Charlie Munger’s background

Charlie Munger was a young child who had trouble getting girls at school. His small body was too small to participate in sports like American football, so he joined the shooting team, where he became one of the best shooters.

When he was older, he trained to become a lawyer, which he worked at for many years. He had children early on and had the enormous misfortune of having one of his children die, and shortly afterwards his wife divorced him. After that, he deliberately drove an ugly car, to avoid golddiggers.

Charlie Munger’s strategies for value investing

Charlie Munger was a good lawyer and even became a partner in a firm, Munger & Tolles. But he didn’t profit from it, in comparison to his real estate investments starting around age 35-40. He then built up a large capital and invested in the stock market full time.

Here are some of his principles for successful value investing:

• Be selective, make only a few investments you really believe in.
• You’re unlikely to get more than 5-10 real big opportunities in your lifetime. Once you get one, make sure to capitalize on it to the maximum.
• The older you get, especially with regards to your experience as an investor, the more you realize the importance of waiting.
• If you are 100% sure about an investment, don’t be afraid to borrow money to invest more. Charlie Munger often gives the example of Belridge Oil.
• Buy quality rather than cheapness. More Fisher than Graham. Rather a company that will be stronger in 5-10 years, than a company you can buy at a discount here and now.
• Don’t buy unless you are very sure what the industry and the company’s strength, relative to competitors, will look like 5 years from now.
• Invest in a concentrated way. Own only a few companies.
• Concentration means extreme knowledge of each company you own, and preferably as few as possible, to make it easier to keep up to date with their progress or problems.
• You can think of Charlie Munger’s approach to value investing as the opposite of Walter Schloss.

As you can see, Charlie Munger sets very rigorous standards for his investments. Which explains why he’s made so few, with such a long time between them. As an example, look at this: Charlie Munger’s portfolio and few transactions.

Charlie Munger’s many interests

Charlie Munger has many interests. Among them: Architecture, psychology, sociology, history, boats, games and puzzles, and more. Not least reading books.

Like Benjamin Graham, he is a Renaissance man with many interests. Warren Buffett lives only for his investments and accumulating companies; Graham and Munger invested to take care of their family and have time to immerse themselves in their many other interests.

More about Charlie Munger:

He has a glass eye. The doctors had to gouge his eye out because he had an eye disease.

He has lived a very frugal and disciplined life, but one thing he plowed a lot of money into was building a custom yacht.

Read on: About the strategies of other famous value investors.