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If you’re trying to build wealth, your first six figures in savings is a huge milestone. That’s according to the late billionaire Charlie Munger.
“It’s a b—-, but you gotta do it,” Munger told investors at an annual Berkshire Hathaway meeting two decades ago (1).
“I don’t care what you have to do,” he continued. “If it means walking everywhere and not eating anything that wasn’t purchased with a coupon, find a way to get your hands on $100,000. After that, you can ease off the gas a little bit.”
Munger’s six-figure fixation might seem a bit arbitrary at first, but his reason behind it was actually simple: Six figures are where the real power of compounding is unlocked. Once you cross this critical threshold, your money earns more money at a meaningful scale.
But not everybody agrees. Some financial advice gurus are saying there’s freedom to be had with numbers as low as $20,000.
Financial YouTuber Nischa Shah explains that once you’ve saved just 20 grand, you can begin taking advantage of the power of compound interest in your investments. More importantly, you can stop being driven by fear — and not have to take the first job you’re offered or stay in a role you hate because you lack other options.
“Compound interest is one of the most powerful forces in finance,” she said (2). “And once you hit 20K, you’ll see exactly what it means. Your money doesn’t just sit there anymore. It starts earning returns. And then those returns start earning their own returns.”
In her words, “It’s like planting a tree that grows even more trees for you.”
Either way, whether the magic number is five or six figures, it’s clear the experts agree on one thing: When it comes to investing in your financial future, compound interest is the best friend to your savings.
Here’s why maximizing savings with compound interest unlocks your wealth potential — and what you can do to hit your goal and discover financial freedom.
Munger’s $100,000 benchmark has math on its side. But in reality, most families struggle to set aside six figures as they battle stagnant wages and rapidly rising costs of living.
To put this in perspective, the national savings rate, or amount of disposable income left over after accounts are settled, was just 3.5% in November 2025, which is the latest month that data is available, as of February 2026 (3).
What is more alarming is that 21% of Americans have no emergency savings at all, and 37% say they would struggle to cover an unexpected $400 bill, according to a 2024 survey of 1,192 Americans from Empower (4).
In other words, many families don’t have a safety net.
The dearth of savings is particularly acute for younger Americans. According to 2026 data from Empower, the median net worth of Americans in their 20s is just $6,600, and those numbers only climb to $23,093 for those in their 30s and $68,698 for those in their 40s (5).
That’s much less than Munger’s benchmark.
That’s why it’s important to remember that your personal finances could start changing at a much lower threshold. If you’re young or lack savings, just getting to $20,000 could really help shift your thinking.
A lack of cash available immediately can limit your flexibility. In this situation, your top priority has to be survival, which means you don’t have the opportunity to leave your job in pursuit of a better one, take time off to get educated or take on investments with significant risk.
Simply put, you have little to no wriggle room, and that has real consequences on the way you think and process the world around you.
According to a survey of Vanguard customers, people with no emergency fund spend nearly twice as much time thinking about money issues every week than those with at least $2,000 in in the bank (6).
That’s why a high-yield account like the Wealthfront Cash Account can be a great place to grow your emergency fund, offering both competitive interest rates and easy access to your cash when you need it.
A Wealthfront Cash Account currently offers a base variable APY of 3.30%, and new clients can get a 0.75% boost during their first three months on up to $150,000 for a total APY of 4.05%. That’s 10 times the national deposit rate, according to the FDIC’s January report.
With no minimum balances or account fees, as well as 24/7 withdrawals and free domestic wire transfers, your funds remain accessible at all times. Plus, Wealthfront Cash Account balances of up to $8 million are insured by the FDIC through program banks.
Boosting your savings can certainly fatten your wallet, but they have profound implications for your mental health, too.
The same Vanguard study also found that going from no savings to $2,000 in savings improved financial well-being by 21% (6). Indeed, those who progressed further and saved up three to six months of living expenses in an emergency fund saw another 13% bump in well-being.
Put another way, it’s good for your health to have an emergency fund.
But scraping together an emergency fund might not seem easy at first. American households spent roughly $78,535 per year in 2024, according to the Bureau of Labor Statistics (7). That means a $20,000 emergency fund should cover just over three months of living expenses for the typical family.
Once you hit this benchmark, though, you won’t need to focus as much on surviving and can start focusing on growth and investments instead. You can also start to think about taking some time off work to invest in education or pursue a better-paying job.
The question is, how do you get to that benchmark?
It could be as easy as setting up a budget. A quick daily check-in of your accounts can show you exactly where your money is going — and find new ways you can save.
However, if managing a budget feels overwhelming to you, apps like Rocket Money can simplify the process.
Rocket Money can easily flag recurring subscriptions, upcoming bills and unusual charges by pulling in transactions from all your linked accounts.
This can help you cut unnecessary costs, and then you can manually redirect savings straight into your retirement fund. No spreadsheets, no guesswork, no stress. Small habits like this can make a big difference over time.
Rocket Money’s intuitive app offers a variety of free and premium tools. Free features include subscription tracking, bill reminders and budgeting basics, while premium features — like automated savings, net worth tracking, customizable dashboards and more — make it easier to stay on top of your retirement contributions and overall financial goals.
Once you’ve set up a budget, it’s also worth assessing how you’re spending money. As Munger suggested, you might consider cutting back where you can.
For instance, you might find in your budget that you have monthly expenditures that should be reassessed and trimmed down.
That doesn’t have to mean sinking to an untenable living standard, though.
Most people look to cutting down on subscriptions like Netflix or DoorDash, or going out less. While these are smart options, you could also consider looking to other ways to save on essential expenses, such as reducing your cell phone bill and car insurance.
Sometimes, you have to go shopping around for the best deals.
OfficialCarInsurance.com lets you instantly sort through policies from car insurance providers in your area, including trusted names like Progressive, GEICO and Allstate. With rates as low as $29 per month, you can find coverage that suits your needs and potentially save you hundreds of dollars per year.
To get started, fill in some basic information, and OfficialCarInsurance.com will provide a list of the top insurers in your area within minutes.
Ultimately, even after setting up your savings and reducing expenses, it is always a good idea to keep things in perspective.
After all, for anyone starting from scratch, getting to the $100,000 milestone can offer breathing room — but it can also be such an overwhelming number that you never even start. Although it would be great to have $100,000 invested in growing assets, even $20,000 can unlock noticeable growth.
Here’s why.
The S&P 500 has delivered a compounded annual growth rate of 10% since 1957 (8). Socking away the first $20,000 you don’t need for other savings goals into a low-cost index fund that tracks this index, then adding $1,000 per month, could get you to the $100,000 threshold in just under five years if the market remains at historic, favorable levels.
However, if you were to have sold off your investments in a year like 2022, when the S&P was down nearly 20% year-over-year, you could end up losing a lot of money — investing always carries risk (9).
And that’s why it’s crucial you have a long-term outlook — like Munger and Warren Buffett — when it comes to investing so that you can ride out any stock market volatility.
Speaking of market volatility, it’s also important to diversify your investments so that you aren’t over-indexed in any one stock or market. But finding the right stock picks can be tricky, and top-shelf advisor services often have asset under management (AUM) fees, which are charged as a percentage of the portfolio’s total value.
How it works is simple: When you make a purchase on a linked credit or debit card, Acorns automatically rounds up to the nearest dollar, and the excess is placed into a smart investment portfolio.
Let’s say you purchase a doughnut for $2.30. Before you’re done licking the sugar off your fingers, Acorns will round the amount to $3.00 and invest the 70-cent difference for you. Just $2.50 worth of daily round-ups add up to $900 per year — and that’s before your savings earn money in the market. This could give you the boost you need to reach that $20,000 benchmark.
Plus, if you sign up now and set up a recurring investment of at least $5, you can get a $20 bonus investment.
Join 250,000+ readers and get Moneywise’s best stories and exclusive interviews first — clear insights curated and delivered weekly. Subscribe now.
The Globe and Mail (1); @nischa (2); Bureau of Economic Analysis (3); Empower (4), (5); Vanguard (6); Bureau of Labor Statistics (7); Business Insider (8); CNBC (9)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
But the Berkshire CEO also warned of higher taxes, teased a potential Canadian investment, and revealed a $500 million gift of Berkshire stock.
