Charlie Munger, who recently passed away at the age of 99, is widely recognized as a vital figure in shaping Warren Buffett’s investment approach.
Munger, as Berkshire Hathaway’s vice chairman, played a crucial role in steering Buffett away from investing in failing companies and towards buying strong-brand quality businesses. He emphasized the importance of purchasing a wonderful business at a fair price, rather than settling for a fair business at a wonderful price.
In a letter commemorating Berkshire’s 50-year anniversary, Buffett credited Munger with breaking his old investment habits and designing the blueprint for Berkshire as it stands today.
Munger’s impact on Buffett’s investment philosophy was profound. He urged Buffett to focus on building a portfolio of high-quality businesses, rather than seeking out troubled companies at deep discounts. As a result, Buffett shifted his approach and began acquiring businesses like See’s Candies, which subsequently generated billions in sales for Berkshire.
Overall, Munger’s influence on Buffett led to the creation of an empire of first-class businesses in industries such as insurance, railroad, retail, energy, and manufacturing. His guidance shaped Buffett’s investment strategy and was instrumental in paving the way for Berkshire’s success.