The Financial Reader

Early Life of Charlie Munger

Charlie Munger is the vice chairman of the Berkshire Hathaway. He is a partner and a friend of Warren Buffet. He served as the chairman of the company Wesco Financial Corporation for 27 years, starting from 1984 to 2011. At that time, Berkshire Hathaway owned most of the shares of Wesco Financial Corporation. He serves as a Director of Costco Wholesale Corporation and daily journal corporation. Charlie was born in Omaha in the state of Nebraska. He had a challenging childhood. He worked in the grocery store named “Buffett & Son” as a teenager

The grandfather of Warren Buffet owned this store at that time. He studied mathematics at the University of Michigan. While studying there, he dropped out of college so that he can serve as Air Corps in the United States Army. There, he became Second Lieutenant there. In California, he continued his studies in the field of meteorology. While studying there, enrolled himself in various universities to learn various advance courses. When he completed his studies in the meteorology, he graduated from Harvard Law School. He studied law at Harvard Law School. He had also served as a member of the Harvard Legal Aid Bureau when he was at Harvard.

Success Story

Charlie Munger’s success story began when he met with Warren Buffet. Although, both had worked in the grocery store “Buffett & Son” before but they never met there. Charlie Munger had his firm when he met with Warren Buffet. In that firm, Charlie was doing investment finance. As per Warren Buffet, he was earning an annual return of 19.8% which he compared to the 5% return of the DOW of that time. At a short period, they have gained outcomes which they have never expected before. As per share basis, he made Berkshire Hathaway most high-priced stock in the history. This happened due to his wise strategies and investment decisions. In this way, Berkshire Hathaway is still considered to be the most high-priced stock ever.

The class A shares of Berkshire Hathaway valued at $214,745 per share as of July 2015. Charlie Munger has helped the company Berkshire Hathaway Warren Buffet to grow the business. Charlie Munger made Berkshire Hathaway one of the most valuable enterprises in the world. Since he always adopts unique strategies, this is the main reason behind his success. In his personal life also, he has adopted a unique approach to his life. He has an unconventional approach to life as he was college dropout with a law degree. He used all his credentials fame and money as an investor and to become a renowned investor.

Hardships and Challenges

From early childhood, he faced many challenges and hardships. He gets divorced and buried his young son at the age of 31 years. His son died at the age of 9 years due to cancer and Charlie Munger was in 31 years of his age. When he was above 35 years, he married again, and he has eight wonderful children from that marriage. Now, he has countless grandchildren. It was his dream to have a large and wealthy family. Despite having to face these hardships, he became one of the richest 400 people in the world. When he became one of the richest 400 people in the world, he was at the age of 69 years. Now people see him as one of the most respected business thinkers and investor in the history. His dreams were to have a huge family, a house full of books and having a lot of money.

His main success is that despite having many hardships, he achieved all his dreams. In achieving his dreams, he faced unbelievable tragedies and challenges. Charlie Munger had married when he was 21 years old, and at the age of 29, he got divorced. When he got divorced, he lost everything and his family home in the South Pasadena granted to her wife. After these incidents, he moved into dreadful conditions. He also drove a yellow Pontiac which was horrible for him. As per Janet Lowe’s biography, Molly Munger asked “Daddy, this car is just awful. Why do you drive it?” Charlie Munger replied: “To discourage the gold diggers.” When he got a divorce from her wife, he got to know that his son, Teddy was suffering from leukemia. After knowing this, he got shocked and upset at that time. He was in shock when he got divorced, but this was another shock for him which he had to bear.

At that time, there was not a concept of health insurance, and every one was paying on their own. People used to pay everything out of their pockets, and there was higher death rate ratio. Rick Guerin said when he learned about his son, he was crying on the Pasadena streets. He is a good friend of Charlie Munger. He was walking and crying on the streets. In 1955, his son died after the diagnosis. These challenges and hardships continued in his life. But he fought with every challenge and hardship until he achieved all his goals. He also got blind in one eye due to a horrific operation which resulted in much pain. He felt severe pain, and it was so terrible that he needed to remove his eye.

Net Worth & Current Influence in the Society

In 2016, Forbes Magazine indicated the net worth of Charlie Munger and it found to be $1.28 billion. If he did not involve in philanthropic work, it could be much higher than this. Apart from his wealth and philanthropic work, he has a huge positive influence on society, and it is not easy to ignore. Most of the new learning investors see Charlie Munger as the biggest source of inspiration and motivation. While taking the pledge of billionaires such as Warren Buffet and Bill Gates, he has also committed to philanthropic work. He has also committed that he will give away half of his net worth before his death.

