Biography of Charlie Munger: My sword passed to those who can wield it

On Tuesday (November 28), Berkshire Hathaway issued a statement through its subsidiary's US Business Information website announcing that Vice Chairman of the Board Charlie Munger (Charlie Munger) passed away that morning at a California hospital at the age of 99, just over a month until his 100th birthday.

In addition to playing an important role in Berkshire Hathaway as Buffett's deputy, Munger also serves as a director of the Daily Journal Company and Market Opener. As of November 28, Munger's net worth reached $2.6 billion, according to Forbes data.

Buffett said in a statement that without Munger's wisdom, inspiration, and participation, Berkshire Hathaway would not have achieved what it is today. On the eve of his 100th birthday, at the age of 99, Mr. Munger is known for his outstanding wisdom. The best way to remember him is to practice his wise teachings.

Charlie Munger (Charlie Munger), vice chairman of Berkshire Hathaway and long-time partner of Warren Buffett, is an outstanding investor and influential thinker. He was born on January 1, 1919 and raised in Omaha, Michigan.

Munger began her career in the field of law. He graduated from Harvard Law School and founded his own law firm in Los Angeles. However, his interest in investing gradually transcended the law, which eventually led him to the financial world. While managing his own investment partnership, Munger developed a unique investment philosophy, emphasizing long-term value investments and an emphasis on the intrinsic value of the company.

Munger's collaboration with Warren Buffett began in 1959. Their partnership is based on a shared investment philosophy and similar values. Under Munger's influence, Buffett transformed Berkshire Hathaway from a textile mill into a diversified investment holding company. Munger played a key role in Berkshire Hathaway's successful transformation, introducing multiple businesses including insurance and other financial services.

Munger is known for her deep insight and unique sense of humour. His speeches and writing, including “Poor Charlie's Almanack” (“Poor Charlie's Almanack”), provided investors and business people with a wealth of wisdom. He often uses mottos and life philosophies to explain investment principles, such as “Never forget: you should always do the right thing whenever possible, which will surprise many people”.

Munger is also known for his diverse knowledge. His thinking was not limited to economics and finance, but also covered fields such as psychology, history, and engineering. This interdisciplinary way of thinking had a profound impact on his investment decisions.

In addition to his work at Berkshire Hathaway, Munger is a director at several other companies, including Costco Wholesale Corporation and Daily Journal Corporation.

There are also many interesting anecdotes from Munger's life. For example, he won a position in the office of US Supreme Court Judge Willis van der Vent because of his outstanding performance at Harvard Law School, but he chose to give up this opportunity to focus on his legal practice and investment career.

Munger made three investment suggestions: First, don't waste time and effort buying cheap but poor quality companies, but invest in good companies at reasonable prices. Second, for companies with strong growth, it's worth buying even if the stock price is slightly higher. Third, investing in stocks is not only about focusing on the opportunities, products, and business models of the company's industry; more importantly, it depends on whether the company's management team has vision and good management ability. If so, even if the stock price is two to three times higher, it is reasonable.

Munger believes that real value investing should begin at age 40. Until then, people often didn't have enough knowledge, experience, and wealth to invest in value. Even if you understand the principles of value investing at age 40, as long as you stick to the investment, even if the initial investment amount is only 100,000, the goal is to increase tenfold within 10 years. By age 70, your assets can grow to 100 million yuan and enjoy a prosperous old age.

In traditional societies, Munger's example proved that it is possible to make money the right way and become rich. Successful investment depends not only on patience and a desire to learn, but also on cultivating a mindset that can learn from a wide range of channels, not just from one's own experience.

Munger's investment style is called “concentrated investment,” that is, investing boldly when good investment opportunities arise, because such opportunities are rare. While most investors don't use this approach, Munger insists it would be wise to focus money on a few projects. His style has kept him in the minority in the investment community.

In the face of a sharp pullback in investment, losses are an inevitable part. The key is to make sure you're not forced to sell. If history shows that the stock price may drop by more than 50%, this is likely to happen in the future, so be prepared for such a scenario.

This opinion stems from chapter 14 of the book “Big Investors: The Best Investors and Their Worst Investments”, which describes how the market and companies will experience significant declines even if they are bullish for a long time, similar to the current market environment.

Remaining calm in the face of market losses is not easy for investors. Munger's experience provided us with a valuable lesson: being patient, disciplined, and able to maintain sanity even in the face of loss and adversity.

Learning how to handle losses requires patience, discipline, and the ability to keep a clear mind in the face of adversity.

Netflix, Amazon, and Google have been among the most successful companies of the past decade. Their products have profoundly changed the way we live, and shareholders can reap huge returns on their investments if they can hold their shares for a long time.

However, one of the rules of investing is that high returns always come with high risk. Since it went public in 1997, Amazon's stock price has risen as much as 38,600%, but turning the initial investment of $1,000 into $387,000 was no easy feat. In the past 20 years, Amazon's stock price has fallen by more than 50% three times, and even reached 95% for the first time.

It's not easy to hold stocks that are long-term winners. Even if you know “Amazon will change the world,” investing won't be any easier.

Netflix's yield has been 38% since it went public in 2002, but its stock price fell by more than 50% four times, and by more than 82% once. Since its launch in 2004, Google's annual yield has been 25%, and its stock price has dropped by more than 50% at one time, and the turnover reached 845 billion US dollars in 264 days.

Although Munger has never been interested in investing in Amazon, Netflix, or Google, the companies he has invested in have also experienced a huge retreat. His quotes and wise opinions are known as “Munger Doctrine.”

Munger thinks in a different way of thinking. At the 2002 Berkshire Hathaway Shareholders' Meeting, he mentioned that “people count too much and think too little.”

He pointed out that long-term investments are usually accompanied by large short-term losses. If short-term losses are unacceptable, it will be difficult to obtain long-term market returns. Munger stressed that if you cannot face large market fluctuations, you are not suitable for investment.

At the end of Munger's “Speech at the University of Southern California Graduation Ceremony”, he quoted the words in “Journey to Heaven”, “My sword is passed on to those who can wield it,” which means passing on wisdom and experience.

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