Munger’s Wide-Ranging Background
In comparison to Warren Buffett, whose first job out of college was as an investment salesman, Munger formally entered the investing business several years into his professional career.
After coincidentally growing up in Buffett’s perennial hometown of Omaha and working at Buffett’s grandfather’s grocery store, Munger dropped out of college in 1943 to serve in what would soon become the US Air Force. There, he would achieve the rank of second lieutenant and study meteorology. Despite lacking a college degree, he graduated magna cum laude from Harvard Law School in 1948 before going on to work as an attorney at a Los Angeles law firm and later founding his own law firm with six partners in 1962.
Meeting Buffett over dinner at an Omaha club sparked Munger’s professional interest in investing. He co-founded the investment firm Wheeler, Munger & Co. with Jack Wheeler in the 1960s. Buffett and Munger would not formally associate, however, until the late 1970s, when Buffett’s Berkshire Hathaway acquired two of Munger’s portfolio companies, Diversified Retailing and later Blue Chip Stamps. In 1978, Buffett asked Munger to join Berkshire’s board of directors, a position he held until his passing.
Munger’s Influential Approach: Investing in Long-Term Growth
Although his early years in the money management business are not as well documented as his later ones, Munger was evidently honing his investing strategy while working with his pre-Buffett portfolio. In one article, Buffett highlighted the fund Munger ran in the early 1970s as one of seven that displayed market-beating returns thanks to careful investments in high-quality businesses with long-term growth prospects.
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Before Munger joined Berkshire, Buffett had focused on identifying and buying undervalued stocks or companies trading below their intrinsic worth, eventually selling them when they were no longer considered underpriced. With Munger as his most trusted advisor, Buffett steered Berkshire’s now-famous investment strategy towards acquiring strong companies with good cash flow, such as Coca-Cola, and holding onto them for the long term. This approach allowed them to enjoy the benefits of reinvested earnings while minimising capital gains taxes.
Munger’s Objective, Outspoken, and Generous Outlook
In their personal lives, Buffett and Munger often differed. Buffett is known for his reserved demeanour, while Munger was opinionated and forthright. Buffett supports the Democratic Party, and Munger leans Republican.
Their approach to philanthropy also diverged: Buffett aims to continue building his wealth for inheritors as long as he is able, while Munger donated hundreds of shares of Berkshire Hathaway to charities before his passing. A BRK. A share is currently priced at over $500,000.
Despite these differences, the two men shared a strong friendship and a keenly objective business mindset. They often exchanged witty remarks in public.
Throughout his lifetime, Charlie Munger made a name for himself as one of the greatest minds in investment. His legacy is inseparable from Berkshire Hathaway and, by extension, the lore of investment.
