Charles Munger

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Munger at Berkshire Hathaway's 2010 Annual General Meeting
Charlie Munger Signature transparent.png

Charles Thomas Munger (born January 1, 1924 in Omaha , Nebraska ) is an American lawyer , investor , manager , billionaire and patron . He is a shareholder and vice chairman of the investment company Berkshire Hathaway , which is led by US major investor Warren Buffett . He is also one of those people mentioned in the essay The Superinvestors of Graham-and-Doddsville .

Munger is associated primarily with Warren Buffett, despite his own remarkable lifetime achievement and despite his significant influence on the business development of Berkshire Hathaway. The reason for this is his strikingly similar way of thinking, which has earned him the nickname "(Buffett's) Alter Ego ".

Life

Charles Munger grew up as the eldest son of a family of lawyers in Omaha. After college, he briefly studied mathematics and then meteorology at the University of Michigan before finally graduating from Harvard University with a law degree. He then settled in Los Angeles and practiced as a lawyer there . After several professional positions, he and a few colleagues finally founded the law firm Munger, Tolles, Hills & Wood (2012: Munger, Tolles & Olsen).

At an arranged meeting with Warren Buffett, he was persuaded to enter the investment business following his example. In 1962, for example, he and a friend founded the investment company Wheeler, Munger & Co., whose profit growth of 19.8% p. a. left the leading US index, the Dow Jones, well behind until its liquidation in early 1976.

Although Buffett and Munger worked separately from one another, the great similarity of their investment styles resulted in different, but in principle purely coincidental, business connections. In the early 1970s, for example, they both bought independently of each other in the retail chain Diversified Retailing and the discount stamp company Blue Chip Stamps in order to use their financial reserves for further acquisitions.

The current formalization of the connection between Munger and Buffett did not arise until 1978, when Warren Buffett merged his then scattered investment activities under pressure from the US Securities and Exchange Commission in Berkshire Hathaway. Diversified Retailing was merged with Berkshire, and "Charlie" Munger received two percent of Berkshire shares and the post of Vice Chairman as compensation for his shares. In addition, he took over the management of the most important investment jointly acquired through Diversified and Blue Chip, the Berkshire subsidiary Wesco Financial Corporation .

For the next three decades, Munger used Wesco as an investment vehicle modeled on Berkshire. Until the final takeover by the parent company in 2011, its profit development - as with Munger's previous companies - left the US benchmark index S&P 500 well behind, albeit by a considerable margin behind the parent company. In addition, Munger bought privately over the years in a newspaper publisher from Los Angeles and in the wholesale company Costco Wholesale , where he held management positions until 2013.

In addition to his professional activity, Munger has been heavily involved in voluntary work since the late 1960s. He was instrumental in setting up abortion clinics in Los Angeles, refurbished an ailing hospital and donated several donations to the University of Michigan . He and his second wife also donated a dormitory at Stanford University.

personality

Of particular importance is Munger's relationship with Warren Buffett. Aside from Buffett's mentor Benjamin Graham , Munger was the only person for decades to have had a significant impact on Buffett's otherwise essentially lonely investment decisions. According to contemporary observers, the main cause was the very large, almost “ghostly” similarity in their way of thinking and their idiosyncrasies. This was expressed, among other things, in hours of conversations and a practically blind understanding of each other's investment decisions, which also resulted in the aforementioned random business connections. At the Berkshire Hathaway Annual General Meeting, Munger is best known for the phrase “ I have nothing further to add ” following Buffett's answers.

Unlike Buffett, Munger was influenced by other investors such as Philip Fisher quite early on . He disliked Buffett's original Graham preference for companies that were quoted below their liquidation value, mostly due to poor business prospects. Instead, in his opinion, it was "better to pay a fair price for a good company than a ridiculous price for a junk company." Hence, over the years he has led Buffett to rethink his investment approach, which Buffett has repeatedly admitted publicly. Yet, despite his significant influence on the successful development of Berkshire Hathaway, Munger lags far behind Warren Buffett in popularity.