Moreover, Buffett declared that he could earn a 50% annual return on $1 million, predicted Berkshire’s cash pile would balloon to more than $200 billion this quarter, and recalled the time a Russian chess grandmaster visited Omaha.
Here are 14 interesting nuggets from the Berkshire meeting:
1. Raking it in
Buffett pointed out that Berkshire generated some $37 billion in operating profits last year, meaning that on an average day, he received a fresh $100 million to deploy. The investor was underscoring the difficulty of shrewdly investing such a large and relentless inflow of cash.
2. Cash hoard
Berkshire’s mountain of cash and Treasury hit a record $189 billion last quarter, and it’s likely to swell to more than $200 billion this quarter, Buffett said.
“I don’t mind at all, under current conditions, building the cash position. When I look at the alternative of what’s available, in the equity markets, and I look at the composition of what’s going on in the world, we find it quite attractive.”
3. Taxing times
The government will probably raise taxes in the coming years in a bid to balance its budget, Buffett said.
“I would say with the present fiscal policies that something has to give. I think that higher taxes are quite likely. The government may decide that someday they don’t want the fiscal deficit to be this large, and they may not want to decrease spending a lot, and they may decide they’ll take a larger percentage of what we earn.”
4. Charlie and Costco
Buffett bemoaned that he should have listened to his late business partner, Charlie Munger, and been “more aggressive” with his investment in Costco.
Berkshire increased its stake in the retailer from $32 million in 1999 to $1.3 billion in June 2020, then exited the following quarter. Costco stock surged more than 500% during that period.
Buffett revealed he’s exploring a potential investment in Canada.
“We do not feel uncomfortable in any way, shape, or form putting our money into Canada. In fact, we’re actually looking at one thing now.”
6. New regime
Buffett appeared to change his mind over who would run Berkshire’s stock portfolio once he’s gone. Instead of his investment managers, Todd Combs and Ted Weschler, he suggested his successor as CEO, Greg Abel, would oversee it.
“I think the responsibility ought to be entirely with Greg,” Buffett said. “He understands businesses extremely well and if you understand businesses, you understand common stocks.”
7. Cracking down
Buffett admitted that he and Munger were lenient with underperforming managers, but declared that would change once Abel takes over.
“If you have 20 children and you’re very rich, you’ll have some that will be go-getters anyway, and you’ll have some that won’t. We are a very, very rich company and we haven’t had a history of being very tough on people that coasted. Greg will do something about it.”
8. Bashing banks
Buffett took aim at Wall Street while underscoring that Berkshire’s rock-solid financials allow it to lend and invest money during dark periods when nobody else will.
“At those times, we want to be sure that the US government thinks we’re an asset to the situation and not a liability or a supplicant, as the banks were in 2008 and 2009. They were all tarred with the same brush. But we want to be sure that the brush that determines our future is not tarred.”
“I did sell a house for $7 million. I did not negotiate the 6% down, and I feel I got my money’s worth and then some. And I’m cheap by nature, so it isn’t I’m careless about it. I got my money’s worth.”
10. Mystery gift
Ruth Gottesman, the widow of the late Berkshire director Sandy Gottesman, recently donated $1 billion of Berkshire stock to the Albert Einstein College of Medicine to cover students’ tuition in perpetuity.
Buffett revealed that at the same time that Berkshire was repurchasing those shares from the college in exchange for cash, it was also buying back $500 million of stock from another charitable donor in a different state.
He shared that fact to make the case that Berkshire shareholders are unrivaled in their generosity.
Ruth Gottesman.Brent N. Clarke/Getty Images
11. Pocket change
Buffett claimed that if he had only $1 million to invest instead of nearly $200 billion, he could earn a 50% annual return. “I would try and know everything about everything small, and I would find something.”
12. Dollar champion
Buffett shrugged off fears of “de-dollarization” or dwindling dollar dominance worldwide: “There really isn’t any alternative to the dollar as a reserve currency.”
13. Debt and deficit
The investor raised the alarm on the US government running a large budget deficit and racking up unprecedented amounts of debt.
“I don’t sit and work myself into a stew about it in the least,” Buffett said about the government spending more than it brings in each year. “But I can’t help thinking about it.”
“It won’t be the quantity, it will be whether in any way inflation would get let loose in a way that really threatened the whole world economic situation,” he said about the national debt.
14. Chess royalty
Buffett recalled that Russian chess icon Garry Kasparov once visited his home town and met the legendary founder of Berkshire-owned Nebraska Furniture Mart.
“I know great bridge players, I know great chess players. Actually, Kasparov came to Omaha, met Mrs B.”
Shareholders shop for items at the Pampered Chef display at the Berkshire Hathaway annual shareholder’s meeting on April 30, 2022 in Omaha, Neb. Scott Olson/Getty Images
Tomorrow (May 4), Warren Buffett’s Berkshire Hathaway (BRK.A) will kick off its annual shareholder meeting in the investing conglomerate’s home base in Omaha, Neb. This year, Buffett will host the meeting without his right-hand man, Charlie Munger, who passed away late last year at the age of 99. Thousands of Berkshire shareholders will look for updates on Buffett’s succession plan as well as his next big bet, as the company is also set to report first-quarter earnings tomorrow morning.
It will not be the first time Buffett leads the shareholder meeting by himself, though. He held Berkshire’s 2020 meeting—virtually due to Covid-19—without Munger and said, “It particularly doesn’t feel like an annual meeting because my partner of 60 years, Charlie Munger, is not sitting up here.”
Munger’s passing in November put Berkshire’s energy business chief Greg Abel and insurance chief Ajit Jain in the spotlight. In 2021, Munger revealed at that year’s shareholder meeting that Abel would succeed Buffett as CEO if anything happened to the CEO. “The directors are in agreement that if something were to happen to me tonight, it would be Greg who’d take over tomorrow morning,” Buffett told CNBC subsequently. He added that, if for some reason Abel couldn’t do the job, Jain would step in as CEO.
Abel, 59, and Jain, 70, were promoted to vice chairmen of Berkshire Hathaway’s board in 2018 and have taken on a larger role in recent years. “Ajit and Greg have rare talents, and Berkshire blood flows through their veins,” Buffett wrote in his 2018 letter to shareholders.
In April this year, Abel joined Buffett on his business trip to Japan, where he made large investments in the country’s top trading houses. Abel “does all the work, and I take the bows—it’s exactly what I wanted,” Buffett told CNBC at the time.
Another item in focus at tomorrow’s meeting will be Buffett’s next big bet, especially given Berkshire’s giant cash pile. At the end of 2023, Berkshire had a record $168 billion in cash. Shareholders are eager to know how Buffett plans to invest that money.
During the December quarter, Berkshire reduced its stake in Apple (its largest holding), Paramount Global and HP while increasing shares in Chevron, Occidental Petroleum and Sirius XM Holdings. Also late last year, Berkshire acquired a mystery stock that the company requested the SEC for permission to keep confidential. Shareholders may expect the company to share more details about that as well.
Warren Buffett, CEO of Berkshire Hathaway, and former vice chairman Charlie Munger.JOHANNES EISELE/AFP via Getty Images
Warren Buffett hailed Charlie Munger as the “architect” of Berkshire Hathaway in his annual letter.
The investor also called out stock-market gamblers who buy “hot stocks” and “lottery tickets.”
Buffett dismissed forecasters, warned Berkshire’s scale is a challenge, and nodded to the AI frenzy.
Warren Buffett paid tribute to Charlie Munger, touted four of Berkshire Hathaway’s biggest bets, and voiced frustration in his annual letter to shareholders published on Saturday.
The famed investor and Berkshire CEO also called out stock-market gamblers and speculators, dismissed Wall Street forecasters, and even nodded to the AI craze while championing his hometown of Omaha, Nebraska.
Munger, Buffett’s business partner and Berkshire’s vice chairman for over four decades, died in November at 99. He shaped Berkshire into a world-beating conglomerate and helped Buffett evolve from bargain hunting to buying businesses at fair prices.
“Though I have long been in charge of the construction crew; Charlie should forever be credited with being the architect,” Buffett said in his letter, describing himself as the “general contractor” who realized Munger’s vision.
