2023-12-03 04:00:00
The death of Charlie Munger, vice chairman of Berkshire since 1978, marks the end of an era in business and investing. Since becoming vice chairman of Berkshire (BRKb.N), Charlie Munger has worked closely with Warren Buffett on Berkshire’s capital allocation. A look back at the life of the man who never minced his words when he felt his business partner was making a mistake.
Remarkable performance
According to Bespoke Investment Group, in 31 of Munger’s 46 years at the company, Berkshire Hathaway outperformed the S&P 500. More importantly, in the 15 years Berkshire underperformed the S&P 500 index, the average underperformance was 13.2 percentage points.
In contrast, during the 31 years that Berkshire outperformed the S&P 500, the average outperformance was 20.9 percentage pointsunderlines Paul Hickey, co-founder of Bespoke Investment Group, in a note.
“The first $100,000 is the hardest,
But no matter how, you have to find a way to earn that first $100,000,
After that, you can relax a little”
Charlie Munger,
2.6 billion dollars,
Vice President of Berkshire Hathaway,
Died at 99 pic.twitter.com/DOm0ypqpeb— Dividend King ???? (@Divs_King) November 29, 2023
“So not only did Berkshire outperform the S&P 500 more than twice as often as it underperformed it, but when it did, the difference was much greater than when it was below it.“, says Mr. Hickey. “While $100 invested in the S&P 500 in 1978 would be worth $16,527 on Wednesday, that same $100 invested in Berkshire Hathaway would now be worth nearly $400,000“, he adds.
An exemplary journey with a major contribution
Charlie Munger was from Omaha, as was Warren Buffett, where he worked in Buffett’s grandfather’s grocery store when he was young. He met Warren Buffett in 1959, but did not join Berkshire Hathaway until 1978 following running his own investment firm for more than a decade. Before that, Charlie Munger, trained in law and holding a degree in meteorology, cut his teeth in several sectors of activity.
As vice president, Charlie Munger helped transform Berkshire Hathaway from a textile SME, acquired in the mid-1960s, into a gigantic conglomerate valued today at more than $782 billion.
“Charlie Munger changed the way I saw things; he has refined it considerably when it comes to finding quality companies and making an investment that can last 5, 10 or 20 years“, Warren Buffett said in a recorded interview in 2017.
The succession widely anticipated and prepared
The disappearance of Charlie Munger, who played a major role in the diversification of the conglomerate, will not destabilize the group. Firstly because Warren Buffett is still there, but also because the two stock market experts have been preparing their succession for several years.
Charlie Munger’s contribution to the growth and success of Berkshire Hathaway has been invaluable. His partnership with Warren Buffett will undoubtedly go down as one of the greatest collaborations in the history of business and investing.
Berkshire Hathaway’s exceptional performance, marked by consistent outperformance versus the S&P 500, is a testament to Charlie Munger’s influence and intelligence in investing and business strategy.
Charlie Munger’s passing does indeed mark the end of an era in business and investing, but his legacy will continue to influence and inspire future generations of investors and entrepreneurs
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