Despite all the similarities, Munger has always lacked Buffett's casual manner in dealing with people. Instead, he has a sullen and very impersonal tone. He approaches both people and investments with great skepticism, prejudice and elitist aspirations. Nor does he cultivate Buffett's proverbial stinginess, but pretends to be a party animal and leads a luxurious private life. On the other hand, there is a deep moral feeling. In addition, Munger works as an eclectic by using models of thought from different sciences for his decision-making.

Private

Charles Munger was married twice. From his first marriage (1945-1953) had two children. After divorcing his first wife, he married again in 1956 and survived his second wife († 2010). From this second marriage there are five more sons. In addition, there are two stepchildren from the first marriage of his second wife. Munger's eldest son died of leukemia in 1955 .

Munger's eyesight is severely impaired. The cause was cataracts and complications from epithelial overgrowth during the subsequent eye operation, which meant that his left eye had to be removed.

literature

  • Peter Kaufmann (Ed.): Poor Charlie's Almanack: The Wit and Wisdom of Charles T. Munger . 2nd ext. Edition. Donning Company Publishers, Virginia Beach (Virginia) 2005, ISBN 978-1-57864-366-0 .
  • Janet C. Lowe: Damn Right! Behind the Scenes with Berkshire Hathaway Billionaire Charlie Munger . Wiley & Sons, New York (New York) 2003, ISBN 978-0-471-44691-0 .
  • Roger Lowenstein: Buffett: The Story of an American Capitalist . Börsenmedien, Kulmbach 2009, ISBN 978-3-938350-87-4 , Alter Ego, p. 279 ff .

Individual evidence

  1. ^ A b Roger Lowenstein: Buffett: The story of an American capitalist . Börsenmedien, Kulmbach 2009, ISBN 978-3-938350-87-4 , p. 279 ff .
  2. ^ The Superinvestors of Graham-and-Doddsville.
  3. see the annual reports of Berkshire Hathaway Inc.
  4. Wesco's stock market value rose from around 40 million dollars in the mid-1970s to more than 2.7 billion dollars most recently. Berkshire rose from $ 87 per share to around $ 120,000 per share between 1973 and 2010, and the S&P 500 rose from 97.55 points to 1257.64 points over the same period.
  5. ^ Form 4: Statement of Changes in Beneficial Ownership of Securities. United States Securities And Exchange Commission, November 15, 2010, accessed March 10, 2013 .
  6. ^ Form 4: Statement of Changes in Beneficial Ownership of Securities. United States Securities And Exchange Commission, February 13, 2012, accessed March 10, 2013 .
  7. ^ A b Roger Lowenstein: Buffett: The story of an American capitalist . Börsenmedien, Kulmbach 2009, ISBN 978-3-938350-87-4 , p. 287 .
  8. Kevin Roose: Munger Donates $ 1.2 million to University of Michigan. In: The New York Times. January 10, 2012, accessed March 18, 2013 .
  9. ^ Ulysses Torassa: Stanford / $ 43.5 million given for more graduate student housing. San Francisco Chronicle, August 27, 2004, accessed March 18, 2013 .
  10. Roger Lowenstein: Buffett: The Story of an American Capitalist . Börsenmedien, Kulmbach 2009, ISBN 978-3-938350-87-4 , p. 138 f .
  11. Buffet's daughter once referred to the two as "clones". (Lowenstein, Buffett, p. 279)
  12. Roger Lowenstein: Buffett: The Story of an American Capitalist . Börsenmedien, Kulmbach 2009, ISBN 978-3-938350-87-4 , p. 193 .
  13. "Boy, if I had listened only to Ben [Graham, note], would I ever be a lot poorer." - Carol J. Loomis: The Inside Story of Warren Buffett . In: Fortune , April 11, 1988, p. 26 ( boy, if I had only listened to Ben, I would always be a lot poorer ).
  14. Roger Lowenstein: Buffett: The Story of an American Capitalist . Börsenmedien, Kulmbach 2009, ISBN 978-3-938350-87-4 , p. 287 ff .
  15. Roger Lowenstein: Buffett: The Story of an American Capitalist . Börsenmedien, Kulmbach 2009, ISBN 978-3-938350-87-4 , p. 195 .