The Digest #177

Remembering Charlie Munger

Dear Readers,

I was in the process of finalizing a new installment of The Digest when I glanced at my email and saw Alex Crippen’s Warren Buffett Watch newsletter announce the death of Charlie Munger. We shouldn’t be shocked when a very elderly person suddenly passes away, but I was shocked, nonetheless. The articles and links I had prepared suddenly seemed irrelevant so I decided to publish a brief tribute to Mr. Munger instead.

Today, I have compiled a selection of articles and podcasts about Charlie Munger that celebrate his life and career. This list is by no means all-inclusive, and I’m sure there are many other worthwhile articles that have been published over the past day and there will be many more in the days to come.

This issue is entirely dedicated to Charlie Munger. I will send out a separate issue of The Digest tomorrow with the material I prepared earlier this week.

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Articles

Charlie Munger (1924 - 2023), November 28, 2023. (The Rational Walk)

Damn Right! — Behind the Scenes with Berkshire Hathaway Billionaire Charlie Munger, January 1, 2023. A book review of Charlie Munger’s biography by Janet Lowe which I re-read prior to his 99th birthday. (The Rational Walk)

Munger’s Psychology of Human Misjudgment, December 2016. (The Rational Walk)

Charlie Munger, Warren Buffett’s Partner and ‘Abominable No-Man,’ Dies at 99 by Jason Zweig and Justin Baer, November 28, 2023. “Munger was a brilliant investor in his own right. He began managing investment partnerships in 1962. From then through 1969, the S&P 500 gained an average of 5.6% annually. Buffett’s partnerships returned an average of 24.3% annually. Munger’s did even better, averaging annualized gains of 24.4%.” (WSJ)

On Charlie Munger by Jason Zweig. This is a great collection of articles about Charlie Munger written by a journalist who knew him very well. “Charlie Munger, the blunt and brilliant vice chairman of Berkshire Hathaway Inc., isn’t big on small talk. My first encounter with him was in 2004 at the Sunday brunch Warren Buffett used to hold at Berkshire’s annual meeting. I was getting something at a buffet table, and Mr. Munger walked up and began ladling food onto his plate. I introduced myself and held out my hand: ‘I’m the guy who just revised the Graham book.’ He looked at me for a split second through his thick eyeglasses, said ‘You did a good job,’ then walked away.” (JasonZweig.com)

Rest in Peace, Charlie Munger by

Joe Koster

, November 28, 2023. “Charlie changed my life. When I started studying him and his multidisciplinary approach to life and learning, a spark went off inside me that changed how I did everything. While I’ll miss him—and his continuing wit and wisdom—I’m so thankful that we all had so long with Charlie to guide and teach us.” (Value Investing World)

Charlie Munger: Full Transcript of Daily Journal’s 2023 Annual Meeting by Richard Lewis, November 28, 2023. “In 2016 I made a personal commitment to transcribe every Daily Journal Annual Meeting so long as Charlie was graciously hosting them. It’s been a privilege to attend each meeting and spend the time deep into the talks transcribing each sentence. Charlie will be dearly missed.” (Latticework Investing)

• Full Video of Daily Journal’s 2023 Annual Meeting (CNBC)

Wit and Wisdom From The World’s Most Irreverent Billionaire by Shane Parrish. Adopting the “Munger” approach to thinking is difficult, as is imitating any genius, but utilizing its core tenets will quickly remove the cobwebs from your mind. When asked his secret to success, Munger once answered “I’m rational.” (Farnam Street)

Reflecting On Charlie Munger by

Adam Mead

, November 29, 2023. The author of The Complete Financial History of Berkshire Hathaway reflects on what he learned from Charlie Munger. (Watchlist Investing)

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Buffett and Munger’s Special Letters to Shareholders

Berkshire – Past, Present and Future by Warren Buffett, February 27, 2015. “Altering my behavior is not an easy task (ask my family). I had enjoyed reasonable success without Charlie’s input, so why should I listen to a lawyer who had never spent a day in business school (when – ahem – I had attended three). But Charlie never tired of repeating his maxims about business and investing to me, and his logic was irrefutable. Consequently, Berkshire has been built to Charlie’s blueprint. My role has been that of general contractor, with the CEOs of Berkshire’s subsidiaries doing the real work as sub-contractors.” (Berkshire Hathaway)

