Life,  Wealth

The Life and Legacy of Charlie Munger: Berkshire Hathaway’s Vice Chairman and Warren Buffett’s Longtime Business Partner

  Life has an end. If Munger knew that he would reach the end of his life at the age of 99, how would he evaluate his life? Maybe the answer is still “I have nothing to add.” Because life has no end, Munger just left a silhouette for this world. If someone is thoughtful from this silhouette, then he will inevitably make up a fresh joke in heaven, and end with two words: Goodbye.
  ”I have nothing to add.”
  This is a unique “laughing period” at Buffett’s shareholder meetings. As long as this voice comes out, there will be laughter on and off the stage. If the person who made this sound was not present, Buffett would use a VCR to play this passage, and the effect would still be full.
  This is Munger: “I have nothing to add.” “Patent” owner-Buffett’s best partner.
  Buffett said that after he met Munger in 1959, he had been trying to find something ordinary in Munger, but it was obvious that he failed. He felt that Munger was a smart, honest and unique man. Similar to Buffett, Munger’s followers regard Munger as an investor, a thinker, and a spiritual engineer who allowed Buffett to “change from an ape to a human.”
  Munger said that even if there was no Munger in history, Buffett would still have achieved amazing achievements, and the outside world’s evaluation of him is “unworthy of the reputation.” What he has been thinking about all his life is how to fit into life.
  A billionaire, especially a thoughtful billionaire, may be much rarer than the person who climbed Mount Everest, which also means that they put themselves in a besieged city with only solitude for company. Munger refuses to be in such a predicament. He doesn’t want to be interviewed or publish a personal biography. He tries his best to avoid speeches, award ceremonies and other activities that allow him to enjoy moments of honor. He likes to go shopping in bookstores along the street and wait for flights at the airport instead of taking a flight. The reason for his own private jet is that all wisdom comes from life, and he never feels that his wisdom has reached the point where he can play God.
Out of Omaha

  Charlie Munger was born on January 1, 1924, in Omaha, Nebraska, USA, the only boy in his family. His father, Alfred Munger, was a local lawyer, and his mother, Tutti Munger, was a smart, funny person who was loved by her children.
  Munger was born during the great economic boom of the 1920s in the United States, but when he was 6 years old – in 1930, the United States fell into the Great Depression, and more than 40 million Americans fell into poverty overnight. The only good news was that Buffett was born in Omaha that year. Of course, Munger had no idea at that time that a newborn a few blocks away from his home would be his future partner for more than 60 years.
  The Great Depression lasted until Munger graduated from high school. Munger’s feeling during that period was “poverty”. There were many homeless people on the street and it was difficult to find a job. Although his family was relatively well off, he was still arranged to work as a summer job during the summer vacation by his family, which cost a lot of money. It was only after I had enough strength that I found a job that paid 40 cents an hour.
  Munger’s uncle and aunt’s family were not so lucky. One of his uncles opened a small bank in Nebraska, which also suffered closures during the wave of bank bankruptcies. Unless there is an injection of new funds, it can avoid bankruptcy. In order to save his uncle’s career, Munger’s grandfather, Thomas Munger, a local federal judge in Omaha, mortgaged $35,000 of his own assets and deposited it into the small bank, which allowed the bank to survive. and later reopened. Munger said that $35,000 at the time was a lot of money, more than half of his grandfather’s life savings, and he took a huge risk. Similar to this uncle, one of Munger’s aunts also ran a pharmacy with the help of his grandfather and successfully weathered difficult economic times.
  These experiences have also become important gains in Munger’s life: “When I was a child, my family set a good example on how to deal with major pressures with good behavior. My grandfather must have experienced tremendous pressure to solve the family’s financial difficulties. If everyone in the family was like a judge, financial management problems would not be so serious. But he still got through it.”
  Another interesting experience during this period was the intersection between Munger and the Buffett family. He worked every Saturday at Buffett’s grocery store owned by Buffett’s grandfather, and was paid $2 for every 12 consecutive hours he worked, which was worse than a job that paid 40 cents an hour. Munger said, “The work hours are long, the pay is low, there are no ideas, and there is no room for mistakes. Buffett’s family store provides an ideal introduction to business. There you have to work for a long time without making mistakes. Life has forced young people, including me and Buffett, to look for easier careers, and they will be excited once they discover the disadvantages in the industry.”
  Compared with the Great Depression, a greater challenge emerged later, which was World War II. In 1941, the flames of World War II had already started but had not yet spread to the United States. Munger was 17 years old at the time and entered the University of Michigan to study mathematics and also began to be exposed to physics. “For me, that was a real eye-opener.” Munger said that if he were in charge of the world, he would require anyone who could do that to study physics, because it would teach them how to think.
