Today, we mourn the loss of Charlie Munger, an icon in the investing world, who passed away at the age of 99. His death marks not only the loss of a great mind but also the end of an era in finance and investment.
Munger's partnership with Warren Buffet at Berkshire Hathaway has been nothing short of historic. Their annual AGMs in Omaha, Nebraska, have become almost a pilgrimage for those eager to glean wisdom from these titans of industry. Their last AGM together in 2023 was a showcase of their sharp insights, covering everything from investment strategies to the evolving global landscape and the fundamentals of personal success. Explore the 2023 Berkshire Hathaway AGM summary below to witness how Charlie Munger's words exemplify his deep understanding and simplicity.
Charlie Munger , once again, was not lacking in his iconic wisdom at this year's conference. He touched on the importance of renewable energy, "Even if we weren't worried about global warming, it would make sense to shift to renewables to conserve our hydrocarbons. There are certain things hydrocarbons can do that nothing else can do. There's only so much of them there, so why not be cautious in conserving them."
Munger spoke about the evolving nature of family values, "I'm quite philosophical about my grandchildren not thinking exactly the way I do. It seems to me that's almost the natural course of life. I just live my life my own way and they can absorb it if they want to. I don't like it when they try some other way, but that's life."
He offered a poignant perspective on the road to happiness, "I think the best road ahead to human happiness is to expect less."
Munger warned against the toxicity of envy, "I am deeply distrustful of situations in which everybody wants to get rich and envies everybody else. I regard that atmosphere as utterly toxic."
He gave a sobering piece of advice to value investors, "My advice to value investors is to get used to making less."
He reflected on the wealth management industry, "We have a situation where we learned to print money in gobs and let a big chunk of our young people go right into wealth management. Yes, we've been bad examples."
He admitted, "I didn't realize wealth management was going to get so big when I went into it. And I want to apologize for what's happened."
Munger concluded his remarks with a dubious view of artificial intelligence, "I am personally sceptical of some of the hype that's gone into AI. I think old-fashioned intelligence works pretty well."
Warren Buffet shared his observations with a reflection on his investment strategy. "Do you ever make bad investment decisions because of your emotions?" he asked, before confirming, "I can't recall any time in the history of Berkshire that we made an emotional decision."
He drew a parallel between the invention of the atom bomb and the development of AI, "We did invent, for very good reason, the atom bomb in WWII, and it was enormously important that we did so. But is it good for the next 200 years of the world that the ability to do so has been unleashed? AI can change everything in the world except how men think and behave."
Buffet voiced his concern about the future of urban centres, "I do think that the hollowing out of the downtowns in the US and elsewhere in the world is going to be quite significant and quite unpleasant. Real estate is difficult. I like what we do better."
He then pivoted to discuss investment opportunities, "New things coming along don't take away the opportunities. What gives you opportunities is other people doing dumb things. I would say there's been a great increase in the number of people doing dumb things."
Warren Buffet criticized the short-term focus of the world, "The world is overwhelmingly short-term focused. If you go to an investor relations call, they're all trying to figure out how to show earnings that result in expectations that will slightly be beaten. That's a world made-to-order for anybody thinking over 5/10/20 years."
He then reflected on the opportunities that lie ahead for younger generations, "I would love to be born today and go out with not too much money, and hopefully turn it into a lot of money. If you're running small amounts of money, I think the opportunities will be greater."
"If you want to figure out how to live your life, write your obituary and reverse engineer it," Buffet shared, offering a unique perspective on life planning.
He then moved on to discuss the issue of climate change, "We haven't created the unity of purpose as a country to tackle climate change. It might take an emergency before we can really make progress on it."
Buffet also discussed management strategies, "There's a reason why our operations have by and large done better than other big conglomerate companies. One of them is that we change managers way less frequently than other people do. That's helped us."
Discussing investment strategies, he said, "We don't know the future but we do know certain kinds of businesses. We know what the right price is. We know what we think we can project out in terms of consumer behaviour and threats to a business."
Buffet critiqued modern investment education, "One of the inane things that's taught in modern university education is that a vast diversification is absolutely mandatory for investing in common stocks. That is an insane idea. It's not that easy to have a vast plethora of good opportunities that are easily identified."
He also commented on the state of global currency, "I see no option for any other currency to be the reserve currency. Nobody knows how far you can go with a paper currency before it gets out of control."
Buffet closed his part of the discussion with some important advice, "The mistakes to avoid are anything that will take you out of the game. Avoid debt with the exception of a mortgage for your house. If you're losing sleep at night over your investment portfolio, you're doing it wrong."
He offered a simple yet profound recipe for success, "It's so simple to spend less than you earn, and invest shrewdly, and avoid toxic people & toxic activities. Try to keep learning all your life. Do a lot of deferred gratification because you prefer life that way. Do all these things and you're almost certain to succeed."
And he underscored the importance of human understanding in business and life, "You need to know how people can manipulate other people, and you need to resist the temptation to do it yourself. Get the toxic people the heck out of your life, and do it fast."
Buffet ended with a light-hearted note, "We've had as much fun on deals that didn't work, in a certain sense, as the ones that did work. Part of the fun of the game is that you hit the ball into the woods sometimes."
As the Omaha weekend drew to a close, the attendees departed, enriched one final time by the invaluable insights of Charlie Munger, a titan of the investing world. His words, a blend of patience, long-term vision, and an astute understanding of human nature, highlighted the essence of his legendary approach to investing. If you're seeking more of Munger's timeless wisdom, I highly recommend delving into 'Poor Charlie's Almanack .’ As we bid farewell to an investing icon, we reflect on the profound impact he had on the financial world.
Rest in peace, Charlie Munger.
