Charlie Munger

Charles Thomas Munger (January 1, 1924 – November 28, 2023) was an American businessman, investor, and philanthropist. He was the vice chairman of Berkshire Hathaway, the conglomerate controlled by Warren Buffett, from 1978 until his death in 2023. Buffett described Munger as his closest partner and right-hand man, and credited him with being the "architect" of modern Berkshire Hathaway's business philosophy.

In addition to his role at Berkshire Hathaway, Munger was a founding partner of the California law firm of Munger, Tolles & Olson; chairman of Wesco Financial Corporation from 1984 through 2011; chairman of the Daily Journal Corporation, based in Los Angeles, California; and a director of Costco Wholesale Corporation.

Charles Thomas Munger was born on January 1, 1924, in Omaha, Nebraska, to Florence "Toody" Munger (née Russell) and Alfred Case Munger, a lawyer. As a teenager, he worked at Buffett & Son, a grocery store owned by Warren Buffett's grandfather, Ernest P. Buffett. His grandfather, Thomas Charles Munger, was a state representative and later a U.S. district court judge appointed by Theodore Roosevelt.

He enrolled in the University of Michigan, where he studied mathematics. During his time in college, he joined the fraternity Sigma Phi Society. In early 1943, a few days after his 19th birthday, he dropped out of college to serve in the U.S. Army Air Corps, where he became a second lieutenant. After receiving a high score on the Army General Classification Test, he was ordered to study meteorology at Caltech in Pasadena, California, the town he was to make his home.

Through the G.I. Bill, Munger took a number of advanced courses through several universities. When he applied to his father's alma mater, Harvard Law School, the dean of admissions rejected him because Munger had not completed an undergraduate degree. However, the dean relented after a call from Roscoe Pound, the former dean of Harvard Law and a Munger family friend. Munger excelled in law school, becoming a member of the Harvard Legal Aid Bureau and graduating in 1948 with a J.D., magna cum laude.

In college and the Army, he developed what he considered "an important skill": card playing. He used this in his approach to business. "What you have to learn is to fold early when the odds are against you, or if you have a big edge, back it heavily because you don't get a big edge often. Opportunity comes, but it doesn't come often, so seize it when it does come." He also used the card analogy to explain his approach to investing. He maintained that treating the shares of a company like baseball cards is a losing strategy because it requires one to predict the behavior of often irrational and emotional human beings.

Munger moved with his family to California, where he joined the law firm Wright & Garrett (later Musick, Peeler & Garrett). In 1962, he founded and worked as a real estate attorney at Munger, Tolles & Olson LLP. He then gave up the practice of law to concentrate on managing investments and later partnered with Otis Booth in real estate development. When he met Buffett over lunch at the Omaha Club, "the two began talking about investments and never stopped."

In 1962, Munger partnered with Jack Wheeler to form Wheeler, Munger, and Company, an investment firm with a seat on the Pacific Coast Stock Exchange. According to Buffett's essay "The Superinvestors of Graham-and-Doddsville", published in 1984, Munger's investment partnership generated compound annual returns of 19.8% during the 1962–75 period compared to a 5.0% annual appreciation rate for the Dow.

In 1974, Munger bought control of Mitchum, Jones, and Templeton, a publicly traded competitor of Wheeler Munger. Mitchum Jones was led by Bill Lupien and Joe Taussig. He wound up Wheeler, Munger, and Co. in 1976, after losses of 32% in 1973 and 31% in 1974. However, he took Mitchum Jones private at $3 per share and liquidated it 10 years later at $180 per share (a 60x gain). Lupien and Taussig later took over and managed Instinet, the first electronic stock exchange, which is now part of NASDAQ.

Munger was previously the chairman of Wesco Financial Corporation, now a wholly owned subsidiary of Berkshire Hathaway. The acquisition of this company was controversial following accusations that Buffett's company, Blue Chip, bought Wesco shares to defeat an impending merger between Wesco and Financial Corp. Wesco began as a savings and loan association, but eventually grew to control Precision Steel Corp., CORT Furniture Leasing, Kansas Bankers Surety Company, and other ventures. Wesco Financial also held a concentrated equity portfolio of over US$1.5 billion in companies such as Coca-Cola, Wells Fargo, Procter & Gamble, Kraft Foods, US Bancorp, and Goldman Sachs. Munger believed that holding a concentrated number of stocks that he knew extremely well would in the long term produce superior returns.

Wesco is based in Pasadena, California, Munger's adopted hometown. Pasadena was also the site of the company's annual shareholders' meeting, which were typically held on the Wednesday or Thursday after the more famous Berkshire Hathaway Annual Meeting. Munger's meetings were nearly as legendary in the investment community as those he co-hosted with Buffett in Omaha. Such meetings were often perfunctory, but Munger interacted with the other Wesco shareholders at considerable length, sometimes speculating about what Benjamin Franklin would do in a given situation. Meeting notes have been posted on the Futile Finance? website, but no updates exist beyond 2011.

In multiple speeches, and in the 2005 book Poor Charlie's Almanack: The Wit and Wisdom of Charles T. Munger, "worldly wisdom" consists of a set of mental models framed as a latticework to help solve critical business problems.

