Most of us go through life wallowing in our own mediocrity. Not Charlie Munger.
A Legend Passes
Munger passed away last month at an age few of us will achieve. He was 99 and, as it turns out, roughly one month shy of his planned 100th birthday extravaganza. What is it that they say, “man plans and god laughs?” But Munger had his share of laughs too, many contributions, and no doubt tears that come with such longevity (he lost a son who died at age 9, his wife in 2010, and his left eye in his 50s from a failed cataract surgery). In the end though, he enjoyed more blessings than one man can stand. And, unlike Buffett who was somewhat fettered by the need to not offend, Munger got to say all the things he truly felt, or at least many of them, and we were better off for it.
To many, Munger will be remembered as the curmudgeonly, not terribly mobile, and slightly pugnacious lieutenant to the better-known Warren Buffet. But he was so much more than that: he was quick-witted, pithy, sagacious, and imbued with a life-long passion for learning. Perhaps the best way to pay homage to one of the greats who leaves behind an enormous legacy of insights and poetic nuggets is to share a few of them with you.
Patience and Delayed Gratification Create Winners
Temperament and patience in investing were, in Munger’s views, more important than brains. Of course, you had to be smart enough but “the big money is not in the buying and selling…but in the waiting.” And he further noted that “it takes character to sit with all that cash and do nothing. I didn’t get to the top where I am by going after mediocre opportunities.”
Knowledge Can Make a Mediocre Mind Magnificent
On the importance of committing to a life of learning, “spend each day trying to be a little wiser than you were when you woke up…if you live long enough…you will get out of life what you deserve.” And the way you do that is through reading as in Munger’s “whole life, I have known no wise people (over a broad subject matter area) who didn’t read all the time—none, zero. My children think I’m a book with a couple of legs sticking out.”
Carpe Diem—Knowing and Seizing Opportunities and Passing On Junk
On recognizing wonderful opportunities that only come along a few times in a lifetime, wise investors should “bet heavily when the world offers them that opportunity.” This of course requires capital on hand and the skill set to recognize a great opportunity from a good, mediocre, or even bad one. Are you able to do that?
Of course, nobody knowingly invests in a business that is grossly mismanaged, but when picking businesses to invest in, Munger admonished us to “invest in a business any fool can run, because someday a fool will.” A good business should be able to hold up during the inevitable periods of mismanagement.
On high-flying internet stocks, which he viewed unfavorably, Munger said “if you mix raisins with turds, they’re still turds” and on cryptocurrencies which he abhorred, “Sometimes I call it crypto shit.”
Passion Alone Is Not Enough—Buffett Is No Ballet Dancer
Recognizing that passion is necessary but not sufficient, Munger suggested “You’ll do better if you have passion for something in which you have aptitude. If Warren Buffett had gone into ballet, no one would have heard of him.” Maybe they would have as that would have been quite the spectacle.
Inflation Ain’t No Big Deal
On inflation, he paid little attention when investing saying “If I can be optimistic when I’m nearly dead, surely the rest of you can handle a little inflation.”
There are many books written about Charlie Munger but if you had to pick one, I suggest “Poor Charlie’s Almanack,” which was written by him. You will surely learn about his investing philosophy and approach to life.
Website Sources: Glanzer, T. (2023, April 30). Munger: "A lot of agony" in CRE loans. The Real Deal. https://therealdeal.com/national/2023/04/30/munger-a-lot-of-agony-in-cre-loans/ Moyer, L., & Cho, J. H. (2023, November 28). Munger’s Advice on Investing, Life Was Often Colorful, and Never Dull. Barrons. https://www.barrons.com/articles/charlie-mungers-quotes-investing-d877ce98?mod=hp_LEAD_3_B_1 Coy, P. (2023, December 6). Opinion | The Timeless Investing Wisdom of Charlie Munger, Buffett’s No. 2. The New York Times. https://www.nytimes.com/2023/12/06/opinion/charlie-munger-warren-buffett.html Goodkind, N. (2023, November 29). Charlie Munger’s best quotes on investing, life and everything in between. CNN Business. Retrieved December 15, 2023, from https://www.cnn.com/2023/11/29/investing/premarket-stocks-trading-charlie-munger/index.html