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Charlie Munger

Charlie Munger

An American business magnate, lawyer, investor, and philanthropist.

Charlie Thomas Munger is an American business magnate, lawyer, investor, and philanthropist born in Omaha, Nebraska on January 1, 1924. He is the vice chairman of Berkshire Hathaway, chairman of the Daily Journal Corporation, chairman of Wesco Financial Corporation, Chairman of Good Samaritan Hospital, and the director of Costco Wholesale Corporation. 



Munger graduated from with a J.D. from Harvard University in 1948, and afterwards founded his own law firm in Los Angeles, California called Munger, Tolles & Olson. He left Munger, Tolles & Olson in 1965 to focus full time on investing after being convinced by Warren Buffet to join him at Berkshire Hathaway. Charlie Munger is often spoken about by news outlets as "Warren Buffet's right-hand man". As of 2019 Charlie Munger has an estimated net worth of $1.6 billion, is living in Los Angeles, California, and identifies as a Republican. 



Charlie also has a passion for architecture. He designed his own house in Los Angeles, and in his 30's designed and built five apartment projects near Los Angeles. He also designed dorm complexes at Stanford University and the University of Michigan.



David Clark in his book, The Tao of Charlie Munger: A Compilation of Quotes from Berkshire Hathaway's Vice Chairman on Life, Business, and the Pursuit of Wealth, describes how he thinks society will see Charlie Munger in the future by writing "Charlie Munger will be seen as the proverbial enigma wrapped in a paradox—he is both a mystery and a contradiction at the same time". Bill Gates spoke gave his opinion of Munger by saying "He is truly the broadest thinker I have ever encountered", and Warren Buffet describes Munger in the following manner "He comes equipped with rationality... I would say that to try and typecast Charlie in terms of any other human that I can think of, no one would fit. He's got his own mold". 

Education

University of Michigan

Charlie Munger enrolled in the University of Michigan in 1941 to study mathematics when he was 19 years old. During his time at the University of Michigan he joined the Sigma Phi Society fraternity. He dropped out in 1943 to join the U.S. Army Air Corps a few days after his 19th birthday. During his time in the army Charlie Munger would become a meteorologist, earn the rank of second lieutenant, and marry Nancy Huggins.

Caltech

Charlie Munger studied physics and meteorology at Caltech Pasadena to become a meteorologist for the American military during World War II after getting a high score ion the Army General Classification Test.  During his time in college and the military Charlie Munger learned how to play cards, and claims to have learned important lessons about business and life from playing the game. 

What you have to learn is to fold early when the odds are against you, or if you have a big edge, back it heavily because you don't get a big edge often. Opportunity comes, but it doesn't come often, so seize it when it does come. 

Harvard University

After taking several university level courses at a few different American Universities with financial support from the Servicemen's Readjustment Act of 1994. Munger was initially rejected from attending Harvard because he did not hold an undergraduate degree. Mungers father attended Harvard University to become a lawyer, and a family friend of theirs named Roscue Pound, former dean of Harvard, convinced the dean of Harvard at the time to admit Charlie Munger into their law program. After Charlie Munger was admitted to Harvard University to study law he moved to Boston with his wife. During his time at Harvard Munger was a member of the Harvard Legal Aid Bureau, and he graduated magna cum laude with a Jurisprudence degree (J.D.) in 1948.

Family

Charlie Munger was born in Omaha, Nebraska January 1,1924 and has 9 children (7 of his own and two step children). Munger's first marriage (at the age of 21) was with Nancy Huggins Freeman. They had 3 children together and divorced in 1953. Nancy Freeman died on July 22, 2002 at the age of 76 from cancer.  A few years after his divorce with Nancy Freeman, Charlie Munger married Nancy Barry in 1956, and her two children became Charlie Munger's step children. They stayed married until Nancy's death on February 6, 2010 at the age of 86. Nancy Barry and Charlie Munger had 4 children together, and one of their children named Teddy was diagnosed with leukemia at the age of 8 and would later die at the age of 9. 



Charlie Munger is the son of Alfred Charles Munger (a Harvard educated a lawyer) and Florence Munger, and the grandson of Thomas Charles Munger. His grandfather was Thomas Charles Munger, was born into poverty on July 7, 1861 in Fletcher, Ohio. He worked to improve the circumstances of his family throughout his life, and was known for being a strict disciplinarian. He made sure everyone in his family read Robinson Crusoe by Daniel Defoe, to better understand that conquest of the natural world is possible through discipline. He enjoyed lecturing his family on the virtues of saving money and avoiding vices such as saloons and gambling. 