Munger, along with Buffett, was one of the main inspirations behind the book Seeking Wisdom: From Darwin to Munger. Author Peter Bevelin explained his key learnings from both Munger and Buffett in a 2007 interview: "How to think about businesses and investing, how to behave in life, the importance of ethics and honesty, how to approach problems but foremost how to reduce the chance of meeting problems." Bevelin stated that previously, he "was lacking the Munger ability to un-learn my own best-loved ideas".

High ethical standards were integral to Munger's philosophy. One writer described his thinking as "Good businesses are ethical businesses. A business model that relies on trickery is doomed to fail." During an interview and Q&A session at Harvard-Westlake School on January 19, 2010, Munger referred to American philosopher Charles Frankel in his discussion on the 2008 financial crisis and the philosophy of responsibility. Munger explained that Frankel believed:

The system is responsible in proportion to the degree that the people who make the decisions bear the consequences. So to Charlie Frankel, you don't create a loan system where all the people who make the loans promptly dump them on somebody else through lies and twaddle, and they don't bear the responsibility when the loans are good or bad. To Frankel, that is amoral, that is an irresponsible system.

As part of his philosophy Munger lived in the same relatively modest California home for 70 years. When asked about living in more luxurious homes, Munger was quoted as stating: "in practically every case, they make the person less happy, not happier." Munger appreciated the utility of a "basic house" with few advantages over living in an ostentatious home. Munger appreciated modesty stating, "don't have a lot of envy" and "don't overspend your income". In Munger's last 2023 interview with CNBC he credited his success and longevity to a long-held sense of caution and ability "to avoid all standard ways of failing".

At the time of his death, Munger had an estimated net worth of $2.6 billion and was ranked as the 1,182nd richest person in the world, according to Forbes.

Munger was a major benefactor of the University of Michigan. In 2007, Munger made a $3 million gift to the University of Michigan Law School for lighting improvements in Hutchins Hall and the William W. Cook Legal Research Building, including the noted Reading Room. In 2011, Munger made another gift to the Law School, contributing $20 million for renovations to the Lawyers Club housing complex, which covered the majority of the $39 million cost. The renovated portion of the Lawyers Club was renamed the Charles T. Munger Residences in the Lawyers Club in his honor.

In 1997, the Mungers donated $1.8 million to the Marlborough School in Los Angeles, of which Nancy Munger was an alumna. The couple also donated to the Polytechnic School in Pasadena and the Los Angeles YMCA.

On December 28, 2011, Munger donated 10 shares of Berkshire Hathaway Class A stock (then valued at approximately $1.2 million total) to the University of Michigan.

Munger and his late wife Nancy B. Munger were major benefactors of Stanford University. Nancy Munger was an alumna of Stanford, and Wendy Munger, Charlie Munger's daughter from a previous marriage, was also an alumna (A.B. 1972). Both Nancy and Wendy Munger served as members of the Stanford board of trustees.

In 1945, while studying at Caltech, Munger married Nancy Huggins (c. 1926 – 2002). She was a Pasadena native who had been Munger's sister's roommate at Scripps College. They had three children, Wendy Munger (a former corporate lawyer, trustee of Stanford University, and trustee of The Huntington Library), Molly Munger (a civil rights attorney and funder of a ballot initiative to raise California taxes for public education), and Teddy Munger (deceased, leukemia, age 9). Munger and Huggins divorced in 1953.

Munger married Nancy Barry within a few years of his divorce from Huggins. Munger and Barry had four children: physicist and political donor Charles T. Munger Jr., Emilie Munger Ogden, Barry A. Munger, and Philip R. Munger. Munger also had two stepchildren from his second marriage: William Harold Borthwick and David Borthwick.

Munger died at a Santa Barbara, California hospital on November 28, 2023, at the age of 99, 34 days shy of what would have been his 100th birthday. In the statement announcing his death, Warren Buffett said, "Berkshire Hathaway could not have been built to its present status without Charlie's inspiration, wisdom and participation." Other prominent figures in the American business community who issued statements in Munger's memory include Microsoft founder Bill Gates, Apple CEO Tim Cook, Chairman and CEO of JP Morgan Chase Jamie Dimon, Bank of America CEO Brian Moynihan and hedge fund manager Ray Dalio.

In the first annual letter to Berkshire Hathaway's shareholders written after Munger's death, Buffett gave a fuller account of his partner:Charlie never sought to take credit for his role as creator but instead let me take the bows and receive the accolades. In a way his relationship with me was part older brother, part loving father. Even when he knew he was right, he gave me the reins, and when I blundered he never – never – reminded me of my mistake.

In the physical world, great buildings are linked to their architect while those who had poured the concrete or installed the windows are soon forgotten. Berkshire has become a great company. Though I have long been in charge of the construction crew; Charlie should forever be credited with being the architect.

Channel NewsAsia reported that deepfakes of Munger have been used in an AI-based disinformation campaign on YouTube targeting Singapore and prime minister Lawrence Wong.