Co-founder of Berkshire Hathaway and longtime friend of Warren Buffett, legendary investor Charles Thomas Munger has built his own following among the community. The late billionaire left behind a wealth of tried and tested investment advice over the years.
Even Buffett, 95, nicknamed the ‘Omaha Believer’ for his numerous flawless investment decisions over the years, credits Munger with teaching him a few things.
After Munger’s death in November 2023, Bloomberg noted in an obituary his importance as a “straight man and scoundrel of corporate excess” who provided a reality check and balance against Buffett’s fame and fortune.
Quote of the day by Charlie Munger
“We have a very special way of looking at things. We want to buy something that is inherently a very good business, which means an idiot could run it and it would do well.”
What does Charlie Munger’s statement mean?
The quote came in response to a question about Munger’s investment philosophy at the Redlands Forum in California on January 29, 2020. The ace investor called it a “strange way of looking at things” but noted that both he and Buffett value businesses with strong fundamentals and “tremendous strength” over any other quality.
While the first aspect is to look for a good business, he added: “And then we want this business that an idiot could run successfully, to have a wonderful person. If we have a great business with a wonderful person running it, that really excites us – and it works very well.”
Munger noted that the duo “makes exceptions” but the philosophy is simple and “they like businesses that have a lot of bad management but don’t get it.”
“That’s our formula. We can’t make it work perfectly, but it’s certainly worked better than most people’s methods. We reject some great businesses and some great people where it’s just too tough. If the business is tough enough, it has a way of staying tough. Warren (Buffett) says that when a business with a reputation for being tough and a manager with a (reputation for) being great, it comes together,” he added.
Master Joke: Who is Charlie Munger?
Munger, known for his sharp wit, brutal honesty and no-nonsense thinking, was one of the architects of Berkshire Hathaway Inc.’s success alongside Buffett’s best friend and business partner. For nearly 60 years, the duo transformed the company from a failing textile manufacturer to an empire worth billions.
A lawyer by training, Munger helped Buffett, who was seven years his junior, develop a philosophy of investing in companies for the long term. Buffett credited him with shaping Berkshire Hathaway’s investment style and shifting the “Oracle of Omaha” from cheap butt stocks to high-quality businesses at fair prices.
Under their leadership, Berkshire averaged 20% annual returns from 1965 to 2022, roughly double the pace of the S&P 500. Decades of compounding returns have made the pair of billionaires and folk heroes idolized by investors.
Munger was vice president of Berkshire from 1978 until the day he died in 2023 at the age of 99. He was also among the company’s largest shareholders, with shares worth about $2.2 billion. His total net worth was about $2.6 billion, according to Forbes.
