The Amazing Life Story of

Charlie Munger before Berkshire

Hathaway
Keshav Bagri Mar 2, 2019 · 7 min read

It was while reading the newsletter of Mission.org (one of my favorites)

that I chanced upon the life story of Charlie Munger and I was super
amazed. This was something which deserved to be broadcast to the world.
Not just for his fascinating journey but for the sheer persistence and grit
which Munger displayed as he got knocked with tragedy after tragedy but
resurrected to become one of the most iconic investor legends in today’s
world. In a sense, it also highlights the utopian case of what ‘truly loving
your job’ can result in when we look at the dynamic investor duo of Warren
Bu et (88) and Charlie Munger (95) and their ve-decade plus journey.

Bu et and Munger are already media favorites with lots of their insights on
investing, business and success captured frequently. Their Annual
newsletters (2018 out recently) and Shareholders Meeting in Omaha every
year in May are one of the most keenly anticipated events in the investor
world (all truly well deserved!). Relatively less though is known about
Charlie Munger’s early childhood and growing up years and the personal
demons he fought before he became what he is today (which will be the
focus of my piece). So before diving in, I provide a brief bio about Munger
(for those who don’t know much about him) and promise won’t be coming
back to his present life in this piece again!

Munger is the Vice Chairman of Berkshire Hathaway and is reportedly

worth shy of just $2bn. He is also a Chairman of the Daily Journal Corp and
sits on the board of retailer Costco. In the 54 years (and counting) reign of
Bu ett and him at Berkshire, the company has returned 2,000,000% (you
gotta be kidding me!) on its initial value only through investing capital in
enterprises at the ‘right time’ and for the ‘right duration’ most of which
went on to be the best market winners (Amex, Coca-Cola, Southwest
Airlines, Walt Disney, Gillette, GEICO, Goldman Sachs, Apple etc.)

But how did Charlie Munger meet Warren Bu et and most importantly
what was his life like prior to Berkshire like? Let’s begin!

Image Credits: CNBC

Charlie grew up in a small mid-western town in the US. Just as he enrolled

in the University of Michigan for graduation Pearl Harbor was attacked. As
the U.S. declared war, he dropped out to enlist in the U.S. Army Air Corps.
It was 1943, and the small division of the Army was spun out into the US
Air Force. Munger became an o cer, was stationed to Alaska and while
training met Nancy Huggins. The two started dating and married soon
after. The years slowly passed accompanying death, destruction, and the
madness of war.

As the war ended it brought relief but it also brought along a nagging
question for Charlie, What next? The answer for him was to think bigger.
Charlie took a risk, ignored the conventional wisdom to nish his
undergraduate degree rst and enrolled in advanced graduate courses at
Caltech. Once con dent enough he used his graduate level courses to sneak
into Harvard Law School, where he graduated magna cum laude (top
distinction). In the military, he had learned to play cards. And at Harvard,
the hobby took a more sophisticated and professional approach as he
turned his attention towards a larger gambling arena- “The stock market”.
He was 29 and life looked all hunky dory for him till now. But that was not
to be for long. After 8 years of marriage and 3 children, his marriage was
not working and divorce followed.

Divorce had a huge social stigma attached at that time and it was the rst
blow for Munger. His wife also got almost everything in the separation,
including the house. Charlie moved into “dreadful bachelor digs” and drove
an “awful” yellow Pontiac with a shoddy repaint job. He, however,
summoned all his courage, worked crazy all week to recover the money lost
in the divorce. On Saturdays, outing with children to the zoo was meant as
a palliative to forget his exhaustion and separation.

This was just the beginning and life had to still test him out further. A year
later, his 8-year-old son Teddy, got leukemia which had no treatment and
no medical insurance in those days. Charlie paid for everything out-of-
pocket because there was no health insurance. Each day he would take
Teddy to the hospital for checkups while taking care of his other two
children and practicing law. Those 11 months were the ‘toughest’ as he saw
his son growing weaker nearing his death. According to his friend Rick
Guerin, Charlie would visit the hospital when his son “was in bed and
slowly dying, hold him for a while, then go out walking the streets of
Pasadena crying.” Teddy passed away at the tender age of 9 leaving him
heartbroken.