Echoing last year’s letter, the centibillionaire hailed Berkshire’s large stakes in Coca-Cola and American Express, which it hasn’t touched in over two decades, as emblematic of his company’s long-term investing style.
Buffett also praised Occidental Petroleum, which he’s built a nearly 28% stake in from scratch within the last two years. He trumpeted the oil-and-gas explorer and producer for supporting US energy independence and pioneering carbon-capture methods.
He also shouted out Berkshire’s roughly 9% stakes in five Japanese trading houses, which he started amassing back in July 2019. He celebrated their restraint in compensating executives, their discipline in paying dividends, and their long-term, conservative management.
Buffett seemed resigned, however, that Berkshire has grown so big that there are few other directions for it to go.
The stockpicker explained that Berkshire is now so large — it had $561 billion of net assets at the end of December, more than any other American company — that it’s extremely hard to make purchases that are big enough to materially accelerate its growth.
“There remain only a handful of companies in this country capable of truly moving the needle at Berkshire, and they have been endlessly picked over by us and by others,” he said, adding there are virtually none outside the United States either.
“All in all, we have no possibility of eye-popping performance,” he said.
Buffett also criticized speculators in his letter, noting that stock traders are “neither more emotionally stable nor better taught” than when he was a student. He also noted the proliferation of stock-trading apps has made daily buying and selling easier than ever.
“Markets now exhibit far more casino-like behavior than they did when I was young,” he said. “The casino now resides in many homes and daily tempts the occupants.”
Along the same lines, Buffett said that he imagines Berkshire shareholders to be long-term holders, not people who use their spare cash to “purchase lottery tickets or ‘hot stocks.’”
Buffett also brushed off the army of experts predicting market crashes and recessions or giving stock tips on TV.
“Pundits should always be ignored,” he said, questioning why they would share their forecasts if they were certain they’d come true. “That would be like finding gold and then handing a map to the neighbors showing its location.”
Buffett also remarked that Omaha has produced himself and Munger; the heads of Berkshire’s insurance and non-insurance divisions, Ajit Jain and Greg Abel; and his sister, Bertie, who he described as “one of the country’s great investors.”
“So what is going on? Is it Omaha’s water? Is it Omaha’s air? Is it some strange planetary phenomenon akin to that which has produced Jamaica’s sprinters, Kenya’s marathon runners, or Russia’s chess experts? Must we wait until AI someday yields the answer to this puzzle?” he quipped.
Even after his long and impactful life as a billionaire investor and right-hand man to the “Oracle of Omaha” Warren Buffett, Charlie Munger’s wise words live on, inspiring others towards wealth and success.
For decades, Buffett and Munger’s shareholder meetings for Berkshire Hathaway have been synonymous with profound advice on not just investing, but creating a successful life in general.
In a 2019 interview with CNBC’s Becky Quick, Munger echoed advice from shareholder meetings and shared his secrets for a long and happy life. Here are five pieces of advice from Munger that undoubtedly contributed to his long life, financial success, and — most importantly — happiness.
It’s not surprising that Munger suggested you can stay happy by living within your means. In his conversation with Quick, he shared several snippets of advice for those who want a better life. One key to success, according to Munger: “You don’t overspend your income.”
By living within your means, you can reduce stress surrounding debt, inflation and rising costs. I you are spending less than what you earn, you have a safety net if your expenses rise or your income drops. Plus, it frees up cash for investments and passive income generation.
Like Buffett, Munger followed the philosophy of holding onto his investments. “The big money is not in the buying and selling, but in the waiting,” he said.
He also advised that you should invest in businesses that virtually anyone can run. “If it won’t stand a little mismanagement, it’s not much of a business,” he said. However, don’t seek out businesses that are poorly run as a general practice: “We’re not looking for mismanagement, even if we can withstand it.”
3. Continue Learning
Learning how to invest and makes the right choices takes time. But if you’re willing to learn, nothing can stop you. Munger had previously advised, “The game of life is the game of everlasting learning. At least it is if you want to win.”
Learning today can take many forms, from taking classes to listening to podcasts or watching YouTube videos. But Munger also emphasized one of these best ways to gain knowledge: “In my whole life, I have known no wise people who didn’t read all the time — none, zero.”
4. Remain Disciplined
Small habits can lead to big results over time. One of Munger’s biggest pointers is to find reliable people to deal with and, in turn, “[Y]ou do what you’re supposed to do.” When people know they can rely on you, whether in business or other relationships, that trust can go far.
5. Avoid Toxic People
While you want to seek out and surround yourself with reliable people, you also want to avoid the toxic ones, Munger advised. “A great lesson of life is get them the hell out of your life — and do it fast,” he told shareholders at one meeting. “If you do all those things, you are almost certain to succeed. If you don’t, you’re going to need a lot of luck.”
Warren Buffett and Charlie Munger’s friendship goes back 60 years.
99-year-old Munger, the investing legend who led Berkshire Hathaway as vice chairman alongside Buffett, died on Tuesday in a California hospital.
“Berkshire Hathaway could not have been built to its present status without Charlie’s inspiration, wisdom and participation,” Buffett said in a short statement about his friend’s death.
The two friends first met in 1959 at a diner, but had worked at the same grocery store for Buffett’s grandfather as teenagers.
“I knew after I met Charlie, after a few minutes in the restaurant, I knew that this guy’s going to be in my life forever,” Buffett told CNBC in 2021. “We were gonna have fun together, we were gonna make money together, we were gonna get ideas from each other. We were both going to behave better than if we didn’t know each other.”
Read more to see how the two men built their careers together.
Warren Buffett and Charlie Munger worked together for 45 years at Buffett’s holding company, Berkshire Hathaway.
Buffett, left, and Munger, right, at the company’s annual Omaha meeting last year. REUTERS/Rick Wilking via BI
Together, the two achieved incredible success and respect in the business world.
Both billionaires grew up in Omaha, Nebraska.
Shutterstock Berkshire Hathaway is also headquartered in Omaha. via BI
Buffett has been called the “Oracle of Omaha.” He started investing early, buying his first stock when he was 11 years old and accruing a small fortune from business ventures by the time he was a teenager. His pursuits included operating a successful pinball machine business in local barbershops, delivering newspapers, and washing cars.
After attending Columbia’s School of Business, Buffett returned to Omaha, then moved back to New York to work for his mentor, Benjamin Graham.
The library at Columbia University in New York. meunierd/Shutterstock via BI
When Graham closed his firm in 1956, Buffett moved back home to Omaha and started Buffett Partnership Ltd. This quickly turned to seven partnerships, which led him to become a millionaire by age 32.
He merged these partnerships in 1962 and invested in a textile manufacturing firm called Berkshire Hathaway.
BloombergTV via BI
In the late 60s, he pivoted the company from textiles to insurance. At the age of 93, Buffett still leads the company today.
Buffett would eventually join forces with Charlie Munger, commonly referred to as his “right-hand man.”
Eric Francis/Getty Images via BI
The pair were introduced by a mutual contact in 1959 in Omaha, where they dined with their wives at Johnny’s Cafe.
Along with enjoying each other’s sense of humor, the men learned they both worked for Buffett’s grandfather at his grocery store as teenagers. Though the two worked at the same store, they had never crossed paths, as Munger was seven years Buffett’s senior.
Both men have recalled their first interaction fondly.
Warren Buffett and Charlie Munger Getty Images via BI
“About five minutes into it, Charlie was sort of rolling on the floor laughing at his own jokes, which is exactly the same thing I did,” Buffett, 90, told CNBC in 2019. “I thought, ‘I’m not going to find another guy like this.’ And we just hit it off.”
Meanwhile, Munger said the pair “got along fine,” according to CNBC.
“What I like about Warren is the irreverence. We don’t have automatic reverence for the pompous heads of all civilization,” Munger said.
A lawyer by trade and an architect on the side, Charlie Munger began working for Berkshire Hathaway in the late 1970s.
Previously, Munger excelled at Harvard Law School and even co-founded his own law firm — Munger, Tolles & Olson LLP — which still exists today.
Buffett convinced Munger to leave the practice as he felt it did not utilize his full talents in the early 1960s.
