On the morning of November 28th, 2023, the world lost one of its best, Charles T. Munger.
In the week since his passing, there's been much written about his unparalleled wisdom, his witty one-liners, and his remarkable impact on the investment community and world at large.
While his knowledge and advice extends well beyond the world of investing, his financial track record and capital allocation advice still deserves a spotlight.
In this quick tribute to Charlie, we'll take some time to recognize his own stellar investment performance and provide a list of timeless investing quotes from the legend himself.
Wheeler, Munger, & Co.
Despite being best known for his association with Berkshire Hathaway, Charlie Munger actually ran a successful investment partnership of his own prior to teaming up with Warren Buffett.
In 1962, in addition to to running his own law firm, Charlie and a partner named Jack Wheeler launched Wheeler, Munger & Co.
From 1962 to 1975, Wheeler, Munger & Co. generated roughly 20% annualized returns before fees compared to just 5% from the DOW during the same period.
Known for taking concentrated bets, Charlie wasn't afraid to put half, or even on one occasion, all of his available capital into a single stock.
While this helped the partnership outperform the broad market quite a wide margin, the partnership was eventually closed after two years of losses.
Charlie's Best Investment Ever
On a trip back home to Omaha in 1959, Charlie was introduced to Warren Buffett. The two hit it off right away and shared ideas over the phone in the years following.
Buffett, who had been generating jaw-dropping returns in his own investment partnership, decided to shut down shop in the late 1960's as he was struggling to find new ideas. At the time, Warren had taken control of one of his partnership positions, Berkshire Hathaway. As he closed his partnership, he retained control and began using it as his investment vehicle.
Following the the broad market collapse throughout 1973-1974, Warren began to get more aggressive with his purchases, including purchasing two business outright in Diversified Retailing and Blue Chip Stamps. Those happened to be two companies that Charlie had sizable stakes in.
But instead of selling his Berkshire shares after the merger, Charlie decided to stay the course and bet on Warren.
That bet on Warren would prove to be his best ever (and he's had plenty of winners over the years). For context, at the end of 1975, Berkshire Hathaway closed at just $38 per share. Today, Berkshire Hathaway's A Shares trade at a price of roughly $541,000 per share. That's more than 20% annual returns for nearly 50 years!
Let's take a look at some of the investing wisdom Charlie has espoused during that time.
"The big money is not in the buying and selling, but in the waiting."
"Invest in a business any fool can run, because someday a fool will. If it won’t stand a little mismanagement, it’s not much of a business."
"Our game is to recognize a big idea when it comes along when one doesn’t come along very often. Opportunity comes to the prepared mind."
“The difference between a good business and a bad business is those good businesses throw up one easy decision after another. The bad businesses throw up painful decisions time after time.”
“All intelligent investing is value investing, acquiring more than you are paying for. You must value the business in order to value the stock.”
"I think that, every time you see the word EBITDA, you should substitute the words "bullshit earnings.”
“If something is too hard, we move on to something else. What could be simpler than that?”
“Mimicking the herd invites regression to the mean (merely average performance).”
“People calculate too much and think too little.”
“Go to bed smarter than when you woke up.”
Few people have demonstrated this better than Charlie. From Costco to BYD to Berkshire itself, Charlie has shown the power that holding onto positions can have.