Charlie Munger, the Stock Market Legend, is Dead

Last Updated: 29. November 2023By

Yesterday evening, the sad news ran through the ticker: Charlie Munger, the congenial partner of investment legend Warren Buffett, has passed away at the proud age of 99. He would have turned 100 on January 1st.

In May, I was able to experience Munger together with Buffett in Omaha at the main meeting of their investment company Berkshire Hathaway. Without Munger, „Woodstock of the Capitalists“ will lose influence.

Munger often stood in the shadow of Buffett. It was precisely the combination of such different character heads that made the once dilapidated textile company Berkshire Hathaway the most successful investment company of modern times. On the occasion of his death, I would like to look back today with you on the life and work of Charlie Munger.

The Life and Work of Charlie Munger Charles Thomas Munger was born on January 1, 1924 as the eldest child of lawyer Alfred C. Munger and his wife Florence in Omaha, Nebraska. The Mungers were traditionally a lawyer family, and so Charlie Munger initially earned his money as a lawyer and only later switched to the investor side.

Munger has strongly changed the investment style at Berkshire Hathaway. While Buffett, in the spirit of his mentor Benjamin Graham, was a bargain hunter and looked for companies with cheap valuation metrics, Munger expanded the concept of value strategy.

For Munger, not only bargains were good value values, but also companies that had an elemental competitive advantage. According to Munger, one should be willing to pay relatively much money for such a „castle with moat“.

So See’s Candies was not bought in 1972 because the metrics were so impressive, but because the brand had virtually given the company a monopoly position or protective moat, at least in the western US.

Munger’s credo has always been quality over quantity. Munger was also not an advocate of the portfolio theory, which states that one can minimize the investment risk by diversifying (= investing in a variety of values). He was of the opinion that an investor should concentrate on his best values, based on the motto „class instead of mass“.

It is better, according to Munger, to invest the available funds in the ten best stocks than to continue searching and distributing the available capital to the best 100. As a value investor, Munger also did not believe in reacting to every market news and constantly reshuffling the portfolio. If he was convinced of the quality of a company, he held on to it even in stormy times.

Finally, here is a message of perseverance from Charlie Munger to us private investors, if there is headwind on the stock market and the profits do not flow immediately: „The first 100,000 dollars are a real bitch.“