Yesterday, Charlie Munger, the renowned investor, businessman, and the vice chairman of Berkshire Hathaway, passed away in a California hospital. He was one month shy of his 100th Birthday.
“Spend each day trying to be a little wiser than you were when you woke up. Discharge your duties faithfully and well. Step by step you get ahead, but not necessarily in fast spurts. But you build discipline by preparing for fast spurts… Slug it out one inch at a time, day by day, at the end of the day — if you live long enough — most people get what they deserve.”
- Charlie Munger
Charlie Munger indeed got what he deserved. He left an indelible mark on many people including myself and transformed how I think about businesses and investing, how I approach problems, and importantly, how I live my life. He is a hero to many not for the wealth he amassed but for his wisdom, humility, and intellectual prowess.
While he had much to say on business and investing, in this post, I will only explore his teachings on life. The key attributes: rationality, humility, bluntness, and constant learning.
Charlie was born in 1924 in Omaha, Nebraska. He studied mathematics at the University of Michigan and served in the US army during WW2. After the war, he went to Harvard Law School and graduated magna cum laude in 1948. He practiced law and eventually founded his own firm - Munger, Tolles & Olsen LLP. However, after meeting Warren Buffett, Charlie turned his attention towards investing and started an investment partnership. Munger's investment partnership generated compound annual returns of 19.8% during the 1962–75 period compared to 5.0% for the Dow Jones. Later, he would join Warren Buffett in building Berkshire Hathaway where he had a tremendous impact on Warren as well as Berkshire.
Here is an alternative biography: With three kids he got divorced at 29. He lost almost all of his financial assets and had to rebuild his life from scratch. Two years after the divorce his son Teddy (age 9) died of leukemia. In those days there was no cure and Charlie had to watch his son gradually slip away. Later in life, Charlie suffered from cataracts and had surgery to remove them. The surgery didn’t go well and he went blind in one eye. When told that his other eye might stop working too, he prompty started braille lessons.
"Feeling like a victim is a perfectly disastrous way to make go through life. I think the attitude of Epictetus helps guide one to the right reaction. He thought that every mischance in life, however bad, created an opportunity to behave well. He believed every mischance provided an opportunity to learn something useful. And one’s duty was not to become immersed in self-pity, but to utilize each terrible blow in a constructive fashion."
- Charlie Munger
Charlie has drawn heavily from the study of psychology, economics, physics, biology, and history, among other disciplines. He calls the acquisition of wisdom a 'moral duty'. In 1995 he gave a seminal speech titled The Psychology of Human Misjudgment in which he explores various cognitive biases and psychological tendencies that can lead to errors in judgment and decision-making. Munger's goal with this speech was to help people become more aware of these biases and develop strategies to mitigate their impact, both in personal and professional contexts.
"It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent."
- Charlie Munger
His multi-disciplinary pursuits helped him form 'mental models' of the world around him. They are the thinking tools that you use to understand life, make decisions, and solve problems. He essentially used these mental models as heuristics to navigate the complexities of life. Here is Charlie on inversion:
“The mental process that really has worked for me my whole life, and I use it all the time, is turning everything into reverse. I figure out what I don’t like instead of figuring out what I like in order to get what I like. I sometimes think straight forward too, of course. But thinking of what I didn’t like and how I can avoid it has just worked wonders for me.”
- Charlie Munger
While people looked to Warren Buffett for investment advice; on matters of life and happiness, they almost always sought Charlie's advice.
“The first rule of a happy life is low expectations. If you have unrealistic expectations you're going to be miserable your whole life . You want to have reasonable expectations and take life's results good and bad as they happen with a certain amount of stoicism.”
-Charlie Munger
How simple, yet how profound!
There is a lot more to Charlie than I can cover in a blog post.
I encourage our partners to read his speeches, watch his videos or devour a book or two about him. The stories and case studies he cites in his speeches are as entertaining as they are enlightening. His quotes are now etched into the minds of those who aspire to think a little wiser, act a little kinder, and learn a little more. I am including some links below. I think it'll be the best time you spend this holiday season. As Charlie would say, "I'm right and you're smart, so think on it for a few minutes and you'll agree with me"
Thank you Charlie. I am grateful for all that I have learned from you. May you rest in peace.
Further reading
Books
Damn Right: Behind the Scenes with Berkshire Hathaway Billionaire Charlie Munger by Janet Lowe
Seeking Wisdom: from Darwin to Munger by Peter Bevellin
Charlie Munger: The Complete Investor by Tren Griffin