett, Charlie Munger, Berkshire Hathaway, Value Investing, and the motley cast of characters who all make the Berkshire lore so fascinating. And unfortunately, the first introduction did not take. 

Years passed and so too did my dreams of buying a new car. While I remained interested in business, reading more accessible books such as Shoe Dog and Michael Lewis, I remained wary of Buffett, Munger, and their value investing philosophy. It just didn’t catch my interest because of the way in which The Intelligent Investor was written and my lack of accounting knowledge and financial statement analysis experience at the time. The archaic way that Graham explained things always struck me as a bit ironic given that his prodigy, Warren Buffett, is renowned for sprinkling midwestern metaphors and biblical references into his explanations of valuation, opportunity cost, and inflation that allow many to understand. Through Buffett’s teachings, myself and other Berkshire followers realized that many business concepts are naturally intuitive but made less so by the opaque nomenclature MBAs and economists use to describe them.

Although the first didn’t take, my second foray into the world of Berkshire took hook, line, and sinker. This time I was introduced by members of the FinTwit community such as Shane Parrish at Farnam Street, and The Rational Walk. Shane Parrish quoted little bits of Berkshire content like a Buffett joke or a Munger zinger and the utter truth, profoundness, and hilarity of these two men beckoned me back. The Rational Walk wrote in a more long form manner and detailed his history as a Berkshire cult member shareholder. In my mind, if Graham, Munger, and Buffett were the holy trinity, Shane and TRW were the disciples who spread the word and collected new followers in their wake. Although these two may blush at being mentioned in the same sentence as those legends, that is truly the role they played in my journey into the Berkshire world.

I read books reviewed on The Rational Walk site such as Making of an American Capitalist, The Snowball, Damn Right!, Poor Charlie’s Almanack, and Charlie Munger: The Complete Investor. Though I have stuck to indexing up to this point in my life, the wisdom in these books apply to far more than stock picking and my own form of the Berkshire MBA had a powerfully positive impact on my life.

My impression of Charlie Munger’s contributions to the world of investing goes something like this: Ben Graham wrote the old testament of investing and while it was a sound skeleton on which to build an investing philosophy, it was not a fully fleshed out one. Munger introduced the New Testament to the world of value investing and while it still believed “price is what you pay and value is what you get”, it also believed that quality businesses were worth paying a, sometimes painfully, high price for. And for this key insight, among others, Munger will always be regarded as an investment great.

I feel there are some silver linings to the passing of Charlie. So much of Charlie's writing, speeches, thoughts, and wisdom have been cemented in the catacombs of the internet that he will never truly be gone. As he so often practiced, we can make friends with the imminent dead whose ranks should count themselves lucky to be joined by such a man as he. If we ever want to hear how Charlie would have thought about a topic we need not look far as hundreds of hours of speech and millions of Munger’s words exist online and in print. As you so often learn from history, any problem you have today that you think is new likely isn’t - so Munger has probably opined on it. 

Another thing that I think we can take solace in, is Munger’s rational attitude. I was a bit upset when I read the final paragraph of a CNN article commemorating Charlie because it ended on a sour note detailing Munger’s “controversial” stances on issues such as China. While I disagreed with Charlie on this topic I thought it was in poor taste to end the eulogy to a great man in such a way. But hours later I watched Munger’s final interview with Becky Quick, an excellent reporter and friend of Warren and Charlie. During the interview Munger said “I’ve written my obituary the way I’ve lived my life and if you want to pay attention to it, that’s alright by me, and if they want to ignore it that’s ok with me too, I’ll be dead, what difference will it make?” What a stinging bit of rationality from Munger and a cutting critique of the tendency of people to ignore the greatest ideas of our predecessors because of their largest human failings. And Charlie’s response to this trend was quite clear - he doesn’t give a damn! **Side Note: so funny and awesome to see the razor sharp focus of Charlie in action during the interview. You can hear car tire shrieks from a nearby street and Munger doesn’t even flinch. Makes you understand how this man read so many books in a house with 8 kids!**

As The Rational Walk pointed out in his tribute to Munger, the greatest tragedy that could have befallen Charlie and his loved ones was the loss of his brilliant mind. We can clearly see from the media appearances he was doing even a few weeks ago that Munger was sharp as a tack to the very end. 

Munger left the world better than he found it and his teachings will reverberate throughout the business and non business communities for decades to come.

Here’s to a great man.

Charles Thomas Munger 1924-2023