Quote of the Day by Charlie Munger: ‘The whole trick of the game is to…’

Berkshire Hathaway co-founder and long-time friend of Warren Buffett, legendary investor Charles Thomas Munger has built a following of his own among the community. The late billionaire left behind a treasure trove of tried and tested investing advice over the years.

Even Buffett (95), dubbed ‘The Oracle of Omaha’ due to numerous impeccable investment decisions over the years, credits Munger for teaching him a few things.

In an obit piece after Munger passed away in November 2023, Bloomberg noted his importance as a “straight man and scold of corporate excesses” who provided a reality check and balance against Buffett's fame and wealth.

But there is also another aspect to the late billionaire's quote here. He notes that “just a few opportunities are enough”, what he means is that diversification is one course of action, but when seeking “excellence” it is imperative to identify a good business, “or two or three”, to make your investment.

Together, his quote views experience and time as the biggest teacher. When you've seen a lot of companies and stocks come and go, over time you will get better at identifying markers for those that are more likely to become a success. 

Buffett himself, expouses the same philosophy. Addressing students at the University of Georgia's Terry College of Business in 2001, he shared a guiding metric to use when making investment decisions — view opportunities as marks each on a 20-slot punch card, where “every financial decision you made, you used up a punch”. He added that treating investment opportunities as only one punch card with only 20 punches during your lifetime ensures that you consider every investment deeply and make good decisions. So good infact, that “you probably wouldn’t even use all 20 punches in your lifetime.”

A lawyer by training, Munger helped Buffett, who was seven years his junior, craft a philosophy of investing in companies for the long term. Buffett has credited him with shaping Berkshire Hathaway’s investing style and pushing the ‘Oracle of Omaha’ away from cheap “cigar-butt” stocks toward high-quality businesses at fair prices.

Under their management, Berkshire averaged an annual gain of 20% from 1965 through 2022 — roughly twice the pace of the S&P 500 Index. Decades of compounded returns made the pair billionaires and folk heroes to adoring investors.

Munger was vice chairman of Berkshire from 1978 until the day he died at 99 in 2023. He was also among the company's biggest shareholders, with stock valued at about $2.2 billion. His overall net worth was about $2.6 billion, according to Forbes.

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