How Charlie Munger helped Warren Buffett build the $785 billion investment giant Berkshire Hathaway

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Charlie Munger, the right-hand man of Warren Buffett at Berkshire Hathaway, died on Tuesday (November 28) at age 99, marking the end of an era in corporate America and investing. He passed away at a hospital in California, where he lived, according to a statement by the conglomerate. Munger played an essential role in transforming Berkshire into an investment powerhouse as he helped Buffett diversify his investing strategy and focus on finding high-quality companies that were undervalued. “Berkshire Hathaway could not have been built to its present status without Charlie’s inspiration, wisdom and participation,” Buffett, Berkshire’s 93-year-old chairman and chief executive, said in a statement. ‘The abominable no-man’ Born in Nebraska’s Omaha, Munger made a name for himself even before joining Berkshire in the 1970s. Through his investment partnership known as Wheeler, Munger & Company which he co-founded in 1962, Munger made some immensely profitable investments in real estate projects and stocks. He closed the firm in 1975 as he was looking for a change and three years later, became vice chairman of Berkshire. Munger knew Buffett before joining the company. They shared similar investment aspirations and invested in the same companies during the 1960s and 1970s. At Berkshire, Munger began to work closely with Buffett on allocating the company’s capital and came to be known as “the abominable no-man” due to the frequency with which he turned down investment ideas he deemed unworthy. Moreover, Munger made Buffett stir away from “cigar-butt” investments — mediocre companies that had a puff of smoke left and could be bought for very cheap prices. “It took Charlie Munger to break my cigar-butt habits and set the course for building a business that could combine huge size with satisfactory profits,” Buffett wrote to shareholders in 2015. “The blueprint he gave me was simple: forget what you know about buying fair businesses at wonderful prices; instead, buy wonderful businesses at fair prices.” The philosophy changed Berkshire’s fortunes. For instance, in 1972, Munger persuaded Buffett to sign off on Berkshire’s purchase of See’s Candies for $25 million even though the California candy maker had “annual pretax earnings of only about $4 million”, according to a report by CNBC. It has since produced more than $2 billion in sales for Berkshire. ‘Trying to be consistently not stupid’ Despite amassing billions through successful investments, Munger never claimed he or Buffett were the smartest people in the industry. “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 intelligent,” Munger once said. Speaking at a conference in Australia in 2021, he told the audience that he and his partner were just better than most at knowing what they know or can’t know, according to a report in Sydney Morning Herald. “We have three baskets for investing: yes, no, and too tough to understand,” was another memorable line that Munger once said. This was the reason why the two businessmen stayed away from investing in Bitcoin. Munger called it “rat poison” and compared other cryptocurrencies to a “venereal disease.” “I wish they’d never been invented,” he said a few years back. (With inputs from Reuters)

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