“It took me a long time to wise up that [Buffett] had a better way of making a living than I did,” Munger said in 2021 regarding the decision to follow Buffett’s advice. “But he finally convinced me that I was wasting my time.”
Over a decade later, Buffett convinced Munger to leave his second company, an investment practice called Wheeler, Munger & Co.
Buffett and Munger with fellow investors Peter and Paul Hilal in 1998. FrankTursetta/Wikimedia Commons via BI
In 1978, he became Vice Chairman of Berkshire Hathaway, where the two had worked side-by-side.
At the time of his death, Munger had a net worth of about $2.5 billion, according to Bloomberg.
After almost half a century of joined partnership, the two men have often appeared as the faces of Berkshire Hathaway, adding a personal element to the holdings company.
Kraft Heinz company is one of Berkshire Hathaway’s companies. REUTERS/Rick Wilking via BI
The pair’s faces are often used by their subsidiary companies, such as Heinz and Coca-Cola.
In 60 years of friendship, Buffet claims they’d never fought.
Buffett told CNBC in 2019 that he “always learn something” from the time he spends with Munger.
Buffett also praised Munger in his 2022 letter to shareholders.
Nati Harnik/AP via BI
“Charlie and I think pretty much alike. But what it takes me a page to explain, he sums up in a sentence,” Buffett wrote.
The pair appeared to share a lighthearted friendship.
“I never have a phone call with Charlie without learning something. And, while he makes me think, he also makes me laugh,” Buffet wrote in the letter.
Munger has spoken highly of Buffett and even stepped in to defend him at times.
Lacy O’Toole/CNBC/NBCU Photo Bank via Getty Images via Business Insider.
Earlier this month, Munger defended his friend against a report alleging Buffett sometimes traded stock in his person account before his company traded the same stocks.
“I don’t think there’s the slightest chance that Warren Buffett is doing something that is deeply evil to make money for himself. He cares more about what happens to Berkshire than he cares what happens to his own money. He gave all his own money away. He doesn’t even have it anymore,” Munger said at the time.
Charlie Munger at Berkshire Hathaway’s annual meeting in Los Angeles California. May 1, 2021.
Gerard Miller
The late investment icon Charlie Munger said Berkshire Hathaway, the conglomerate he and Warren Buffett built over the last five decades, could have doubled its value if they applied leverage, or borrowed money, when buying businesses and common stocks.
Munger, Berkshire Hathaway’s vice chairman who died Tuesday just a month shy of his 100th birthday, stressed that he and Buffett almost never used this common Wall Street practice, because they always put their shareholders first.
“Berkshire could easily be worth twice what it is now. And the extra risk you would’ve taken would’ve been practically nothing. All we had to do is just use a little more leverage that was easily available,” Munger said in CNBC’s special “Charlie Munger: A Life of Wit and Wisdom,” which aired Thursday.
“The reason we didn’t is the idea of disappointing a lot of people who had trusted us when we were young … If we lost three quarters of our money, we were still very rich. That wasn’t true of every shareholder,” he told CNBC’s Becky Quick in the previously unaired interview. “Losing three quarters of the money would’ve been a big letdown.”
The use of leverage is prevalent on Wall Street as it provides a way to boost buying power and enhance the potential return in any given investment. But it also significantly increases the risk as losses can multiply quickly if the investment doesn’t pan out as expected.
Beware an ‘unsettled mind’
Buffett, often called the “Oracle of Omaha,” previously explained the perils of using debt and leverage to buy stocks, saying it can make an investor short-sighted and panicky when times turn volatile.
“There is simply no telling how far stocks can fall in a short period,” he wrote in his 2017 annual letter to shareholders. “Even if your borrowings are small and your positions aren’t immediately threatened by the plunging market, your mind may well become rattled by scary headlines and breathless commentary. And an unsettled mind will not make good decisions.”
Munger said he and Buffett had been “very cautious” in handling their shareholders’ money over the years. Berkshire shareholders tend to be long-term investors like all the conglomerate’s top executives, often treating their stock like a savings account.
“If Warren and I had owned Berkshire without any shareholders that we knew, we would’ve made more. We would’ve used more leverage,” Munger said in the CNBC special.
Still, Munger acknowledged that Berkshire did use leverage in the form of its insurance float. Insurers receive premiums upfront and pay claims later, so they can invest the large sums collected — cost free — for their own benefit.
“Insurance float gave us some leverage. That’s why we went into it,” he said.
The vice chairman of multinational holding company Berkshire Hathaway once described cryptocurrency and artificial intelligence as “overhyped” and “stupid”.
Charlie Munger, the billionaire vice chairman of Berkshire Hathaway, has died. He was 99.
Munger, an integral force at Berkshire since 1959, played a pivotal role in shaping the company into a global conglomerate with a market capitalization of $784 billion.
Munger served as vice chairman alongside Warren Buffett, contributing significantly to its success.
Munger was a multifaceted figure, co-founding Munger, Tolles & Olson in California and later chairing Wesco Financial Corporation, a Berkshire Hathaway subsidiary.
Renowned for his insightful investment philosophies, Munger — as well as Buffett — were fierce skeptics of cryptocurrencies.
While the pair often advocated for ethical business standards and steered away from troubled businesses at a discount, they often emphasized the importance of investing in businesses at fair prices, and denounced speculative investments like Bitcoin.
Born on Jan. 1, 1924, in Omaha, Nebraska, Munger’s journey included a stint in the U.S. Army Air Corps, studies at Caltech, and a law degree from Harvard Law School.
His philanthropic focus on education extended to contributions to the University of Michigan Law School, Stanford University and the University of California, Santa Barbara.
His critical stance on cryptocurrencies, as well as artificial intelligence, earned attention, with Munger referring to both as “overhyped” and “stupid.”
At the time of his passing, Munger had a net worth of $2.7 billion, according to Forbes.
Billionaire Charlie Munger, the investing sage who made a fortune even before he became Warren Buffett’s right-hand man at Berkshire Hathaway, has died at age 99.
Munger died Tuesday, according to a press release from Berkshire Hathaway. The conglomerate said it was advised by members of Munger’s family that he peacefully died this morning at a California hospital. He would have turned 100 on New Year’s Day.
“Berkshire Hathaway could not have been built to its present status without Charlie’s inspiration, wisdom and participation,” Buffett said in a statement.
In addition to being Berkshire vice chairman, Munger was a real estate attorney, chairman and publisher of the Daily Journal Corp., a member of the Costco board, a philanthropist and an architect.
In early 2023, his fortune was estimated at $2.3 billion — a jaw-dropping amount for many people but vastly smaller than Buffett’s unfathomable fortune, which is estimated at more than $100 billion.
During Berkshire’s 2021 annual shareholder meeting, the then-97-year-old Munger apparently inadvertently revealed a well-guarded secret: that Vice Chairman Greg Abel “will keep the culture” after the Buffett era.
Munger, who wore thick glasses, had lost his left eye after complications from cataract surgery in 1980.
Munger was chairman and CEO of Wesco Financial from 1984 to 2011, when Buffett‘s Berkshire purchased the remaining shares of the Pasadena, California-based insurance and investment company it did not own.
Buffett credited Munger with broadening his investment strategy from favoring troubled companies at low prices in hopes of getting a profit to focusing on higher-quality but underpriced companies.
An early example of the shift was illustrated in 1972 by Munger’s ability to persuade Buffett to sign off on Berkshire’s purchase of See’s Candies for $25 million even though the California candy maker had annual pretax earnings of only about $4 million. It has since produced more than $2 billion in sales for Berkshire.
“He weaned me away from the idea of buying very so-so companies at very cheap prices, knowing that there was some small profit in it, and looking for some really wonderful businesses that we could buy in fair prices,” Buffett told CNBC in May 2016.
Or as Munger put it at the 1998 Berkshire shareholder meeting: “It’s not that much fun to buy a business where you really hope this sucker liquidates before it goes broke.”
Munger was often the straight man to Buffett’s jovial commentaries. “I have nothing to add,” he would say after one of Buffett’s loquacious responses to questions at Berkshire annual meetings in Omaha, Nebraska. But like his friend and colleague, Munger was a font of wisdom in investing, and in life. And like one of his heroes, Benjamin Franklin, Munger’s insight didn’t lack humor.