Vice Chairman’s Thoughts — Past and Future by Charlie Munger, February 27, 2015. Charlie Munger wrote a special letter to Berkshire Hathaway shareholders on the occasion of the fiftieth anniversary of Warren Buffett taking control of the company. “I believe that versions of the Berkshire system should be tried more often elsewhere and that the worst attributes of bureaucracy should much more often be treated like the cancers they so much resemble.” (Berkshire Hathaway)

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Podcasts and Videos

Becky Quick Discusses Charlie Munger’s Final Interview, November 28, 2023. 9 minutes. I believe that Becky Quick is one of the few financial journalists who Charlie Munger respected, and so it was not surprising to learn that he sat down with her for an interview a few weeks ago. Becky Quick discussed the interview at some length after learning about Mr. Munger’s death and released a few excerpts. (CNBC)

• Partial transcript of Becky Quick’s Interview of Charlie Munger (CNBC)

• Charlie Munger: A Life of Wit and Wisdom will premiere on CNBC tomorrow night at 8:00 PM. This will include Becky Quick’s full interview of Charlie Munger which took place on November 14.

Charlie Munger, October 30, 2023. 1 hour, 6 minutes. Transcript. “Over dinner at his Los Angeles home, Charlie reflected with us on his own career and his nearly 50-year partnership at Berkshire Hathaway with Warren Buffett. He offered lessons and advice for investors today, and of course he shared his speech on the virtues of Costco once again (among other favorite investments).” (Acquired)

I had dinner with Charlie Munger, March 20, 2023. 1 hour, 20 minutes. Transcript. David Senra had the opportunity to meet Charlie Munger for dinner earlier this year. In this podcast, he describes the dinner as well as what he learned about Mr. Munger from a recent book. (Founders)

• Notes from my dinner with Charlie Munger, November 29, 2023. 31 minutes. After learning about Charlie Munger’s death, David Senra reflects on their meeting in March and releases recorded notes he took after the dinner.

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Costco Wholesale and Daily Journal

Aside from Berkshire Hathaway, no two companies come closer to Charlie Munger’s ideal of the proper way to run a public corporation than Costco and Daily Journal. I’ve followed both companies over the years due to Mr. Munger’s involvement as a board member at Costco and Chairman at Daily Journal. I have permanently removed the paywalls on the profiles I wrote for each company.

Costco Wholesale Corporation

Daily Journal Corporation

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Blue Chip Stamps Annual Letters

I’ll conclude by briefly commenting on Charlie Munger’s letters to Blue Chip Stamps shareholders from 1977 to 1982, the last year before Blue Chip merged with Berkshire Hathaway. Charlie Munger was Chairman of Blue Chip which was the vehicle used to acquire See’s Candies and Buffalo News. The letters provide great insight into these businesses during critical early years. While See’s was a success from the beginning, Buffalo News was a troubled acquisition before it finally turned the corner.

When I wrote a review of a book about Buffalo News several years ago, I quoted at length from one of Mr. Munger’s letters. I think that this excerpt shows what kind of a manager Mr. Munger was but, more importantly, was a testament to his character:

“Finally, our shareholders should recognize that if our 1977 purchase of the News has now worked out acceptably from their viewpoint, which contrary to our prediction last year may now be true even after taking into account time delays, the conclusion does not follow that we made a sound managerial decision buying the News when we did for the price we paid. In retrospect, we were strongly influenced because we liked the newspaper, its people and the city, and we may simply have gambled shareholders’ money against the odds and won. Our stewardship may have been, at best, dubious in this instance. We know that the financial outcome we now report could with slightly different breaks just as well have been either (1) a large loss on closure of the News or (2) the expectation of much more money-losing in continued operation, as part of the only defensive strategy with reasonable prospects.”

— Charlie Munger’s 1982 Letter to Blue Chip Stamps Shareholders

I think it is fair to say that this level of candor is extremely rare in corporate America, then and now. For the past two decades, Charlie Munger has been a business celebrity and everyone paid attention to his words and conduct. The same was not true in 1982 when he was a relatively obscure individual and few were watching. It did not matter. Charlie Munger operated from a position of integrity and it made no difference how many people were watching. A man with an inner scorecard never cares about how many people are watching when deciding whether to do the right thing.

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