Fund Lessons From Charlie Munger
NEW YORK (TheStreet.com) -- Let's take a look at prominent financier Charlie Munger. He has gained a considerable amount of fame due to his association with the second-wealthiest man in the world. While a great investor on his own, he is considered by Warren Buffett to be a partner in Berkshire Hathaway (BRK.A) - Get Report, which has cemented his place among the greats of the financial world.
Prior to joining Buffett, Munger already had a number of accomplishments under his belt. During World War II, Munger served the U.S. military as a meteorologist in Alaska. Upon returning from the war, he applied to Harvard Law School, where he eventually graduated magna cum laude.
Munger's success at Harvard was exceptional considering that, prior to being admitted to the school, though he dabbled in mathematics, Munger lacked an undergraduate degree.
After graduating, Munger worked in California as a real estate attorney until 1965, when he decided to switch his focus over to managing investments. He and another individual formed an investment firm that stayed in business until 1976.
Munger, like Buffett, is a native of Omaha, Neb. In fact, they first met at an Omaha restaurant in 1959. Two years after Munger's investment company closed its doors, he jumped on board full time with Buffett, where he has remained ever since.
Looking at the personalities of the two men gives merit to the term, "opposites attract." While Buffett has gained publicity with his outspokenness and public appearances, Munger has remained in the background, more comfortable being in Buffett's shadow than in the limelight.
Munger and Buffett also differ in their political views. While Buffett maintains a more liberal stance on issues, Munger is a conservative.
While their many differences may cause the two men to butt heads on issues, they both agree that they also complement and enhance their ability to find winning companies. In fact, a number of Munger's more public picks have netted Berkshire and Buffett a comfortable profit. Others have actually shaped the company into what it is today.
While Munger is less concerned with the price of his investments, Buffett has made a name for himself seeking out companies that are cheap. Therefore, in 1972 when Munger suggested spending $25 million on See's candy, it took a little insisting to get Buffett on board. However, since making the purchase, the California chocolate company has become a staple of Berkshire Hathaway as well as a huge earner.
While Buffett prefers to invest in companies that produce simple, boring products such as
Coca-Cola
(KO) - Get Report
and
Burlington Northern
(BNI)
, Munger was an important player in Buffett's bold investment in
BYD
, the Chinese battery and car company that recently netted Berkshire Hathaway $1 billion in profit.
Today, BYD's battery-powered F3 DM sedan is not only a top-selling car in China, but an important stepping stone for the future of the automotive industry. With a 10% stake in the company, Buffett, Munger and Berkshire will likely see even more profit in the future.
Charlie Munger made a name for himself being the no-nonsense right hand to Warren Buffett. Living through every major economic boom and bust including World War II and the Great Depression has given him experience and expertise in the field of finance that is largely unmatched.
Today, aside from being vice chairman of Berkshire Hathaway, he is the chairman of
Wesco Financial
(WSC) - Get Report
. Though he remains characteristically quiet at the annual Berkshire Hathaway meetings, at Wesco's gatherings, Buffett's quiet and brilliant go-to guy can be seen taking the stage and giving investors the rare opportunity to pick his brain.
While Charlie Munger is often overshadowed by Buffett's overwhelming presence, his association with Berkshire Hathaway has been instrumental in the company's awe-inspiring rise to success.
-- Written by Don Dion in Williamstown, Mass.
At the time of publication, Dion had no positions in the stocks mentioned.
Don Dion is president and founder of
, a fee-based investment advisory firm to affluent individuals, families and nonprofit organizations, where he is responsible for setting investment policy, creating custom portfolios and overseeing the performance of client accounts. Founded in 1996 and based in Williamstown, Mass., Dion Money Management manages assets for clients in 49 states and 11 countries. Dion is a licensed attorney in Massachusetts and Maine and has more than 25 years' experience working in the financial markets, having founded and run two publicly traded companies before establishing Dion Money Management.
Dion also is publisher of the Fidelity Independent Adviser family of newsletters, which provides to a broad range of investors his commentary on the financial markets, with a specific emphasis on mutual funds and exchange-traded funds. With more than 100,000 subscribers in the U.S. and 29 other countries, Fidelity Independent Adviser publishes six monthly newsletters and three weekly newsletters. Its flagship publication, Fidelity Independent Adviser, has been published monthly for 11 years and reaches 40,000 subscribers.