“I have a friend who says the first rule of fishing is to fish where the fish are. The second rule of fishing is to never forget the first rule. We’ve gotten good at fishing where the fish are,” the then-93-year-old Munger told the thousands of people at Berkshire’s 2017 meeting.
He believed in what he called the “lollapalooza effect,” in which a confluence of factors merged to drive investment psychology.
Charles Thomas Munger was born in Omaha on Jan. 1, 1924. His father, Alfred, was a lawyer, and his mother, Florence “Toody,”was from an affluent family. Like Warren, Munger worked at Buffett’s grandfather’s grocery store as a youth, but the two future joined-at-the-hip partners didn’t meet until years later.
At 17, Munger left Omaha for the University of Michigan. Two years later, in 1943, he enlisted in the Army Air Corps, according to Janet Lowe’s 2003 biography “Damn Right!”
The military sent him to the California Institute of Technology in Pasadena to study meteorology. In California, he fell in love with his sister’s roommate at Scripps College, Nancy Huggins, and married her in 1945. Although he never completed his undergraduate degree, Munger graduated magna cum laude from Harvard Law School in 1948, and the couple moved back to California, where he practiced real estate law. He founded the law firm Munger, Tolles & Olson in 1962 and focused on managing investments at the hedge fund Wheeler, Munger & Co., which he also founded that year.
“I’m proud of being an Omaha boy,” Munger said in a 2017 interview with Dean Scott Derue of the Michigan Ross Business School. “I sometimes use the old saying, ‘They got the boy out of Omaha but they never got Omaha out of the boy.’ All those old-fashioned values — family comes first; be in a position so that you can help others when troubles come; prudent, sensible; moral duty to be reasonable [is] more important than anything else — more important than being rich, more important than being important — an absolute moral duty.”
In California, he partnered with Franklin Otis Booth, a member of the founding family of the Los Angeles Times, in real estate. One of their early developments turned out to be a lucrative condo project on Booth’s grandfather’s property in Pasadena. (Booth, who died in 2008, had been introduced to Buffett by Munger in 1963 and became one of Berkshire’s largest investors.)
“I had five real estate projects,” Munger told Derue. “I did both side by side for a few years, and in a very few years, I had $3 million — $4 million.”
Munger closed the hedge fund in 1975. Three years later, he became vice chairman of Berkshire Hathaway.
In 1959, at age 35, Munger returned to Omaha to close his late father’s legal practice. That’s when he was introduced to the then-29-year-old Buffett by one of Buffett’s investor clients. The two hit it off and stayed in contact despite living half a continent away from each other.
“We think so much alike that it’s spooky,” Buffett recalled in an interview with the Omaha World-Herald in 1977. “He’s as smart and as high-grade a guy as I’ve ever run into.”
“We never had an argument in the entire time we’ve known each other, which is almost 60 years now,” Buffett told CNBC’s Becky Quick in 2018. “Charlie has given me the ultimate gift that a person can give to somebody else. He’s made me a better person than I would have otherwise been. … He’s given me a lot of good advice over time. … I’ve lived a better life because of Charlie.”
The melding of the minds focused on value investing, in which stocks are picked because their price appears to be undervalued based on the company’s long-term fundamentals.
“All intelligent investing is value investing — acquiring more than you are paying for,” Munger once said. “You must value the business in order to value the stock.”
Warren Buffett (L), CEO of Berkshire Hathaway, and vice chairman Charlie Munger attend the 2019 annual shareholders meeting in Omaha, Nebraska, May 3, 2019.
Johannes Eisele | AFP | Getty Images
But during the coronavirus outbreak in early 2020, when Berkshire suffered a massive $50 billion loss in the first quarter, Munger and Buffett were more conservative than there were during the Great Recession, when they invested in U.S. airlines and financials like Bank of America and Goldman Sachs hit hard by that downturn.
“Well, I would say basically we’re like the captain of a ship when the worst typhoon that’s ever happened comes,” Munger told The Wall Street Journal in April 2020. “We just want to get through the typhoon, and we’d rather come out of it with a whole lot of liquidity. We’re not playing, ‘Oh goody, goody, everything’s going to hell, let’s plunge 100% of the reserves’ [into buying businesses].”
Munger donated hundreds of millions of dollars to educational institutions, including the University of Michigan, Stanford University and Harvard Law School, often with the stipulation that the school accept his building designs, even though he was not formally trained as an architect.
At Los Angeles’ Harvard-Westlake prep school, where Munger had been a board member for decades, he ensured that the girls bathrooms were larger than the boys room during the construction of the science center in the 1990s.
“Any time you go to a football game or a function there’s a huge line outside the women’s bathroom. Who doesn’t know that they pee in a different way than the men?” Munger told The Wall Street Journal in 2019. “What kind of idiot would make the men’s bathroom and the women’s bathroom the same size? The answer is, a normal architect!”
Munger and his wife had three children, daughters Wendy and Molly, and son Teddy, who died of leukemia at age 9. The Mungers divorced in 1953.
Two years later, he married Nancy Barry, whom he met on a blind date at a chicken dinner restaurant. The couple had four children, Charles Jr., Emilie, Barry and Philip. He also was the stepfather to her two other sons, William Harold Borthwick and David Borthwick. The Mungers, who were married 54 years until her death in 2010, contributed $43.5 million to Stanford University to help build the Munger Graduate Residence, which houses 600 law and graduate students.
Asked by CNBC’s Quick in a February 2019 “Squawk Box” interview about the secret to a long and happy life, Munger said the answer “is easy, because it’s so simple.”
“You don’t have a lot of envy, you don’t have a lot of resentment, you don’t overspend your income, you stay cheerful in spite of your troubles. You deal with reliable people and you do what you’re supposed to do. And all these simple rules work so well to make your life better. And they’re so trite,” he said.
“And staying cheerful … because it’s a wise thing to do. Is that so hard? And can you be cheerful when you’re absolutely mired in deep hatred and resentment? Of course you can’t. So why would you take it on?”
Warren Buffett’s unexpected decision to invest in Japan during the 2020 pandemic seems to have paid off, and no one appears more pleased than Berkshire Hathaway Inc. Vice Chairman Charlie Munger.
The strategy was a departure from the company’s well-known preference for American enterprises like Apple Inc., the Coca-Cola Co., Bank of America Corp. and American Express Co. The company’s portfolio has often been a testament to its confidence in the U.S. market. Speaking on the Acquired podcast in October, however, Munger pointed out that the Japanese investment was a distinctive and lucrative opportunity that couldn’t be passed up.
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“If you’re as smart as Warren Buffett, maybe two, three times a century, you get an idea like that,” Munger said on the podcast. He cited Japan’s low interest rate environment as a key factor, saying, “The interest rates in Japan were 0.5% a year for 10 years, and these trading companies were really entrenched old companies.”
Berkshire Hathaway’s strategy involved borrowing money in Japan at a mere 0.5% interest and investing in companies there that offered a 5% dividend yield.
“It was like having God just opening a chest and just pouring money into it,” Munger said.
Initially, Berkshire Hathaway declared a $6 billion investment across five Japanese trading houses — Itochu International Inc., Marubeni Corp., Mitsubishi Corp., Mitsui & Co. Ltd. and Sumitomo Corp. Group — in August 2020. That investment has grown substantially and is now valued at approximately $17 billion, thanks in part to both additional share purchases and soaring stock prices of the companies involved.
Munger provided more detail on the mechanics of the investment, indicating it wasn’t an overnight success but rather a result of patient, incremental actions.
Trending: Get equity and front row seats to the startups and small businesses you love — for as little as $100.
“The only way you could get it was to be very patient and just pick away at little pieces at a time. It took forever to get $10 billion invested, but it was awfully easy money,” Munger said.
In contrast, U.S. interest rates have escalated to over 5% since last spring, adding another layer of context to the wisdom of this Japanese trade.
“We could do that, nobody else could,” said Munger, highlighting that Berkshire’s strong credit rating gave them access to such favorable borrowing terms in Japan.