At this stage of life with everything going against him- a failed marriage,
being nancially broke, losing his son, it would have been tempting to just
give it all up and turn to vices (alcohol, drugs) as so many people around
him had done at that time. But Charlie was not that man and he kept
going.

Later, he re ected on the inner turmoil that he could’ve given in to and

said:

“Generally speaking, envy, resentment, revenge, and self-pity are disastrous

modes of thought. Self-pity gets fairly close to paranoia, and paranoia is one of
the very hardest things to reverse. You do not want to drift into self-pity… Self-
pity will not improve the situation.”

As he started feeling better, he began searching for a new wife. Soon, he

found Nancy Barry who also had two children from a previous marriage as
did Charlie. The six of them became family and things started looking up.
That was not to be for too long though as he heard of the untimely demise
of his father. Charlie had to return home to Nebraska to support his family
through the challenging times. While there, a friend insisted he meet a
quirky mid-western investor (no points for guessing who he was!). The two
of them hit it o and remained in close touch as Charlie returned back to
California.

Back in California, Charlie left his job and started his own law rm focused
on real estate. It would not be long before he would stop practicing law
entirely to focus on investment management. As he sharpened his investor
skills and blended his passion (recall the earlier card playing and stock
market days) with work, his investments started delivering an annual
return of 20%+ which was 4 times the average market rate of the time.
Ambition burned within him, but adversity being his constant companion
struck again soon enough.

His investments did not go as expected and he faced two years of heavy
losses. His gut instinct told him to fold up and he closed his investment
partnership. A couple of years later at the age of 52, he developed
cataracts. The botched surgery left him blind in one eye and caused
complications similar to cancer. His blind eye throbbed with pain so intense
that he couldn’t stand up. Desperate to end it, he requested the doctor to
remove his entire eye.

Eager to prove his investor mettle and with the underdog re burning, he
returned to investing. As he stepped up his game he learned from his
previous struggles to be calm, careful and take calculated forward-thinking
risks. Throughout this time, his friendship with the quirky midwestern
investor continued. Slowly but steadily Charlie being the diligent learner
had mastered his investing skills to an extent that he became that quirky
investor’s investment advisor!

As they started investing together they rst bought stock in a textile

company which started to wane. The two doubled down to nd and invest
in other promising businesses and retained the name of the failing textile
business for their holding company- Berkshire Hathaway.

The quirky investor friend was… Warren Bu ett!

The dynamic investor duo!

Munger went through personal hell before he turned his life around. Each
of his misfortunes was bad enough to knock him down badly, wallow in
self-pity and doubt and succumb to depression. But he persevered through
rock solid determination and an iron will.

He remembers Epictetus when talking of the countless adversities faced.

“Every missed chance in life was an opportunity to behave well, every missed
chance in life was an opportunity to learn something, and that your duty was
not to be submerged in self-pity, but to utilize the terrible blow in a constructive
fashion.”

Winston Churchill also said it best, “If you’re going through hell, keep going.
There is always a way up and out. If you are persistent enough and have the
courage not to quit, you’ll nd it.”

Ending the piece with ve of Munger’s best quotes (was tough to pick since
there are quite a lot!)

“You’re looking for a mispriced gamble. That’s what investing is. And you have
to know enough to know whether the gamble is mispriced. That’s value
investing.”

“You don’t have to be brilliant, only a little bit wiser than the other guys, on
average, for a long time”

“The big money is not in the buying and selling but in the waiting”

“Like Warren, I had a considerable passion to get rich, not because I wanted
Ferraris — I wanted the independence. I desperately wanted it.”

“I always say I want to know where I would die so I can never go there.”

Heavy credits for this story and idea to: Mission Blog. You guys are terri c!

If you got curious to know more about the amazing person that Charlie
Munger is, here is an absolutely fantastic repository by Farnam Street
(treasure treat and another personal favorite!)