  But a few months after Munger attended the University of Michigan, the Pearl Harbor incident broke out and the United States officially entered World War II. Munger served in the army at the end of 1942. Just as his family survived the economic depression, Munger still had a lucky aura when he joined the army. Instead of going to the front line of the war, he was stationed behind the scenes and served in Utah, USA. In an environment far away from the war, in a boring military camp, Munger’s expectation for the future is “I want a bunch of children, a house, a lot of books in the house, and enough wealth to live a free life.” . It was also in the military camp that Munger learned a skill – playing cards. “What you have to learn is to admit defeat early when the situation is unfavorable, and if you have big cards, you have to bet big, because you don’t get them often.” Big names. Opportunities appear, but they don’t happen often, so once they come, you have to seize them.”
  After World War II, Munger was introduced to Harvard Law School and graduated in 1948. Munger was the first in the class One of the 12 outstanding students among 335 graduates. Regarding his college experience, Munger does not think he belongs to the well-educated category. “I learned more through self-study, which is often the case in my life. I usually prefer the great people who have passed away than those who are alive.” Teacher.”
  After graduating from college, Munger’s father’s advice for his son’s future development was to see outside Omaha. This suggestion was based on both his natural preference for his son to be favored by fate and the fact that his son’s accumulated abilities were self-defeating in that small pond in Omaha. His father’s advice suited Munger, and he and his wife Nancy sought development in Los Angeles, which he loved.
  As a lawyer, Munger was well-paid at the time. But as a husband and father of several children, Munger, who was in his 20s, paid a heavy price for his reckless marriage a few years ago (1945). He and his wife often quarreled and eventually broke up amicably. Not long after the divorce, his son Teddy Munger was diagnosed with leukemia and was bedridden for two years, making Munger anxious and painful. A friend of Munger said that Munger watched helplessly as his son waited for death. Munger hugged his son in the ward, then ran outside and walked on the street crying.
  The darkness during that period was a lingering pain for Munger. Recalling that past event when he was old, Munger said, “You should never let one tragedy turn into two or even three tragedies because you lose faith when faced with some incredible tragedies.”
  In contrast to the tragedy of losing his son, Munger quickly reflected on the failed ending of his first marriage. His second wife was also named Nancy. They were introduced to each other in 1955 and got married in January 1956. Charlie Munger Jr., Nancy and Munger’s first son, said that his father’s strength was his ability to resolutely say goodbye to the past and move forward, but this was actually his Achilles’ heel.
  What’s more reflective is that Munger’s children—all eight of them, including his stepson, received the same treatment—Munger would share his way of looking at life, values, etc. with them invisibly. In particular, Mr. Munger’s example education has had a profound impact on the children.
From lawyer to investor

  Munger has good qualities as a lawyer, and he has indeed done an impressive job. However, he thinks there are some unreasonable aspects of this profession. For example, the people he likes to work with usually don’t get into trouble, and the people who seek his help usually have character problems. More importantly, he does not think that being a lawyer can achieve financial freedom.
  As a result, Munger began to invest in securities, entity businesses, etc. while working as a lawyer. In the 1950s, he invested in a small transformer manufacturing factory, which was a technology enterprise at the time. It lasted until 1961 and achieved certain returns. However, the various troubles encountered in business management and the direct impact of changes in the business environment on the company have all brought pain to Munger. Munger said, “I never went back to high-tech because I tried it once and found so many problems. I was like Mark Twain’s cat who would never sit on a stove again after one bad experience. Even if it’s already cold.”
  Munger also did real estate development in 1961 and later. At the invitation of a friend, he and his friends jointly invested in a land near the California Institute of Technology to build self-occupied apartments. At that time, the U.S. economy was in recession, and their project was launched at a low speed to tide over the economic downturn. The project was sold out in 1967, and Munger’s investment of US$100,000 became US$500,000. Then, Munger and his friends started a new apartment project. Munger found that apartments on the ground floor were easiest to sell, while sales on the upper floors were very slow. Therefore, they decided to build only high-priced single-story bungalows in their new projects. The results were very suitable for the market and their projects were very profitable.
  Munger said: “Buffett and I each graduated from school and entered the shopping mall, and found that some things we took for granted were actually extremely unreasonable. These unreasonable things were obviously very important to what we wanted to do, but the professor never mentioned them. To understand these It’s not easy to do irrational things – I learned about the psychology of human misjudgment almost against my will: I realized that my resistance would cost me a lot of money and reduce my interest in the things I love. It helped.”
  It was also during the real estate development process that Munger’s talent as an architect was inspired. However, real estate development’s need for borrowing will increase as the project expands, which is what Munger is worried about. Munger worked on a total of 5 real estate development projects and earned US$1.4 million. “Then he stopped because he didn’t like borrowing money from others. Of course, there is another reason. This is a job involving many details. Every detail is important, and it’s not easy to do it full-time, let alone part-time.”
