Charlie Munger, who passed away on 30th November, was one of the most influential business leaders and investors of the last 60 years. The businessman, and philanthropist along with his Partner Warren Buffet epitomised a no-nonsense rational approach to life and business. He is perhaps best known for being the Vice Chairman of Berkshire Hathaway, the multinational conglomerate. Munger’s contributions to investing, investing culture, and business have been substantial and have left a lasting impact on the financial world. Here are nine key aspects that have resonated with us.
- Value Investing Philosophy: A strong proponent of value investing, a strategy that involves picking stocks based on their intrinsic value rather than market trends. Their partnership and success in applying this philosophy have made Charlie and his business partner Warren Buffet legendary figures in the investment world. Value is what we get, and the price is what we pay, to quote Charlie’s partner Warren Buffett, we see again and again that price is secondary when there are good sound commercial reasons to transact.
- Emphasis on Quality Businesses: Munger emphasizes investing and in high-quality businesses, greatly influencing Warren Buffet to leave the ‘fag butts alone” (bargains), rather seeking a durable competitive advantage. He spoke often about the importance of investing in companies with strong economic moats, which can protect them from competition and ensure long-term success. We agree a good business, irrespective of its size, is always attractive irrespective of short-term market noise.
- Mental Models and Multidisciplinary Thinking: Driven by his wide reading and strong intellect, Munger was known for his emphasis on using mental models from various disciplines, such as psychology, economics, and physics, to make better investment decisions. He encouraged investors to adopt a multidisciplinary approach, drawing insights from different fields to gain a more comprehensive understanding of businesses and the world. It’s vital to keep a balanced perspective when doing deals and not get lost in the chase, a transaction is a means to an end, perhaps only one of several.
- Focus on Rational Decision-Making: Munger was a strong advocate for rational decision-making and avoiding cognitive biases. He emphasized the importance of being aware of psychological pitfalls that can lead to poor investment choices, such as overconfidence and groupthink. We also think that when emotions go up, intelligence goes down!
- Long-Term Perspective: Munger was known for his long-term perspective on investing. Believing in holding onto investments for extended periods, often years or decades, allowing businesses to grow and compound returns over time. It’s true that Rome wasn’t built in a day, it normally takes long time to build something truly great. Patience in both investing and life are critical.
- Candor and Plain Speaking: Munger was candid and straightforward in his communication style. His speeches and writings were often filled with wit and wisdom, making complex financial concepts more accessible to a broader audience. We love this idea at Oasis Partners which we have coined, “Simplexity” we hate jargon for its own sake.
- Influence on Berkshire Hathaway: As Vice Chairman of Berkshire Hathaway, Munger played a crucial role in the company’s success. His influence extended beyond investments to the overall management philosophy of the conglomerate. Charlies had strong opinions and even stronger values, and they helped shape the investment powerhouse which is Berkshire Hathaway.
- Education and Intellectual Curiosity: Munger was a strong advocate for continuous learning and intellectual curiosity. He used to speak about the importance of expanding one’s mental models and knowledge base throughout life. We love the idea of continuous life long-learning and developing our personal curiosity.
- Philanthropy: Munger was involved in significant philanthropic activities. Through the Giving Pledge, he and Warren Buffet have committed to donating the majority of their wealth to charitable causes. Once you have what you need, the idea of how much we ‘need’ is a blog all of its own, why not give the rest away!
Charlie Munger’s contributions to investing culture and business over his lifetime have been profound, shaping the way many investors approach the market and make decisions. His insights will no doubt continue to be influential, and his timeless wisdom will also continue to be cited by both seasoned and aspiring investors. RIP Charlie.