In the Acquired podcast interview, the host pointed out a paradox: While Berkshire Hathaway’s excellent credit allows it access to low-interest loans, the company’s enormous scale makes it challenging to invest sufficiently large sums. In response, Munger agreed, stating, “That’s true, but why shouldn’t it be hard to make money? Why should it be easy?”
Before the podcast, at Berkshire Hathaway’s annual shareholders meeting in May, Buffett shared insights into these investments, noting that the selected companies were “ridiculously” cheap and compatible with Berkshire’s long-term vision.
Andrew McCagg of Nomura Asset Management UK Ltd. also offered his perspective on the investment.
“Improving shareholder returns were likely a bigger factor in Buffett’s decision to buy Japanese trading houses than some of the other factors,” he told Insider via email.
Berkshire Hathaway’s Japanese investments, as described by Munger, represent a special kind of opportunity: high rewards for low risk. The investment appears to be a case study in successful financial strategy, blending patient capital allocation with keen market observation.
In the realm of high-reward, low-risk investments, fine art presents another intriguing opportunity. Masterworks is a platform that has democratized access to the art market, traditionally considered an investment playground for the ultra-wealthy. Through Masterworks, everyday investors can now own shares in high-value artwork from renowned artists like Banksy and Jean-Michel Basquiat. This offers a unique chance to invest alongside billionaires, without needing a Berkshire Hathaway-sized budget.
According to data from various sources, including Art Market Research, fine art has outperformed the S&P 500 over the long term, further validating its investment potential. Like Berkshire Hathaway’s calculated risk in Japan, investing in art through platforms like Masterworks can provide a potentially lucrative yet relatively stable avenue for building wealth.
At the annual Berkshire Hathaway shareholder meeting, billionaire Charlie Munger said that cutting out toxic people is essential to success.Nati Harnik/Associated Press
Berkshire Hathaway CEO Warren Buffett sat down for his first national TV interview in 1985.
Appearing on the PBS show “Adam Smith’s Money World,” he offered sage investment advice that he continues to preach today.
Here are the best quotes Buffett dropped in his first TV interview from nearly 40 years ago.
Berkshire Hathaway CEO Warren Buffett is a household name today, as the businessman has consistently been ranked as one of the best investors ever and, subsequently, one of the wealthiest people in the world.
Through his ownership stake in Berkshire Hathaway, Buffett currently has a net worth of about $114 billion. But in 1985, it was closer to $500 million and his name recognition was a lot lower.
That year Buffett sat down with host George Goodman of the PBS show “Adam Smith’s Money World,” in what is thought to be Buffett’s first-ever national TV interview.
What’s striking is how consistent Buffett’s views towards investing have been nearly 40 years later. These are the best pieces of investment wisdom he shared.
1. Number one rule
“The first rule of an investment is don’t lose. And the second rule of investment is don’t forget the first rule. And that’s all the rules there are. If you buy things for far below what they’re worth, and you buy a group of them, you basically don’t lose money.”
2. Most important quality for investment manager
“It’s the temperamental quality, not an intellectual quality. You don’t need tons of IQ in this business. I mean, you have to have enough IQ to get from here to downtown Omaha, but you do not have to be able to play three-dimensional chess or be in the top leagues in terms of bridge playing or something of the sort. You need a stable personality. You need a temperament that neither derives great pleasure from being with the crowd or against the crowd because this is not a business where you take polls. It’s a business where you think.”
3. What most investors get wrong
“They do not really think of themselves as owning a piece of a business. The real test of whether you’re investing from a value standpoint or not is whether you care whether the stock market is open tomorrow. If you’re making a good investment in a security, it shouldn’t bother if they closed down the stock market for five years.”
4. On checking stock prices
“All the ticker tells me is the price. And I can look at the price occasionally to see whether the price is outlandishly cheap or outlandishly high but prices don’t tell me anything about a business. Business figures themselves tell me something about a business, but the price of a stock doesn’t tell me anything about a business. I would rather value a stock or a business first, and not even know the price, so that I’m not influenced by the price in establishing my valuation and then look at the price later to see whether it’s way out of line with what my value is.”
5. Omaha versus Wall Street
Nebraska: “Well, believe it or not, we get mail here and we get periodicals and we get all the facts needed to make decisions. And unlike Wall Street, you’ll notice we don’t have 50 people coming up and whispering in our ear that we should be doing this or that this afternoon.”
New York: “If I were on Wall Street I’d probably be a lot poorer. You get overstimulated on Wall Street. And you hear lots of things, and you may shorten your focus and a short focus is not conducive to long profits.”
6. Not owning technology stocks
“I really haven’t [ever bought a technology company]. I haven’t understood any of them. Never owned IBM. Marvelous company, I mean a sensational company, but I haven’t owned IBM.”
7. Missing market trends
“I don’t have to make money in every game. I mean, I don’t know what cocoa beans are gonna do. There are all kinds of things I don’t know about, and that may be too bad. But you know, why should I know all about it? I haven’t worked that hard on it.”
8. Waiting for the right pitch
“There are no called strikes in the business. The pitcher just stands there and throws balls at you… You don’t have to swing at any of them. They may be wonderful pitches to swing at, but if you don’t know enough, you don’t have to swing. And you can sit there and watch thousands of pitches and finally get one right there where you wanted something that you understand, and then you swing.”
9. Market timing
“If I were being asked to participate in a business opportunity, would it make any difference to me whether I bought it on a Tuesday or a Saturday or an election year or something? It’s not what a businessman thinks about in buying businesses. So why think about it when buying stocks? Because stocks are just pieces of businesses.”
Charlie Munger trashed cryptocurrencies, warned the AI buzz seems overblown, and praised Zoom for keeping him connected during his closing keynote at Zoomtopia on October 4.
Warren Buffett’s business partner and Berkshire Hathaway‘s vice-chairman also shared some of his best tips for achieving success in business and life at the private event, including hard work, discipline, saving, and investing.
The 99-year-old investor’s conversation with Zoom CEO Eric Yuan was a special treat for in-person attendees of the video-conferencing company’s annual gathering, and hasn’t been shared online, a Zoom spokesperson told Insider.
We spoke to six people who were in the room, and Zoom confirmed their recollections of Munger’s key points were accurate. Here are their comments, lightly edited for length and clarity:
1. Tobi Tungl, chief marketing officer at CTI:
“The main takeaways were his opinion on AI being a bit overdone in the market, and his opinion that crypto was never anything. Memory serves me that he said ‘overly hyped’ or similar. He had some stories on how AI has been around for over 50 years, but we are just bringing it to the surface as of late.”
2. Craig Durr, research director at The Futurum Group:
“Munger shared his seasoned perspective on crypto and AI – both of which he was skeptical about. Yet, with nearly a century of wisdom and a financial track record to match, his views command respect. Eric Yuen chose to acknowledge rather than dispute. After all, when a legend speaks, the room listens.”
3. Mark Friedler, CEO of Gigex:
“Munger had a wry and great sense of humor. He was super negative about crypto and called it a scam. He said communications help drive business, and business success is about focus and consistency. Like Warren Buffett, he didn’t see large success until later in life, and only massive success after his 60s.”
4. Eric Kunnen, senior director of IT innovation and research at Grand Valley State University:
“Charlie loves Zoom and uses it frequently for business and to keep in touch with his family, as it’s difficult for him to travel. His business advice was to build a better product or offer a better solution, that it’s all about competition, and that successful people are those with the acumen to understand life better than everyone else. He said it’s up to you to work harder and better than the next person.
Charlie also said investments are better than money in the bank, and it’s important to go to the office to work in person.”
5. Melody Brue, VP and principal tech analyst at Moor Insights & Strategy:
“I think my biggest takeaway — and probably a big reason for having him — was that Charlie stays connected to people through Zoom at 99 when he doesn’t get out as much as he once did. There are physical limitations at that age and Zoom has kept him engaged.
Charlie spoke about working to get ahead. He said to ‘spend less than you make,’ and invest the money you save.
Eric had a plate of donuts with him on stage, and Charlie made the point that donuts aren’t good for you, but you can have them every now and then. You have to be disciplined though, and know that you can only have so much for it to not be bad for you. It was cute and it illustrated Charlie’s mental discipline.
