Charlie Munger is a colorful guy. Most think of him as Warren Buffett’s sidekick who makes pithy comments during Berkshire Hathaway’s annual meeting. But Munger brings so much more to the table. His thoughts are a primary driver for Buffett’s success.
Buffett used to buy “cigar butt” stocks meaning that there was few puffs left in the stock that could result in a nice gain. Butts were readily available for cheap prices in the “bargain bin”. Munger convinced Buffett to instead focus on quality companies that were reasonably cheap, but not sold at fire sale prices. The transition to owning quality companies took Buffett a significant part of his career to embrace. The transition has been instrumental to Buffett’s success. And, Charlie Munger was the driver of that transition.
The attachment is a speech that Munger made in 2008 which discusses a lot of important points in Munger’s framework for investment. While it is a long 18 pages, the information is both critical to understand while also being very simple. I found it very logical and clear. I would recommend reading it to any serious investor. Sure it’s an investment of time, but the ability to learn vicariously vastly overshadows the time spent reading it.
Vicarious learning is essential in many disciplines, like investing. If each investor had to learn about investments exclusively through their own experiences, they would be dead before they gathered the necessary information to be even mildly successful. So take advantage of those who have brought enlightenment on the path to success by understanding their thoughts and experiences.
"If I have seen further it is by standing on the shoulders of Giants."
- Isaac Newton 1675
Be smart, be well-read and be successful.
