Financial History 148 Winter 2024 | Page 14

Charlie Munger

Bonnie Schiffman Photography

The Life and Legacy of Our Late , Eminent Friend

By Lawrence A . Cunningham
Charles T . Munger , who died on November 28 , 2023 , a month shy of his 100th birthday on New Years Day , was an eminent figure in contemporary finance . As Warren Buffett ’ s long-time business partner and vice chairman of Berkshire Hathaway , he helped shape the culture and philosophy of one of the world ’ s most successful and admired companies . He was also a voracious reader and gifted intellectual who drew on a wide range of disciplines and sources to develop a unique approach to investing and decision-making .
A Remarkable Career
Munger was born in Omaha , Nebraska , in 1924 , the son of a lawyer and a homemaker and grandson of a federal judge . He attended the University of Michigan as a math major from 1941 to 1942 , served as a meteorologist in the US Army Air Corps during World War II while taking classes at Caltech and graduated magna cum laude from Harvard Law School in 1948
( in two years rather than three , despite not having a college degree ). He practiced law in Los Angeles until 1965 , while also pursuing interests in the fields of investing and real estate .
In 1959 , Munger met Buffett , a fellow Omaha native , and they soon became close friends and collaborators . In 1962 , Munger co-founded both a law firm , Munger Tolles , a leading firm today , and an investment partnership , Wheeler , Munger & Company , which achieved an average annual return of 19.8 % through its closure in 1975 , beating the Dow Jones Industrial Average by 13.7 percentage points over the period .
In 1977 , Munger acquired the Daily Journal Corporation , and led its growth over the decades , remaining on its board until his death . In 1978 , he joined Berkshire Hathaway as vice chairman , where he made many contributions and influenced the world of finance for five decades . He was also chairman and president of Wesco Financial from 1984 until 2011 , when it became a wholly owned Berkshire subsidiary .
Major Contributions to Berkshire
Munger ’ s most significant contribution to Berkshire was shaping its investment philosophy . Under his influence , Buffett ’ s approach evolved . In his early years , Buffett focused on cheap and undervalued companies as his mentor , Benjamin Graham , had taught him . Munger nudged Buffett toward a broader and more flexible one that considered business quality , as outlined by investor Phil Fisher in his 1958 book , Common Stocks and Uncommon Profits , now a classic of investment literature .
Munger recognized that high-quality businesses with durable competitive advantages can generate more value over time , even if not bargain-priced , which is better for the long term than mere “ cigar butt ” companies . This refinement of investing to focus on both value and quality was demonstrated early in the Buffett-Munger collaboration . In 1971 , Munger persuaded Buffett to buy See ’ s Candies , a premium chocolate maker , for a price that was far above its book value and earnings multiple . Munger observed that See ’ s had a loyal
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