  Investing in securities, manufacturing, real estate development, etc. is Munger’s exploratory process of trying business and finding high-quality partners. In the process, he gradually shifted his focus to securities – essentially asset allocation.
  Munger ended his legal career in 1965 and his real estate development career a few years later. The focus of his work was basically in securities, namely Wheeler and Munger Securities. The company initially gave Munger good returns, but the setbacks were even worse. During the 1973-1974 stock market crash, the assets of Wheeler and Munger Securities fell by 31.9% (the Dow fell 13.1%) and 31.5% (the Dow fell 23.1%) respectively in two years. The primary reason for the relative underperformance of Wheeler and Munger Securities is their large holdings of common stock in New America Funds and Blue Chip Stamps. Some of the money was borrowed, putting significant pressure on the net worth of Wheeler and Munger Securities. By the end of 1974, Wheeler & Munger Securities’ net worth was only $7 million. 61% of that was 505,060 shares of Blue Chip Stamp stock valued at $4.3 million, with a market price of $5.25 at the time, and 427,630 shares of New America Fund priced at $3.75 each. Until 1975, Wheeler and Munger Securities obtained a 73.2% return, and the company liquidated its assets the following year.
  Munger said, “When the dust settled, our family had made $3 million from Wheeler and Munger Securities, and about $2 million from real estate development and other frivolous investments, which at that time was A lot of money and a great time. I own a lot of great securities and other great assets that I acquired at low prices and are about to go public.”
  Of course, of Munger’s wide range of interests and investments, his partnership with Buffett is the most The secret to his massive increase in wealth is the same for Buffett. Munger and Buffett were introduced to each other in Omaha in 1959. Buffett said, “We saw that both parties had some weird tempers, but they happened to get along quite well, and we have become partners in one form or another since then. We are not very formal partners, but spiritually we have always been partners.”
  Among the business cases that Munger and Buffett worked on together, including the Blue Chip Stamps acquisition, the establishment of a diversified retail company, the acquisition of See’s Candy, etc., these cases brought Berkshire’s early success and lifted it from mediocrity on the verge of bankruptcy. It has grown to a current market value of more than 770 billion US dollars. For example, in 1972, Blue Chip Stamping bought See’s Candy at 3 times its book value. In the past, the Graham strategy advocated by Buffett could not accept such a premium, but it was precisely because of Munger’s promotion that it became possible The acquisition went through and made See’s Candy one of Berkshire’s cash cows. Munger’s rationale was that it was more cost-effective and enjoyable to buy high-quality businesses than to buy mediocre companies that were cheap and struggling to survive.
  It was also due to the successful acquisition of See’s Candy that Buffett later also bought Coca-Cola, which was priced at a high price. Some comments pointed out, “When it comes to what factors drove Buffett to make Coca-Cola-style investments, which are franchise methods that can bring benefits to generations, Munger played a very important role in this process. This is consistent with How Munger manages his life is consistent. He does not pursue getting rich quickly, but seeks long-term success.”
  Buffett said, “I changed gradually. I did not change from ape to human or from human to human all at once. Ape. Boy, if I had just listened to Graham, I might be a lot poorer than I am now. I became very enthusiastic about buying good businesses at the right price.”
  In terms of book wealth alone, Munger helped Buffett reach the top While he is among the top few in wealth, he hopes that he is just below the threshold line of the rich list, because they don’t like to be high-profile. Although he owns 1.5% of Berkshire shares with a market value of approximately US$11.6 billion, Munger does not have such a large amount of wealth. According to data published by Forbes, Munger was worth approximately US$2.6 billion before his death. , 300 million US dollars short of the threshold for the Forbes 400 richest Americans list. The reason for this gap is mainly because Munger sold part of the Berkshire shares he held, donated part of it, and even gave some to someone he liked.
There are many things in life more important than money

  In Munger’s 99-year life, he pursued a wide range of interests such as a happy family, wealth and freedom, and performed countless joyful things. For example, he enjoys being an architect. Whenever he designs and builds a house, he shares it with his friends, but that’s all. The houses he designs and builds are eventually sold. For example, he likes fishing. At the Munger cabin on Star Island in Minnesota, which has been in his family for more than a hundred years, he not only more than doubled the cabin, but also hung a “Fishermen’s Rest” sign in front of the main house. .
  From Buffett’s perspective, Munger is a qualified partner, but not a good driver or captain. Munger once drove Buffett along with him. Because he was discussing a complex issue, he forgot that the car was parked at an intersection. The traffic lights changed several times, and the cars in the queue almost honked their horns. Munger kept talking. At the annual gathering of the Munger family on Star Island, Buffett was invited. Munger personally took Buffett and Rick Guerin to go fishing in a boat. As a result, on the mirror-flat lake, Munger turned around while driving the boat. An operational error caused the boat to capsize. Gurian and Buffett were trapped underwater for a while before they emerged. “Buffett’s eyes were as big as his glasses.” That was Buffett’s second trip to Star Island. It’s also the last time.
