Investor Charles Munger, to whom Warren Buffett owes much of his wealth and fame, has died

Famous investor Charles Munger, the vice president of Berkshire Hathaway, thanks to whom the investment company achieved its current success, has died at the age of 99. It was he who motivated Warren Buffett to move from buying cheap shares of distressed companies to acquiring the best of the best at a fair price. Thanks to this, Berkshire Hathaway’s portfolio included Apple, Coca-Cola, American Express, IBM, Wells Fargo

“Investment genius and Warren Buffett’s right-hand man,” “much more than the second-in-command (in the company.— “Kommersant”) Warren Buffett,” “Warren Buffett’s trusted partner who shaped the investing style that made them both billionaires.” Here are some quotes from the obituaries published by American and British newspapers in connection with the death of Charles Munger, a famous investor and vice chairman of Berkshire Hathaway. Mister Munger died yesterday, November 28, at a hospital in Santa Barbara (California). He did not live a little more than a month before his 100th birthday.

According to many experts, Warren Buffett, perhaps the most famous investor in the world, owes a significant part of his fortune to Charles Munger.

It is believed that it was thanks to him that Warren Buffett moved from a value investing strategy to a quality investing strategy that Mr. Munger himself developed. Value investing relies on identifying undervalued companies and buying their shares in the hope that their price will rise in the future. High-quality investment comes from the selection of companies with the best quality characteristics.

“Charlie pushed me to do more than just buy bargains, as Ben Graham (famous investor and one of the creators of the principles of value investing) taught me. “Kommersant”). He had a great influence on me… and expanded my horizons,” Warren Buffett once said.

Buffett described Munger’s strategy this way: “Forget about buying great businesses at great prices; instead, buy great businesses at good, fair prices.”

Charles Munger was born on January 1, 1924 in Omaha, Nebraska, into a highly respectable family: his father was a lawyer and his grandfather a federal judge. Interesting fact: as a teenager, Charles worked part-time at the Buffett & Son store, owned by Warren Buffett’s grandfather. Although both billionaires are natives of Omaha, they only met in the 1950s.

Charles Munger began studying mathematics at the University of Michigan, but dropped out in 1943 to join the US Air Force. After the end of World War II, he continued his studies at Harvard Law School, from which he graduated in 1948. After graduation, Mr. Munger began working as a lawyer, but pretty soon his main activity became investments.

“Like Warren, I had a passion for getting rich. Not because I wanted to buy a Ferrari. I wanted independence. I desperately wanted this,” Mr. Manger later said.

In the 1950s, he earned his first millions. Finally, in 1959, Warren Buffett and Charles Munger met. It was a good time to meet Ben Graham, who advised Mr. Buffett before he retired and needed a new investment partner.

However, for a long time they simply exchanged experience and consulted, heading separate investment companies – The Buffett Partnership and Wheeler, Munger & Company. Only in 1978 did Mr. Munger join the board of directors of the then already created Berkshire Hathaway, and in 1983 his own investment company was merged with it.

Charles Munger has criticized value investing, arguing that it means investors are missing out on many good stocks that will grow in the future, but which will have to be bought at a fair price, not a bargain price, now.

Before this, Mr. Buffett was known, among other things, for buying problem companies at a deep discount. Charles Munger, in his characteristically blunt manner, compared it to picking up cigarette butts.

Among the companies whose shares are now included in Berkshire Hathaway’s investment portfolio are Coca-Cola, American Express, IBM, Wells Fargo. The approach paid off. According to estimates Financial Timesfrom 1964 to the end of 2022, Berkshire Hathaway grew by 3.8 million percent.

Mr. Munger tried to identify mistakes made by other investors in order to avoid them. That’s why Berkshire Hathaway has long been wary of buying high-growth tech stocks. Nevertheless, she managed to acquire many of them in time, primarily Apple shares.

Mr. Munger was known for his sarcasm and blunt remarks. He was quoted many times: “The bastard who came up with this stupid accounting system was not skinned alive as he should have been,” “There is even more imbecility in matters of finance than in matters of sex.” True, in addition to harsh statements, he was known for his love of quotes from Cicero, Benjamin Franklin and Albert Einstein.

Munger has been a vocal critic of cryptocurrencies and investor apps like Robinhood, considering them a form of gambling.

He himself adhered to his own investment principles until the end and, as observers note, despite being much less famous compared to Warren Buffett, he continued to have a great influence on Berkshire Hathaway’s strategy.

The market capitalization of the investment company, as of the end of November, is estimated at almost $783 billion; it ranks 9th in the ranking of the most valuable companies in the world. Mr. Buffett’s fortune is estimated at $118 billion; Mr. Munger’s fortune at the time of his death was $2.6 billion.

Like Warren Buffett, Charles Munger actively donated to various charities, as well as to architectural projects – architecture was one of his hobbies.

He, however, did not join Bill Gates’ pledge to donate the bulk of his fortune to charity: Mr. Munger explained that he had already given quite a significant portion of his fortune to his children, so making such a promise would be dishonest. Nevertheless, he gave quite actively, saying that he was “deliberately reducing his capital” because he realized that he was not immortal.

Yana Rozhdestvenskaya