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In the vast landscape of finance and investment, where seriousness often has precedence, one man managed to sprinkle a generous dose of wit and wisdom into the mix, the unrestrainable Charlie Munger. While his partner, Warren, was perhaps the one that had a more mainstream following, Charlie seemed to have almost operated like the engine in the background and when he did end up saying something publicly it tended to be blunt and unflinching. This is what resulted in somewhat more fame then in earlier years as compared to his partner. His passing on the 28th of November rocked the investing world, in part because 99 is an unsatisfying number, but mostly because he was followed and idolised by many investment enthusiasts. Our hearts go out to his friends and family and it was at our morning meeting yesterday that the Arysteq team felt it necessary to honour his contributions with a moment of silence.
Charlie Munger, well-known as Warren Buffet’s indispensable right hand, achieved an investment career that will continue to echo across Wall Street. His ability to seemingly navigate market noise and make sense of the chaos helped lead Berkshire Hathaway to achieving a 19.8% compounded annual return over a period of 57 years. To put this into perspective, a $1,000 investment in Berkshire Hathaway in 1966, with no additional contribution after that, would equate to $29,650,951 as of December 2022. One soundbite that encapsulates Munger’s disciplined approach was his response to whether Berkshire Hathaway would ever invest in cryptocurrencies, “The whole development is disgusting” and “… traders that go into trading cryptocurrencies, it’s just disgusting. It’s like somebody else is trading turds and you decide, I can’t be left out”. Beyond his quips, Munger’s wisdom was often in the form of profound insights, he remarked, “The best thing a human can do is to help another human being know more” and “Those who keep learning, will keep rising in life.” These philosophical statements underpin his commitment to lifelong learning and the importance of sharing and gaining knowledge continuously.
Charlie Munger was lionized for his ideologies, such as mental frameworks, or as he called them ‘latticework of mental models’. A holistic approach that allowed him to solve complex problems with a more nuanced and effective perspective, ultimately leading to more consistent and sound decision making. This forensic approach provided the foundation for Berkshire’s master strokes in avoiding the dot-com bubble, not taking on excessive risk and living the principles of value investing.
An insightful 45 minutes discussing the success story that is Charlie Munger, the biggest take-aways are that knowledge is compounding so ensure that you maximize your input, patience is the key to successful investing, and knowing what you don’t know is more useful than being brilliant. “Everyone is trying to be smart, I’m just trying not to be stupid” – Charlie Munger. These were some of the interesting points that the team made in the morning meeting while we waved good bye to the investing genius and shared some of our favourite quotes. In fact Rachel Nendongo, a Research Analysts highlighted that he was in fact a polymath and had a diverse knowledge set.
While we mourn his passing, we are soothed by what he taught us and some of that is enshrined in the Arysteq Investment Philosophy. In the words of our Chief Investment Officer, Purvance Heuer, “They say diversification is the only free lunch, but I will venture one more that margin of safety is just as much a free lunch in the Arysteq investment process.”
