by Zain Jaffer
Recently, a giant in the investing world passed away. Charlie Munger, who formed part of the highly successful Berkshire Hathaway duo with Warren Buffet, died in late November 2023. At the time of his death, Forbes estimated that his holdings were worth almost $2.2bn.
I do not agree with all of Munger’s (and Buffett’s) views, particularly on digital assets. Their views reflect an earlier era characterized by traditional manufacturing and services, although in recent years Berkshire Hathaway has invested heavily in tech bellwethers like Apple and Amazon, as well as some smaller tech companies in sectors like biotech and the like. Much of their portfolio are in companies that actually have excellent cash flow rather than speculative tech plays.
However, both Buffett and Munger have excellent values that have served them well as investors and stewards of their Berkshire Hathaway fund. The fact that Munger lived in Pasadena, California in later years and shuttled to Omaha, Nebraska for investor meetings instead of New York, Boston, Los Angeles, or San Francisco is a reflection of the traditional way that they view the world. They are not new kids on the block that are suddenly impressed by today’s “shiny new toy” tech startups.
Instead, like any good value investors, they do their due diligence and check if a company actually makes or produces something that the world really wants, and is willing to buy.
In reality, technology is like a toy store for adults. There are many shiny new things out there all the time, and sometimes the hype causes even experienced funds to skip the due diligence needed to evaluate an investment properly. The fact that Sam Bankman Fried at FTX/Alameda managed to fool many of the world’s best venture capitalists like Sequoia Capital and Softbank and not Berkshire Hathaway speaks volumes. They also declined to bail out Lehman Brothers in 2008 but helped other companies at that time bolster their balance sheets.
Not that they didn’t make mistakes. Munger has said in the past that two of his investing mistakes were with Belridge Oil and China’s Alibaba, but he always owned up to his mistakes, saying these were opportunities for learning.
Munger had humble beginnings, working in his teen years as a grocer for Warren Buffett’s grandfather’s grocery store. He dropped out of a math program at the University of Michigan to join the Army Air Corps as a second lieutenant in World War II as a meteorologist, and took many courses on the Army’s dime. After the war, he was briefly declined at Harvard Law School, but got in at the intercession of a former Dean. He eventually graduated Magna Cum Laude in 1948 three years after WWII ended. Both Buffett and Munger are known for their down to earth lifestyles and attitudes towards life, stressing basic ethical and business values.
In this age of AI and crypto, with the promise of technology laid out temptingly before us, it is still useful to view business proposals through the lens of both Buffett and Munger, perhaps tweaked slightly for the realities of the younger generation, but not so much that business proposals are so out of whack with reality and basic decency.
###