The death of Charlie Munger this week at the age of 99 took me a bit by surprise. At such an advanced age, it was to be expected, but Munger has been part of my investing life for so long, he has served as a beacon for me for so long that I can’t believe I won’t be able to listen to him next May at the Berkshire Hathaway meeting.
So, what are the main messages I take away from Munger’s life and remarkable example? Here are a few:
1- Simplicity. With such intelligence, Munger could have made even more money. But throughout his life, he focused on simplicity and patience.
2- Humility. Munger was humble, both in his way of living and in his ability to admit his mistakes. He once said, “I like people admitting they were completely stupid horses’ asses. I know I’ll perform better if I rub my nose in my mistakes. This is a wonderful trick to learn.”
3- Rationalism. Always the reverse. Munger often joked that all he wanted to know was where he would die so he would never set foot there. To solve problems, Munger always advocated the practice of “inverting” a problem: instead of thinking about hitting home runs, it is better to find the best way to strike out as infrequently as possible.
4- Integrity and straight talk. Munger never bit his tongue, and he did not hold back! For example, when asked what he thought of bitcoin, he replied “rat poison”.
5- Thirst to learn. His children called him “a book on legs” because he always had a book in his hand and took advantage of any break to read. He was particularly fond of biographies to learn from the successes and failures of others. He often said that learning every day was a moral duty.
6- Quality above all. It is largely to Charlie that we owe the change in investment philosophy that brought about the phenomenal success of Buffett and Berkshire Hathaway. One of the first investments advocating the quality of a company rather than a low valuation was See’s Candies in 1972 for US$25 million.
7- Psychology. You need to know the psychological errors that the majority of people make day after day to protect yourself from them. For Munger, investing success is much more about minimizing costly mistakes than hitting home runs.
8- The lattice of mental models. Munger was a polymath, having studied many disciplines including mathematics, meteorology, philosophy, history, architecture, among others. He attempted throughout his life to learn and add arrows to his quiver of knowledge, which added to his latticework of tools helping him make better decisions. He never believed in specialization, but always advocated for a broad and diverse education.
Warren Buffett’s great friend and associate is no more. For investors around the world, a guiding light has just gone out. But even if he will no longer be able to speak and write to us, Munger will remain, through his writings and his messages, a model to follow, a mentor, for current investors and for those of future generations. His star already shines among the greatest in the business and investment world and among people who have done much good for countless people around the world.
Thanks Charlie!
