Charlie Munger was the Vice Chairman of Berkshire Hathaway and Warren Buffet’s right-hand man. He quit a well-established law career to become Warren Buffet’s partner, transforming a textile company into the successful firm Berkshire Hathaway is today. Charlie passed away last week at the age of 99. He was a prolific author and investor and full of wisdom.

Warren Buffet described Charlie as the originator of their investing approach. In this episode of Best in Wealth, I will share eight of his quotes, both simple and profound, that every investor can learn from.

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Outline of This Episode

“Lifelong learning is paramount to long-term success.”

You should always be learning more. Anyone you know who is highly successful is committed to learning. You must be humble enough to admit that you do not know everything. Can one of your major goals for the new year be learning more? Reading more books? What doors will open for you when you focus on learning on growth?

Another thing that Charlie said was “The best thing a human being can do is to help another human being know more.” If I am going to encounter somebody, I want to learn from them. Secondly, I want them to learn something—hopefully good—from me. Why not learn from each other?

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“If I can be optimistic when I’m nearly dead, surely the rest of you can handle a little inflation.”

This was something Charlie said in the 2010 annual Berkshire Hathaway meeting. In 2010, inflation was running higher. He was around 86 at the time. What happened to us when inflation rose in 2023? We felt like the world was ending. How we should behave should always be the same. If he can be optimistic, we can handle a little inflation. There will always be something else to overcome, right?

Charlie also said, “If you are not willing to react with equanimity to a market price decline of 50% two or three times a century, you are not fit to be a common shareholder and you deserve the mediocre result you are going to get.”

If you cannot stay composed when a market declines 2–3 times a century, you cannot handle a high-risk stock portfolio. This happened during the Great Recession and in 2009. Return and risk are directly related. If you want more of a return, you have to accept more risk.

Charlie's most important architectural feat was designing Berkshire

“Forget what you know about buying fair businesses at wonderful prices. Instead, buy wonderful businesses at fair prices.”

This means buying value companies. At Fortress, we like to use book value. Wonderful businesses can be expensive and trade at high multiples. Their book value and stock value are far apart. Those are considered growth companies.

But if wonderful businesses have fallen on rough times—like airlines during the Covid pandemic—it is a wonderful business selling at a fair price. When you look at long-term averages, value companies do better than growth companies. Buying them at a fair price is key.

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The Best In Wealth Podcast is hosted by Scott Wellens. Scott Wellens is the principal at Fortress Planning Group. Fortress Planning Group is a registered investment advisory firm regulated by the US Securities and Exchange Commission in accordance and compliance with securities laws and regulations. Fortress Planning Group does not render or offer to render personalized investment or tax advice through the Best In Wealth Podcast. The information provided is for informational purposes only and does not constitute financial, tax, investment or legal advice.