On November 28th local time, investment genius and Warren Buffett's golden partner Charlie Munger passed away at the age of 99.
"Without Charlie's inspiration, wisdom, and involvement, Berkshire could not have achieved its current position," said Warren Buffett, CEO and "stock god" of Berkshire, in a statement
Munger, known as the "walking encyclopedia", "behind the scenes think tank", "last secret weapon", and others, worked with Buffett to develop the philosophy of a long-term investment company. Their relationship can be traced back to 1959 and they are a pair of "divine combinations" in the investment world.
Buffett, who is regarded as a representative figure of Berkshire Hathaway, has always emphasized that the company is operated jointly by himself and Munger. Munger taught him Berkshire's key investment philosophy, which is to "buy excellent companies at a reasonable price," and described their relationship as "he is a designer, and I am the general contractor.".
For example, as early as 1972, Munger successfully convinced Buffett to agree to Berkshire's purchase of Sees Candies for $25 million, despite the candy manufacturer's annual pre tax revenue of only about $4 million at the time. Later on, Shisi Candy Company created a total sales revenue of over $2 billion for Berkshire.
In 2016, Buffett said, "Munger made me give up the idea of buying ordinary companies at very cheap prices, although doing so may bring some small profits; instead, I need to find some truly outstanding companies to buy them at a reasonable price."
According to statistics, Buffett frequently mentions Munger in his annual shareholder letters and expresses himself very intimately. As early as in his shareholder letter in 1982, Buffett wrote, "Charlie and I can replace each other when making business decisions. Distance is no obstacle to us: we always believe that making phone calls is more efficient than half a day of committee meetings."
In the shareholder letter of 1989, Buffett joked about their relationship like this: "Our Vice Chairman Charlie Munger has always emphasized the importance of studying mistakes over success in other aspects of business and life. His approach is to follow a spirit of 'I just want to know where I will die, so I will never go there.' You can quickly understand why we formed a great team: Charlie likes to study mistakes, and I have provided him with rich materials."
In his 1995 shareholder letter, Buffett mentioned Munger's significant impact on the company's operational strategy: "Here at Berkshire, we all adhere to Charlie's motto, 'Tell me only bad news, because good news will solve it on its own.' We also expect our manager to exhibit this behavior when reporting." In 2000, Buffett wrote, "Charlie is better at thinking about business economics and investment affairs than anyone I know, and over the years I have learned a lot by listening to his opinions."
Buffett also stated in his 2011 letter that he often tries to see the future ten or twenty years from now when making acquisitions, but Munger's foresight is stronger than his, and sometimes he does not agree with Buffett's views in acquisition discussions.
In a shareholder letter in 2014, Buffett also wrote about how the two handled their differences: "Charlie has a wide range of talents, amazing memory, and firm opinions, and I myself am not indecisive. We sometimes have different opinions. However, in 56 years of cooperation, we have never had an argument. When we have differences, Charlie usually ends the conversation like this: 'Warren, think carefully, you will agree with me because you are smart and I am right.'"
In his 2022 annual shareholder letter, Buffett once again spared no effort in praising his good partner: "Charlie and I think in similar ways. But what I need to explain on a whole page can be summarized in one sentence. Moreover, his version always has clearer reasoning and more clever - maybe someone will interject - expressions."