How Charlie Munger influenced Berkshire Hathaway’s operations
Charlie Munger is an iconic figure in the world of investing. He has influenced many traders and laid important foundations for the industry.
Munger was born in 1924 and, after leaving school, attended the University of Michigan, where he studied mathematics. However, World War II and the attack on Pearl Harbor in 1941 changed everything. The young man dropped out of school and volunteered at the front in the US Air Force. The command sent him to the University of California, where he studied to become a meteorologist.
After his service, Charlie enrolled at Harvard to study law. He successfully defended his degree in 1948 and began his career as a lawyer. During this time, he became increasingly attracted to investment activities. Over time, Munger established his law practice while developing an investment business.
Developing a new direction
One of the key events in Munger’s life was meeting Warren Buffett in 1959. The young men quickly found a common language, which was the beginning of a friendship and business relationship. After a while, Charlie became a partner in Warren Buffett’s company, Berkshire Hathaway.
In the 1960s, Munger immersed himself in the financial markets and achieved considerable success. By 1975, Charlie had retired from the practice of law to concentrate on investing. Working closely with Buffett, he became vice chairman of Berkshire Hathaway in 1978. Munger remained a key figure in the life of the company until he died in 2023.
Investing principles
Unlike the most innovative financiers of his day, Munger focused on quality rather than quantity. Charlie valued assets from a long-term perspective and acted with wisdom:
1. When analysing companies, he didn’t just look at price. He was also interested in the potential and the opportunity for greater returns over time.
2. As a result, Berkshire’s strategy was based on the prospects and growth opportunities of the business.
3. Munger’s ideas led the firm to invest in strong brands, including Coca-Cola and American Express.
4. The investors chose companies that would allow them to build capital over the long term.
5. The strategy also took into account the margin of safety of the business, estimated over decades.
This approach brought Munger not only market recognition but also wealth. His fortune was worth an estimated US$2 billion.
Charlie shared his ideas with his peers. He wrote books explaining his investment principles and revealing the strategies that made him successful. Munger regularly participated in professional events and lectures, sharing his experience with industry professionals. Charlie taught aspiring investors and ran his company until his death.