Charlie also talked a lot about poker and trust. I don’t think he was necessarily saying you can’t trust people, but there was a bit of caution about people’s motives in business, and how you have to be good at reading them — and be a good ‘poker player’ yourself when necessary.
He was very funny and the conversation between him and Eric felt like watching old friends catch up – not a typical ‘celebrity’ keynote that are pretty much all the same. They gave away a copy of Charlie’s book upon exit. The books were gone in seconds!”
6. David Maldow, founder and CEO of Let’s Do Video:
“Charlie had a few good jokes about his age. I think he used the old standby about how ‘it’s great to be anywhere’ at the start. He is 99, but his thoughts are all coherent and he is charming and funny.
“There were a few moments where Eric was asking about taking risks, and seemed to expect Charlie to encourage risk-taking, but Charlie seemed risk-avoidant. He gave the impression that he didn’t get rich from wild, risky investments, but from not being stupid. Basic, smart investments and hard work.
Eric even brought up the topic of poker as part of the risk discussion. Eric wanted to know how Charlie would play poker with a cheater at the table. Charlie’s answer was that he wouldn’t play poker with that person, and he only plays poker with people that he can beat. The implication was that was how he wins at business at well.
The big, heartwarming moment was when he explained how his entire family does big Zoom meetings, and it’s a very big deal for him because traveling is too hard for him now due to the wheelchair. He said that being able to see them all, despite his failing eyesight, meant so much to him.”
OMAHA, Neb. (AP) — Billionaire Warren Buffett said artificial intelligence may change the world but new technology won’t take away opportunities for investors and he’s confident America will continue to prosper despite its bitter political divisions.
Buffett and his partner Charlie Munger spent all day Saturday answering questions at the annual shareholders meeting for his Berkshire Hathaway conglomerate inside a packed arena in Omaha.
“New things coming along doesn’t take away the opportunities. What gives you the opportunities is other people doing dumb things,” said Buffett, who had a chance to try out ChatGPT with his friend Bill Gates a few months back.
“The problem now is that partisanship has moved more towards tribalism, and in tribalism you don’t even hear the other side,” he said.
Both Buffett and Munger said the U.S. will benefit from having an open trading relationship with China, Both countries should be careful not to exacerbate tensions — the stakes for the world are too high.
“Everything that increases the tension between these two countries is stupid, stupid, stupid,” Munger said.
The chance to listen to the legendary investors answer questions about business and life attracts people from all over the world to Buffett’s hometown. Some shareholders feel a particular urgency to attend because the two men are both in their 90s.
“Charlie Munger is 99. I just wanted to see him in person. It’s on my bucket list,” said Sheraton Wu, 40, from Vancouver. “I have to attend while I can.”
Chloe Lin traveled from Singapore for what she called “a once-in-a-lifetime opportunity.”
The two capitalists discussed a range of topics, including:
— Buffett said bank regulators need to find a way to punish executives and board members who make risky decisions that doom a bank.
— The U.S. is carrying a concerning level of debt but it’s hard to know how much the country can take on without devaluing the dollar and jeopardizing the world’s reserve currency.
— Buffett said Apple — Berkshire’s biggest stock holding — is a wonderful business because of how devoted consumers are to their iPhones. “I don’t understand the phone at all,” Buffett said. “But I do understand consumer behavior.”
— Elon Musk is a brilliant man who has taken on impossible tasks and succeeded even if he “overestimates himself.” Buffett and Munger said, but his approach doesn’t appeal to the investors who look for places they can prosper without ridiculous effort.
“We’re different,” Munger said. “Warren and I are looking for the easy job we can identify.”
— Berkshire isn’t a big player in commercial real estate but they predicted problems ahead. Munger said the “hollowing out of the downtowns in the United States and elsewhere in the world is going to be quite significant and quite unpleasant.”
— To avoid the biggest mistakes in life, Buffett said, “You should write your obituary and figure out how to live up to it.” Also avoid debt, and in business try to avoid taking on so much risk that a single mistake can wipe you out.
— Munger gave similarly simple advice: Spend less than you earn, avoid toxic people and activities, and keep learning throughout your life.
In a nod to the longstanding concerns about their age, Berkshire showed video clips of questions about succession from past meetings dating back to the first one they filmed in 1994. Two years ago, Buffett finally said that Greg Abel will replace him as CEO although he has no plans to retire. Abel already oversees all of Berkshire’s noninsurance businesses.
“Greg understands capital allocation as well as I do. He will make these decisions on the same framework that I use,” Buffett said.
Abel assured the crowd that he knows how Buffett and Munger have handled things for nearly six decades. “I don’t really see that framework changing.”
Not everyone in Omaha was a fan.
Outside the arena, pilots from Berkshire’s NetJets protested over the lack of a new contract and environmental groups questioned why the company’s utilities continue to burn coal. Pro-life groups carried signs declaring “Buffett’s billions kill millions” to object to his many charitable donations to abortion rights groups.
Berkshire Hathaway said Saturday morning that it made $35.5 billion, or $24,377 per Class A share, in the first quarter. That’s more than 6 times last year’s $5.58 billion, or $3,784 per A share.
Three analysts surveyed by data firm FactSet had expected Berkshire to report operating earnings of $5,370.91 per Class A share.
However Buffett has long cautioned that those bottom-line figures can be misleading because of wide swings in the value of Berkshire’s investments — most of which it rarely sells. Buffett says operating earnings that exclude investments are a better measure of the company’s performance. They grew nearly 13% to $8.065 billion, up from $7.16 billion a year ago.
Buffett said he expects operating profits to grow this year although the economy is slowing and most of the company’s businesses will sell less. He said Berkshire will profit from rising interest rates on its holdings, and the insurance market looks good.
This year’s first quarter was relatively quiet compared to a year ago when Buffett revealed he’d gone on a $51 billion spending spree at the start of 2022, snapping up stocks like Occidental Petroleum, Chevron and HP. Buffett’s buying slowed, aside from a number of additional Occidental purchases.
Edward Jones analyst Jim Shanahan said the quarterly report suggests Berkshire may have sold about 35 million Chevron shares, but Buffett appears bullish on oil stocks given his recent Occidental purchases.
Buffett quashed speculation that Berkshire might buy all of Occidental. He said Berkshire won’t bid for control of the oil producer although he may buy more shares, and holds warrants to buy another 83.9 million shares.
At the end of this year’s first quarter, Berkshire held $130.6 billion cash but spent $4.4 billion during the quarter to repurchase its own shares.
Berkshire’s insurance unit, which includes Geico and a number of large reinsurers, recorded a $911 million operating profit, up from $167 million last year, driven by a rebound in Geico’s results. Geico benefitted from charging higher premiums and a reduction in advertising spending and claims.
But Ajit Jain, who oversees all of Berkshire’s insurance businesses, said Geico still has a long way to go to upgrade its internal technology.
CFRA Research analyst Cathy Seifert called those comments “a pretty candid acknowledgement that Geico has a lot of work to do to catch up to its peers.”
Berkshire’s BNSF railroad and its large utility unit reported lower profits. BNSF earned $1.25 billion, down from $1.37 billion. The number of shipments it handled dropped 10% after it lost a big customer and imports slowed. The utility division added $416 million, down from last year’s $775 million.
Berkshire owns an eclectic assortment of dozens of other businesses, including retail and manufacturing firms like See’s Candy and Precision Castparts.
Berkshire shareholders rejected a number of proposals that Buffett opposed. Those would have required the company to disclose more about climate change risks and diversity, split Buffett’s job into separate chairman and CEO positions, and silence executives’ political views.
With Buffett controlling nearly one third of the vote, those proposals never had much chance.
Shareholders watch Warren Buffett and Charlie Munger from the overflow room during the Berkshire Hathaway annual meeting on Saturday, May 6, 2023, in Omaha, Neb.
Rebecca H. Gratz | AP
Berkshire Hathaway‘s annual shareholder meeting on Saturday included dozens of questions spanning topics such as investing strategy, artificial intelligence and politics for the legendary investors at the helm of the conglomerate: Chairman Warren Buffett and Vice Chairman Charlie Munger
But it wasn’t all strictly business. Buffett and Munger — who are 92 and 99 years old, respectively — cracked jokes and shared wisdom from decades in the investing world throughout the more than five hours spent answering questions.