This commitment has raised his name even much higher as a society this has also resulted into a positive influence in society. He is perusing various philanthropic ventures, and this has raised his name in the philanthropic world. In 2014, for supporting Kavli Institute of Theoretical Physics, he donated Class A shares worth a total of $65 million. He donated these class A shares to UC Santa Barbara for the support of education. With his success, he seeks to make the world a better place and he are perusing philanthropic work as his main venture.

Endorsements

Bill Gates, Microsoft

“He is the broadest thinker I have ever encountered.” Bill Gross, PIMCO

“When the East and the West coasts fall into the sea, either through storm, earthquake, or a deterioration of values, there will still be Munger’s Omaha. Charlie’s ethical standards should beam by satellite to all global financial centers to prevent future Enrons and WorldComs.” Rick Guerin, Pacific Partners

“On two occasions, I saw Charlie pay more than he needed to in business transactions. First, with two little old ladies who held notes in business we were buying, which we could have redeemed at far less than face value – Charlie paid them face value. Second, to raise some cash I needed for another investment, I offered to sell him my half of a venture we were in together, and he said to set a fair price – I said $130,00; he said, no, $230,000 was correct, and he paid me that.”

Most Influential Quotes

“I’m not entitled to have an opinion unless I can state the arguments against my position better than the people who are in opposition. I think that I am qualified to speak only when I’ve reached that state.”

“It never ceases to amaze me to see how much territory can grasp if one master and uses all the obvious and learned principles.”

“Philanthropy should not come at the expense of your lifestyle.”

He has also proposed three rules for the career.

Work only with people you enjoy.
Don’t work for anyone you don’t respect and admire.
Don’t sell anything you wouldn’t buy yourself.

Charlie’s Investing Philosophy.

Charlie is a big advocate of Value Investing. He has a unique philosophy of investment which results in huge profits. The successes of Charlie Munger can see by the company performance of Berkshire Hathaway. The time since he joined Berkshire Hathaway, it reached a new level of success. His style is to wide and deep knowledge in many fields and generate new ideas. After generating ideas this wide and deep knowledge in many fields will also help in decision making. According to share premise, he made Berkshire Hathaway most evaluated stock in the history. This happened because of his astute techniques and speculation choices. Along these lines, Berkshire Hathaway is still thought to be the highest estimated stock ever.

He religiously believe that investing is pure common sense, in one of his lecture he detailed how it perfectly makes sense to value good businesses. It is Charlie Munger who have made Berkshire Hathaway a standout among the most profitable organizations on the planet. Since he receives novel methodologies, this is the primary purpose for his prosperity. In his life Additionally, he has embraced one of a kind way to deal with his life. He has an offbeat way to deal with life as he was school dropout with a law degree. In spite of having these certifications, he has profited as a speculator in the foundation. He has likewise dedicated that he will give away 50% of his total assets before his demise. This dedication has raised his name even much higher as a society this has additionally come about into positive impact in the public arena. He is scrutinizing different magnanimous endeavors, and this has brought his name up in the charitable world. Charlie Munger is likewise famous as Warren Buffett’s right hand and accomplice. He is a business tycoon on one side and opposite side he is a fruitful donor, speculator, and a legal advisor.

Dealing With Hardships of Life.

As indicated by Charlie Munger, the difficulties and hardships which he confronted in life created him. His fantasies were to have affluent life, a home with gigantic family and loaded with books. He couldn’t finish his fantasy from his first marriage as he got separated early and he covered his young child. Rather than these hardships, he never surrendered, rather he headed up and proceeded with his life. Munger, playing poker in the Army showed him when you have hardships in life how to conquer them with achievement. His prosperity elements are information, cheapness, morals, diligent work and respectability. As indicated by Charlie Munger, a plan of action that depends on fraud is bound to come up short.

According to Charlie Munger, the challenges and hardships which he faced in life developed him. His dreams were to have wealthy life, a home with huge family and full of books. He could not complete his dream from his first marriage as he got divorced early and he buried his young son. Instead of these hardships, he never gave up, rather he headed up and continued his life. Munger, playing poker in the Army taught him when you have hardships in life how to overcome them with success. His success factors are intellectual knowledge, frugality, ethics, hard work and integrity. According to Charlie Munger, a business model that relies on trickery doomed to fail. When Charlie Munger became a millionaire, he still reinvested his all money in the market.