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Charlie Munger, the sharp-witted vice chairman of Berkshire Hathaway and investment partner of Warren Buffett, died in a California hospital on Tuesday morning at the age of 99, the US investment group said.
Munger, a trained lawyer whose name still appears at the helm of the Los Angeles law firm Munger, Tolles & Olson, was instrumental in turning Berkshire into an investment powerhouse, including by steering Buffett away from the strategy to buy troubled companies cheaply, regardless of their business prospects.
“Berkshire Hathaway could not have been built to its current status without Charlie’s inspiration, wisdom and involvement,” Berkshire CEO Buffett said in a statement.
Munger’s death brings Berkshire and its hundreds of thousands of shareholders closer to an era in which an investment empire worth nearly $800 billion will be led by a less familiar group of executives.
Berkshire has spent more than a decade preparing for this moment and the day when Buffett, 93, hands over the reins. It was Munger who inadvertently revealed that Greg Abel, who had risen through Berkshire’s energy business and is now vice chairman of its sprawling non-insurance division, would one day succeed the couple.
Abel was surrounded by a team hand-picked by Munger and Buffett. That includes a number of value investors, both on the board and on the team that decides how Berkshire invests its $319 billion stock portfolio, and who take a similar approach to securities analysis as the two billionaires.
Despite the title of vice chairman, Munger was much more than Buffett’s deputy and was often a driving force behind investments. Before meeting at his home in Los Angeles for an interview with the Financial Times this year, he was reviewing a possible real estate development deal.
Munger was often consulted on major acquisitions and in some cases negotiated the details himself, according to people who sat across from him. His passion for technology helped the company make a number of investments, including in the Chinese car manufacturer BYD.
Munger was born on January 1, 1924 in Omaha, Nebraska. A survivor of the Great Depression, he studied meteorology during his military service in World War II before graduating from Harvard Law School.
Munger met Buffett in 1959 and founded his law firm in 1962, the same year that Buffett began buying shares in textile manufacturer Berkshire Hathaway.
Buffett repeatedly urged Munger to take the plunge into the investment world, once telling him that “law was fine as a hobby, but he could do better.” Munger eventually formed his own investment partnership called Wheeler, Munger & Company. Like Buffett, the returns were outstanding. Munger’s partnership achieved an average annual return of 24.3 percent between 1962 and 1975, compared to a return of 6.4 percent for the Dow Jones Industrial Average.
Munger eventually joined Berkshire Hathaway’s board of directors in 1978.
“It took Charlie Munger to break my cigar butt habits and set the stage for building a company that could combine enormous scale with satisfying profits,” Buffett wrote to shareholders in 2015. “The plan he gave me was simple: Forget what you know” about buying fair deals at wonderful prices; Instead, buy wonderful companies at fair prices.”
The couple’s investment acumen and ability to weather market downturns attracted tens of thousands of shareholders to Berkshire’s annual meeting in Omaha. Munger told attendees at this year’s meeting: “I think the best path to human happiness is to expect less. I think it will be more difficult.”
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In a 1995 address to Harvard students, he focused on 24 misconceptions that he believed affected decision makers.
“The human mind is very similar to the human egg, and the human egg has a shut-off device,” he said. “When one sperm enters, it shuts down so the next one cannot enter. The human mind has a great tendency in the same direction. And here too it affects not only ordinary mortals, but also the deans of physics.”
Despite his and Berkshire’s successes, Munger – whose fortune Forbes estimated at $2.6 billion – was cautious about the prospects for other investors.
“We were a creature of a particular time and a perfect set of opportunities,” he told the FT this year, adding that he had lived “in a perfect time as a common stock investor”.
“The nature of things is that a very intelligent man who works hard will get maybe three, four, five really good opportunities over the long term to buy great companies at a great price,” he said. “That rarely happens.”
Additional reporting by Peter Wells in New York