Tens of thousands congregated at the CHI Health Center in Omaha, Nebraska were left laughing on multiple occasions by quips from the nonagenarians.
Here’s some of the best moments from the “Oracle of Omaha” and Munger:
Buffett referenced the coronation of King Charles III in England also scheduled for Saturday as he introduced Munger. Charles was the 40th monarch to be crowned at Westminster Abbey in a tradition that dates back to 1066, according to NBC News.
“When I woke up this morning, I realized that we had a competitive broadcast going out somewhere in the U.K. … They were celebrating a ‘King Charles,’ and we’ve got our own ‘King Charles’ here today.”
Munger said value investors should be prepared to get smaller returns as competition intensifies. But Buffett said there’s still opportunities given so many people have a short-term view and often do stupid things in a panic.
What gives you opportunities is other people doing dumb things … In the 58 years we’ve been running Berkshire, I would say there’s been a great increase in the number people doing dumb things, and they do big, dumb things.
Munger said it’s “insane” to teach that one has to diversify when investing in common stocks.
One of the inane things that’s taught in modern university education is that a vast diversification is absolutely mandatory in investing in common stocks … That is an insane idea. It’s not that easy to have a vast plethora of good opportunities that are easily identified. And if you’ve only got three, I’d rather be in my best ideas instead of my worst.
And he said investors should know themselves and their strengths.
We’re not so smart, but we kind of know where the edge of our smartness is … That is a very important part of practical intelligence. … If you know the edge of your own ability pretty well, you should ignore most of the notions of our experts about what I call ‘deworsification’ of portfolios.
Buffett offered advice on how to live life and spend and invest in a way that isn’t detrimental.
“You should write your obituary and then try to figure out how to live up to it. That’s something you get wiser on as you go along. … You just want to make sure you don’t make any mistakes that take you out of the game or come close to taking you out of your game. You should never have a night when you’re worried about investing, assuming you have any money to invest at all. … Spend a little bit less than you earn, and you can spend a little bit more than you earn. … Then you’ve got debt, and chances are you’ll never get out of debt. I’ll make an exception in terms of a mortgage on your house.”
Buffett said investors don’t need to be experts in technical aspects of businesses if they can understand fundamentals and commit to always learning.
We’re interested in owning a wonderful business forever. … We do learn a lot as we go along. … We’re learning all the time how consumers behave. I’m not going to be able to learn the technical aspects of businesses. It’d be nice if I knew it, but it isn’t essential. … We’ve got a business at Apple … I don’t understand the phone at all, but I do understand consumer behavior. … We’re learning all the time, from all of our businesses. … We don’t get smarter over time, we … get a little wiser, though, following it over time.
Charles Munger at the Berkshire Hathaway Annual Shareholders Meeting in Omaha, Nebraska, April 29, 2022.
David A. Grogan | CNBC
Charlie Munger believes there is trouble ahead for the U.S. commercial property market.
The 99-year-old investor told the Financial Times that U.S. banks are packed with “bad loans” that will be vulnerable as “bad times come” and property prices fall.
“It’s not nearly as bad as it was in 2008,” he told the Financial Times in an interview. “But trouble happens to banking just like trouble happens everywhere else.”
Munger’s warning comes as U.S. regulators have asked banks for their best and final takeover offers for First Republic by Sunday afternoon, the latest in what has been a tumultuous period for midsized U.S. banks.
Since the failure of Silicon Valley Bank in March, attention has turned to First Republic as the weakest link in the American banking system. Shares of the bank sank 90% last month and then collapsed further this week after First Republic disclosed how dire its situation is.
Berkshire Hathaway, where Munger serves as vice chairman, has largely stayed on the fringe of the crisis despite its history of supporting American banks through times of turmoil. Munger, who is also Warren Buffett’s longtime investment partner, suggested that Berkshire’s restraint is partially due to risks that could emerge from banks’ numerous commercial property loans.
“A lot of real estate isn’t so good anymore,” Munger said. “We have a lot of troubled office buildings, a lot of troubled shopping centers, a lot of troubled other properties. There’s a lot of agony out there.”
Charlie Munger at the Berkshire Hathaway press conference, April 30, 2022.
CNBC
Berkshire Hathaway Vice Chairman Charlie Munger urged the U.S. government to ban cryptocurrencies like China, saying a lack of regulation enabled wretched excess and a gambling mentality.
“A cryptocurrency is not a currency, not a commodity, and not a security,” the 99-year-old Munger said in an op-ed published in the Wall Street Journal Wednesday evening.
“Instead, it’s a gambling contract with a nearly 100% edge for the house, entered into in a country where gambling contracts are traditionally regulated only by states that compete in laxity,” Munger said. “Obviously the U.S. should now enact a new federal law that prevents this from happening.”
Munger, along with his business partner Warren Buffett, have been longtime cryptocurrency skeptics, arguing that they are not tangible or productive assets. Munger’s latest comments came as the crypto industry was plagued with problems from failed projects to a liquidity crunch, exacerbated by the fall of FTX, once one of the world’s largest exchanges.
The cryptocurrency market lost more than $2 trillion in value last year. The price of bitcoin, the world’ largest cryptocurrency, plunged 65% in 2022 and it has rebounded about 40% to trade around $23,824, according to Coin Metrics.
The renowned investor said in recent years, privately owned companies have issued thousands of new cryptocurrencies, and they have become publicly traded without any governmental pre-approval of disclosures. Some has been sold to a promoter for almost nothing, after which the public buys in at much higher prices without fully understanding the “pre-dilution in favor of the promoter,” Munger said.
Munger listed two “interesting precedents” that may guide the U.S. into sound action. Firstly, China has strictly prohibited services offering trading, order matching, token issuance and derivatives for virtual currencies. Secondly, from the early 1700s, the English Parliament banned all public trading in new common stocks and kept this ban in place for about 100 years, Munger said.
“What should the U.S. do after a ban of cryptocurrencies is in place? Well, one more action might make sense: Thank the Chinese communist leader for his splendid example of uncommon sense,” Munger said.
Billionaire investor Charlie Munger says he’s never cared about comparing his riches to the money of others.
Rather, he says his motivation in accumulating wealth has always been about securing independence, the freedom to do what he wishes in business and in life — and he wishes more people would follow his example.
The 98-year-old, who has amassed a fortune that Forbes estimates at $2.2 billion, added that it’s easy, and common, for people to become envious. No matter how much some people have, someone else will always have more, he noted.
It’s a sentiment that Munger has expressed in the past, and one he’s previously attributed to his longtime friend and investment partner, Warren Buffett. But Munger seems confident that he’s overcome the tendency himself.
“I have conquered envy in my own life. I don’t envy anybody,” Munger said. “I don’t give a damn what someone else has. But other people are driven crazy by it.”
Of course, it’s easier to say that when you’re a billionaire. Forbes lists more than 1,300 other billionaires with larger fortunes than his — including Buffett, who has an estimated net worth of $106 billion — but Munger’s wealth is still more than enough to ensure he would want for nothing.
In 2017, Munger said in an interview that he always tries to avoid feelings of “envy and jealousy” in business. Those types of thoughts can hurt your career, because you’ll be more likely to make biased decisions that could turn out poorly, he added.
In 2019, he spoke out against envy again, telling CNBC that avoiding envy is one of the “simple” secrets to living a long and happy life.
Indeed, a 2018 study that found people driven by envy are more likely to experience poorer mental health and well-being. The rise of social media has also been criticized for feeding into people’s feelings of envy and materialism — by constantly offering windows into the lives of people who either have, or appear to have, particularly luxurious lives.
Envy is simply “built into the nature of things,” Munger said at the Daily Journal’s meeting. The billionaire added that he can’t understand why people today aren’t more content with what they have, especially when compared to hard times previous generations endured.
Munger himself lived through the Great Depression, and cited poorer living conditions and shorter lifespans as far back as the 1800s as examples of how far humanity has come.
“The fact that everybody’s five times better off than they used to be, they take that for granted,” Munger said. “All they think about is somebody else [has] more now, and it’s not fair that he should have it and they don’t.”
