Charlie Munger: the aphorism-loving, bitcoin-hating sage behind Warren Buffett
“If people weren’t so often wrong, we wouldn’t be so rich,” Charlie Munger, the right-hand man of the billionaire stock picker Warren Buffett, once said of rival investors.
It was that humour, paired with decades of investment successes, that endeared Munger to a global business community now in mourning after news of his death at the age of 99 on Tuesday night.
Best known for serving as vice-chair of the textile manufacturer turned $785bn (£619bn) investment conglomerate Berkshire Hathaway, Munger was credited with shifting Buffett’s strategy from buying up cheap, undervalued assets, towards selecting quality stocks such as Apple. The change made multibillionaires of both men.
But in his 50 years working alongside his business partner, Munger also garnered fans for his quick wit and noholds-barred comments that led Buffett to write in 2000: “Miss Manners clearly would need to do a lot of work on Charlie.”
Munger’s comedic targets were wide-ranging, spanning graduate schools that he claimed taught poor investment strategies to the US government for failing to crack down on cryptocurrencies, and bankers whom, after the 2008 financial crisis, he likened to “heroin addicts” struggling to control their habit.
Munger, who married twice and had seven children, refused to entertain new accounting methods such as Ebitda, which, rather than presenting bottom-line profits, shows a business’s earnings before a series of costs: interest, taxes, depreciation, and amortisation. “I think you would understand any presentation using the word Ebitda if every time you saw that word you just substituted the phrase ‘bullshit earnings’,” he once said.
He similarly hit out at the valuation of investment products such as derivatives, which are contracts linked to the expected future price of assets like gold, oil or company stocks. “To say that derivative accounting in America is sewage is an insult to sewage,” the billionaire once quipped.
Born on New Year’s Day in 1924 to Florence and Alfred Munger, he grew up a few blocks down from Buffett in Omaha, Nebraska, but he would only meet his future business partner decades later, in 1959.
Munger studied mathematics before dropping out of the University of Michigan and later joining the US army air corps. While in the military he was sent to study meteorology at the California Institute of Technology, and he later attended Harvard law school in 1948. He would go on to form the law firm Munger, Tolles & Olson in 1962, the same year he launched the hedge fund Wheeler, Munger & Co.
Three years earlier, Munger, then 35, had met Buffett, then 29. The two Omahans hit it off and stayed in touch for more than two decades before finally formalising their business relationship when Munger joined Berkshire Hathaway’s board in 1978.
Buffett, known as the Sage of Omaha, spoke warmly of his longtime colleague, saying in 2018 that the two “never had an argument in the entire time we’ve known each other”.
He said: “Charlie has given me the ultimate gift that a person can give to somebody else. He’s made me a better person than I would have otherwise been … He’s given me a lot of good advice over time ... I’ve lived a better life because of Charlie.”
The duo’s comedic chemistry was palpable, often drawing laughs and applause from investors who regularly made the pilgrimage to Berkshire Hathaway’s annual meeting held in the pair’s home town each May.
Munger did not pull punches, most recently airing open disdain for artificial intelligence and cryptocurrencies. “I am personally sceptical of some of the hype that has gone into artificial intelligence. I think old-fashioned intelligence works pretty well,” he told investors at this year’s meeting.
However, he reserved more cutting comments for traders taking a punt on crypto assets such as bitcoin, saying: “It’s like somebody else trading turds and you decide I can’t be left out.”
In 2021, he added: “I hate the bitcoin success and I don’t welcome a currency that’s useful to kidnappers and extortionists and so forth.”
Munger, whom Forbes estimated to be worth $2.6bn, regularly doled out aphorisms that would be collected for books and video compilations by adoring fans. They included: “Capitalism without failure is like religion without hell”; “Without the method of learning, you’re like a one-legged man in an asskicking contest”; and “The best armour of old age is a well-spent life preceding it”.
Of late, the billionaire was realistic about the prospects for the next generation of investors, saying: “There is so much money now in the hands of so many smart people all trying to outsmart one another. It’s a radically different world from the world we started in.”