Thomas C. Munger would later be nominated by Theodore Roosevelt on February 27, 1907 to become a judge for U.S. District Court of Nebraska. Charlie Munger's daughter Molly Munger said the following addressing the influence of her great grandfather, Thomas Charles Munger, has had on the Munger family during a special event at the Harvard Law School Alumni Center: 

I’m the descendant of a great-grandfather who taught his children that you don’t get that many opportunities in life, and when one comes along, you have to have the courage and determination to grasp it, and play the game hard… That is a lesson that any of you can learn.

Investing

Charlie Munger is most well known around the world for his investment activities. After successfully founding his own law firm working as a real estate attorney, Munger gave up practicing law to focus on managing investments. From 1962 to 1975 Charlie Munger ran his own investment partnership where he generated approximately a 19.8% compound return (compared to the 5% annual return of the DOW during the period of time between 1962 to 1975). 



He would later meet Warren Buffet at a friends homecoming dinner party in 1959, after being introduced to each other by a doctor in Omaha attending the party who believed the two would get along. After meeting each other both Munger and Warren began speaking on a regular basis through phone calls and handwritten letters. Warren Buffet noticed the success of Munger's investments and investing philosophy and chose to bring him to Berkshire Hathaway, where Munger would eventually become vice chairman. In an interview in the Wall Street Journal, Charlie Munger told reporters that he holds Warren Buffet solely responsible for convincing him to leave his law practice to focus on investing, he said: 

Warren talked me into leaving the law business, and that was a very significant influence on me. I was already thinking about becoming a full-time investor, and Warren told me I was far better suited to that. He was right. I would probably have done it myself, but he pushed me to it. I have to say, it isn’t an easy thing to work very hard for many years to build up a significant career, as I had done, and then to destroy that career on purpose. That would have been a lot harder to do if not for Warren’s influence on me. it wasn't a mistake. It worked out for the both of us and for a lot of other people...

Warren Buffet is confident him and Charlie Munger made Berkshire Hathaway into a successful investment management business that will last long after they leave the company. During the 2014 Berkshire Hathaway annual shareholders meeting Buffet said: 

All told, Berkshire is ideally positioned for life after Charlie and I leave the scene. We have the right people in place – the right directors, managers and prospective successors to those managers. Our culture, furthermore, is embedded throughout their ranks. Our system is also regenerative. To a large degree, both good and bad cultures self-select to perpetuate themselves. For very good reasons, business owners and operating managers with values similar to ours will continue to be attracted to Berkshire as a one-of-a-kind and permanent home.

Charlie Munger is also the chairman of Wesco Financial Corporation, a subsidiary of Berkshire Hathaway. Wesco began as a savings and loans association and expanded into controlling Precision Steel Corp., CORT Furniture Leasing, Kansas Bankers Surety Company, and several other ventures. Munger also helped Wesco build an equity portfolio worth over $1.5 billion. Wesco's equity portfolio is primarily made up of Coca-Cola, American Express, Wells Fargo, and Proctor & Gamble. During the annual shareholders meeting for Wesco, Munger is known to speak for hours with shareholders and joke about what one his his idols, Benjamin Franklin, would do in given situations. 

Investing philosophy

Charlie Mungers investing philosophy focuses on minimizing risk by simplifying his investment portfolio into a concentrated number of stocks he knows very well, and ensuring he maintains highly ethical investment standards. Charlie Munger made the following statements about why he keeps his investment strategy simple "Simplicity has a way of improving performance by enabling us to better understand what we are doing", and "If something is too hard, we move onto something else. What could be simpler than that? We have passion for keeping things simple". At the annual Wesco Financial meeting of 2009 Munger commented on the importance of ethical investing by saying "Good Businesses are ethical businesses. A business model that relies on trickery is doomed to fail".

The Psychology of Human Misjudgement

In June 1995 Charlie Munger gave a famous speech at the Harvard Law School titled "The Psychology of Human Misjudgement" where he spoke about how minimizing misjudgement has been the key to his investment success over the course of his life. During his speech Munger outlined what he believes to be the 22 standard causes of human misjudgement. They are: 