  Regarding the capsizing incident, Munger’s focus is: “Even when I capsized the boat when I took him fishing in Minnesota and we had to swim to the shore, he (Buffett) didn’t yell at me. ”
  As for the question of what Munger left behind after completing the entire journey of his life, if Munger was asked to answer, he might say that all the money was left behind, and everything was left behind.
  During his lifetime, Munger claimed to be enthusiastic about financial freedom. Behind this was his desire to have the ability to be independent, which can also explain his extensive interests in investments in family, architectural design and fishing, as well as charitable donations.
  Munger built a family from scratch with his genius mind and lived a transparent life. His stepson, Los Angeles lawyer Hal Borthwick, believes that most people see Munger as the man who sat on the podium with Buffett at the Buffett shareholder meeting and whose catchphrase was “I have nothing to add.” Called the “Master of Saying No,” but “no one sitting there is the real Charlie Munger.” Borthwick said Munger was a devoted stepfather, a spiritual mentor and a man who faced life head-on.
  But Munger said: “Life is not a great story. It may be like an old woman’s foot wrap – smelly and long. I only know that if you want to win the first place, you must take the initiative and never stand still.” It’s funny how some people rush to Harvard Law School with a group of experienced people just because their grandpa was a lawyer or a judge, but I was willing to join many different professions. I was always new to something. As soon as he does a job, he does better than anyone else. Why is this? The answer is to improve self-cultivation through self-study. This is a really effective and good idea.”
  Munger, known as the “Walking Desk”, in his He advises people to learn in any event he attends, for example he advises young people to respect common sense and avoid doing really stupid things. “Then you have to develop a good character, good mental habits, and you have to learn from your mistakes – every mistake as you move forward.”
  Munger repeatedly emphasized that learning from mistakes is the pursuit of happiness. Key Strategies for Life.
  Munger said in “Harvard High School Speech” (1986) that this was the only speech he gave in his life. Of course, he later “reneged” on his promise. In this “only speech”, Munger fully demonstrated his unique reverse thinking and values ​​to the teachers and students present. He started from the questions of why he was chosen to give a speech and how long the speech would be, and unfolded his life thinking in the way of answering the questions. It should be noted that the first question raised by Munger was only to express his gratitude and respect for the invitation to the school, and the substantive thinking was in the answer to the second question.
  What Munger said about “how long” is actually to arouse students’ interest, and then use how to get the opposite of happy life, “painful life”, to strengthen students’ willingness to listen. This operation itself is a reverse operation. He also used the attitude of a sharer to sell students the “secret recipe” on how to live a painful life, citing the many times he had failed and experienced a lot of pain.
  Someone once prescribed “Carson’s prescription” for living a “painful life”, which contains three elements: numbing yourself with addictive chemicals in order to change your mood or feelings; jealousy; and resentment. On this basis, Munger also prescribed four “medicines” for living a “painful life”. The first is to be inconsistent and not do what you are doing religiously. “If you develop this habit, you will always play the role of the hare in the fable, except that the one who outruns you is no longer just an excellent tortoise, but groups of mediocre tortoises, and some even use crutches. The mediocre tortoise.” The second is to gain knowledge from your own experience as much as possible, and try not to draw lessons broadly from the success or failure of other people, whether they are ancient or modern. “This medicine will definitely ensure that you live a painful life and achieve second-rate achievements.” The third is that when you encounter the first, second or third serious failure on the battlefield of life, please be depressed and It will never recover from this. The fourth is please ignore that redneck story people told me when I was a kid. A countryman once said: “If only I knew where I would die, then I would never go to that place.”
  Munger’s four medicines are the four main reasons for failure in life. Avoid these four For one reason, the probability of happiness in life will be greatly increased. If you actively avoid these reasons for failure and even more reasons for failure, success and happiness will almost come naturally. Munger said, “Many difficult problems can only be best solved when thinking in reverse.” Einstein, Darwin, etc. all achieved new achievements by going in the opposite direction outside of authoritative academic circles. Munger’s expectation for students is to “grow with the goal of avoiding failure every day in a long life.”
  Munger’s thinking model is not only the above, but the comprehensive application of these models will help everyone who can use this method A magic weapon for people to cope with the challenges of life and work. But life’s highlights are often mundane and obvious, Munger said. “There are many things in life that are far more important than money. This statement does confuse some people. One of my golfing friends said this: ‘What’s so good about being healthy? ?The good thing is you can’t buy it with money.'”

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