  1. First: Under-recognition of the power of what psychologists call “reinforcement” and economists call “incentives.”
  2. My second factor is simple psychological denial.
  3. Third: invcentive-cause bias, both in one's own mind and that of ones trusted advisor, where it creates what economists call 'agency costs.'
  4. Fourth, and this is a superpower in error-causing psychological tendency: bias from consistency and commitment tendency, including the tendency to avoid or promptly resolve cognitive dissonance. Includes the self confirmation tendency of all conclusions, particularly expressed conclusions, and with a special persistence for conclusions that are hardwon.
  5. Fifth: bias from Pavlovian association, misconstruing past correlation as a reliable basis for decision-making.
  6. Sixth: bias from reciprocation tendency, including the tendency of one in a role to act as other persons expect.
  7. Seventh, now this is a lollapalooza, and Henry Kaufman wisely talked about this: bias from over-influence by social proof -- that is, the conclusions of others, particularly under conditions of natural uncertainty and stress.
  8. Nine [he means eight]: What made these economists love the efficient market theory is the math was so elegant.
  9. Nine: bias from contrast-caused distortions of sensation, perception and cognition.
  10. Bias from over-influence by authority.
  11. Eleven: bias from deprival super-reaction syndrome, including bias caused by present or threatened scarcity, including threatened removal of something almost possessed, but never possessed.
  12. Bias from envy/jealousy.
  13. Bias from chemical dependency.
  14. Bias from mis-gambling compulsion.
  15. Bias from liking distortion, including the tendency to especially like oneself, one’s own kind and one’s own idea structures, and the tendency to be especially susceptible to being misled by someone liked. Disliking distortion, bias from that, the reciprocal of liking distortion and the tendency not to learn appropriately from someone disliked.
  16. Seventeen [he means 16]: bias from the non-mathematical nature of the human brain in its natural state as it deals with probabilities employing crude heuristics, and is often misled by mere contrast, a tendency to overweigh conveniently available information and other psychologically rooted misthinking tendencies on this list.
  17. Now we come to bias from over-influence by extra-vivid evidence.
  18. Twenty-two [he means 18]: Mental confusion caused by information not arrayed in the mind and theory structures, creating sound generalizations developed in response to the question “Why?” Also, mis-influence from information that apparently but not really answers the question “Why?” Also, failure to obtain deserved influence caused by not properly explaining why.
  19. Other normal limitations of sensation, memory, cognition and knowledge.
  20. Stress-induced mental changes, small and large, temporary and permanent.
  21. Then we’ve got other common mental illnesses and declines, temporary and permanent, including the tendency to lose ability through disuse.
  22. And then I’ve got mental and organizational confusion from saysomething syndrome.

Philanthropy

Charlie Munger has made many philanthropic contributions over the course of his life primarily to improve health, education, and the Los Angeles community. He was critical of philanthropy until later in his career where he began engaging in philanthropic activities.

Giving Pledge

Charlie Munger has not signed the Giving Pledge created by his partner Warren Buffet because he says that he has already violated its terms. In an interview with Andrew Serwer Munger said: 

Well, I wouldn't sign the Giving Pledge 'cause I've already transferred so much to my children that I've already violated it. So I think I'm asking, I'm seeking false credit if I join them and say I'm a big philanthropist that's going to give more than half of my wealth to charity. I've already given more than half of it to my children. So I can't join them. It's like coming back from the dead. I can't do it.

Education

Munger has donated more than $110 million dollars to the University of Michigan (the largest donations in the universities history) to build their graduate center ($10 million went directly to fund graduate student fellowships), contributed $65 million to the theoretical physics department at the University of Santa Barbara (UCSB), another $200 million to UCSB at a later date, and a $20 million donation of class A Berkshire Hathaway stocks to the University of South Carolina Beaufort.



Munger's donation of $110 million to build a graduate student building at the University of Michigan was to encourage graduate students of different disciplines to exchange ideas with each other because during his time at studying law at Harvard University he saw little interactions between students of different disciplines. Munger's $65 million dollar donation the theoretical physics department of the University of Santa Barbara went towards creating a 61-bed residence for physicists visiting the institute to help them exchange ideas with each other. Munger said his donation is significant because: 

U.C.S.B. has by far the most important program for visiting physicists in the world. Leading physicists routinely are coming to the school to talk to one another, create new stuff, cross-fertilize ideas.

In March 2016 Charlie Munger donated another $200 million to UCSB for building a new residence halls on their campus, and Munger said the funds will be used to create "the best undergraduate housing in the world". The funds will build two student housing projects on 28-acres of land where existing dormitories already exist. The residences will be two six story building, and are estimated to reduce the cost of student housing for students by approximately 60%. 



Munger has also been a major contributor to Stanford University, Polytechnic School in Pasadena, California Harvard -Westlake, and other academic institutions him and his family have been involved with. He has also made a point of focusing his philanthropic contributions directly to educational institutions operating within the Los Angeles community by giving gifts to the Huntington Library and the Los Angeles YMCA. 

Health

Charlie Munger is the chairman of Good Samaritan Hospital and has helped with several major funding campaigns for the hospital. Munger also has donated some of his Berkshire Hathaway stock to Planned Parenthood. 

Awards

Forbes annual list of billionaires

On March 5, 2019 Charlie Munger was ranked number 1425 on the Forbes annual list of billionaires with a reported net worth of $1.6 billion. 

Timeline

August 2, 2019

Graduated from Harvard University

Charlie Munger graduated magna cum laude with a Jurisprudence (J.D.) from Harvard University in 1948.

March 5, 2019

Forbes annual list of billionaires

On March 5, 2019 Charlie Munger was ranked number 1425 on the Forbes annual list of billionaires with a reported net worth of $1.6 billion. 

1978

Becomes vice chairman of Berkshire Hathaway

In 1978 Charlie Munger became the vice chairman of Berkshire Hathaway. 

1959

Meets Warren Buffet

At a friends homecoming dinner party in 1959 Charlie Munger met Warren Buffet for the first time. 

People

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Further reading

Title
Author
Link
Type
Date

"A Lesson on Elementary, Worldly Wisdom" by Charlie Munger | James Clear

James Clear

Web



13 Priceless Warren Buffett and Charlie Munger Quotes From the 50th Anniversary Meeting

Dave Koppenheffer / The Motley Fool

Web

May 12, 2015

24 years ago, Charlie Munger gave brilliant life advice at Harvard--and it's important now more than ever

Nicholas Pearce

Web

June 1, 2019

A Fireside Chat With Charlie Munger

Jason Zweig

Web

September 12, 2014

A Special Event | Harvard Law School

Harvard Law School

Web

March 31, 2014

Berkshire Hathaway's Charlie Munger Has 1 Simple Rule to Outsmart the Competition

Peter Cohan

Web

May 6, 2019

Berkshire's Charlie Munger on Baltimore: 'I've seen a lot of riots'

Paul R. La Monica

Web

May 3, 2015

Charles Munger: A Lesson on Elementary, Worldly Wisdom As It Relates To Investment Management & Business - The Big Picture

Ritholtz

Web

February 20, 2012

Charles Munger: Secrets of Buffett's Success?

Jason Zweig

Web

September 12, 2014

Charlie Munger

James Chen

Web

June 25, 2019

Charlie Munger - USC Law School Commencement - May 13, 2007



Web

May 13, 2007

Charlie Munger [quotes]

25iq

Web



Charlie Munger Comments and the Art of Stock Picking

John Huber

Web

April 27, 2015

Charlie Munger is Warren Buffett's right-hand man -- here are 18 of his most brilliant quotes

Caroline Frost

Web

May 3, 2019

Charlie Munger is Warren Buffett's right-hand man -- here are 18 of his most brilliant quotes

Caroline Frost

Web

May 3, 2019

Charlie Munger on How to Be Happy, Get Rich and Other Advice - GuruFocus.com

Brian Flores

Web

May 20, 2015

Charlie Munger On Leverage and Paying Your Mortgage Off Before Retirement

Jonathan Ping

Web

May 18, 2015

Charlie Munger Tag

The CEO Library

Web



Charlie Munger: Bio, Books, Speeches, Quotes, Videos



Web



Charlie Munger: The Complete Investor

Tren Griffin

Book

September 15, 2015

Charlie Munger's 2015 Daily Journal Annual Meeting - Part 4

Phil DeMuth

Web

April 27, 2015

Financier Munger Gives DuBridge Lecture

Caltech

Web

January 29, 2008

Munger: McDonald's one of US' best educators

Fred Imbert

Web

May 4, 2015

Documentaries, videos and podcasts

Title
Date
Link

1994 Berkshire Hathaway Annual Meeting Warren Buffett Charlie Munger Bill Ackman FULL Q&A

January 20, 2018

A Conversation with Charlie Munger

March 22, 2011

A Conversation with Charlie Munger and Michigan Ross - 2017

December 20, 2017

Berkshire Hathaway VP Charlie Munger on investing

February 15, 2019

Charles T. Munger: Poor Charlie's Almanack Part 1 Book Summary

November 12, 2018

Charles T. Munger: Poor Charlie's Almanack Part 2 Book Summary

November 15, 2018

Charles T. Munger: Poor Charlie's Almanack Part 3 Book Summary

November 21, 2018

Charlie munger - Caltech 2008 DuBridge Distinguished Lecture in Beckman Auditorium

December 7, 2014

Charlie Munger Commencement Address - USC

March 2, 2017

Charlie Munger Interview, China, 2018

October 6, 2018

Charlie Munger on Common sense and Investing

September 8, 2016

Charlie Munger's advice on investing and life choices that make a person wealthy

May 9, 2019

LIVE: Charlie Munger Speaks at Daily Journal Annual Meeting -- Feb. 14, 2019

February 14, 2019

The Psychology of Human Misjudgement - Charlie Munger Full Speech

January 13, 2013

TIMESAVER EDIT - FULL Q&A Warren Buffett Charlie Munger 2004 Berkshire Hathaway Annual Meeting

July 27, 2017

TIMESAVER EDIT FULL Q&A Warren Buffett Charlie Munger 2018 Berkshire Hathaway Annual Meeting

May 13, 2018

Warren Buffett and Charlie Munger chair the 2019 Berkshire Hathaway Shareholders Meeting (FULL)

May 4, 2019

Watch CNBC's full interview with Warren Buffett, Charlie Munger and Bill Gates

May 6, 2019

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