How Did Charlie Munger Meet Warren Buffett? - Financhill

How Did Charlie Munger Meet Warren Buffett?

How Did Charlie Munger and Warren Buffett Meet? Charlie Munger and Warren Buffett stand out as two of the world’s most successful investors. Both men work for Berkshire Hathaway, where Munger serves as Vice Chairman, and Buffett holds the title of Chairman and CEO.

Buffett tends to get more attention than Munger. After all, Buffett has a net worth over $70 billion, making him one of the wealthiest individuals in the world. Charlie Munger also has personal fortune, but he doesn’t make the list of the world’s top-five wealthiest people.

Munger and Buffett are both from Omaha, Nebraska, but they didn’t meet until several years after Munger had left the town to earn degrees at Columbia University and the University of Pennsylvania. At the time, Munger was 35, and Buffett was 29.

How Charlie Munger Met Warren Buffett

Charlie Munger and Warren Buffett could have encountered each other countless times in Omaha.

At one point, Munger even worked at a grocery store owned by Buffett’s grandfather. Warren Buffett had also worked at the store, but during different years.

After earning a law degree, Munger moved to California to join a firm. When his father passed away, Munger returned to Omaha to attend the funeral and take over the family law practice.

Shortly after moving back to Omaha, a prominent businessman invited him to dinner at his home. This was the first night that Munger and Buffett would enjoy each other’s company.

According to Buffett, the two became friends quickly. They felt a kinship within minutes of sitting down at the dinner table.

Shortly after the first meeting, Munger and Buffett decided to share a meal at Johnny’s Diner. Munger had such a good time that at one point he laughed so hard that he fell on the floor.

When Did Charlie Munger Join Berkshire Hathaway?

Charlie Munger operated Wheeler, Munger and Company from 1962 to 1975. The law firm provided counsel to investors and investment managers. Charlie Munger stopped practicing law in 1965, but he continued managing Wheeler, Munger and Company until 1975.

After leaving his family practice, Charlie Munger joined Warren Buffett at Berkshire Hathaway. He became the investment company’s Vice Chairman in 1978.

Munger became CEO and Chairman of the board at Wesco Financial Corporation in 1984 while maintaining his position at Berkshire Hathaway.

Wesco Financial Corporation primarily focused on issuing insurance with support from subsidiaries Kansas Bankers Surety and Wesco-Financial Insurance Company. Wesco Financial Corporation also owned stock in several large companies, including Kraft Foods and Wells Fargo.

The relationship between Berkshire Hathaway and Wesco Financial Corporation highlights Munger’s genius as an investor.

For many years, Wesco Financial Corporation was predominantly owned by Blue Chip Stamps, a company that Berkshire Hathaway owned.

The arrangement allowed Wesco Financial Corporation, Blue Chip Stamps, and Berkshire Hathaway to earn money by taking slightly different approaches to choosing and managing investments. Although the companies often picked the same company stocks to purchase, they had independent revenue streams

Munger managed Wesco Financial Corporation until 2011, when the company closed.

How Did Charlie Munger Make His Money?

Most people assume that Charlie Munger made his money as the Vice Chairman of Berkshire Hathaway.

Surprisingly, Munger has not taken a raise in about 30 years. In fact, Munger and Buffett talk openly about the need for corporate leaders to take lower salaries. The pair agree that CEOs do not need excessive pay to do their jobs well.

So, how did Charlie Munger make his money? Most of it comes from investing in the stock market and ownership of Berkshire Hathaway stock. At the end of February 2020, one share of Berkshire Hathaway had a value of over $340,000. Even after the stock market plunge, Munger was still worth north of a billion dollars.

Having access to so much investment information and expertise certainly helps Munger choose smart investment options. Having Warren Buffett as a close friend can only help!

Experience working as an investment lawyer has also helped Munger maximize his returns while staying without violating regulations.

Munger knows how to create corporations and other entities that lower tax burdens. By keeping tax burdens and other payments low, he can reinvest more money into the stock market. Over time, his investments have grown exponentially.

How Rich Is Charlie Munger?

Charlie Munger has an estimated net worth of $1.6 billion, which makes him approximately the 500th richest person in the world. Obviously, that’s a lot of money. Compared to Buffett, though, Munger’s fortune looks small.

People have explained the difference between Munger’s and Buffett’s fortunes in several ways. Munger was older than Buffett when he started working for Berkshire Hathaway. A few years can make a huge difference when you consider how compound interest works.

Munger has also given away more money than Buffett. This isn’t necessarily because Munger is a more charitable man. The two just have different perspectives on how to use their money best.

Munger wants to donate to causes during his lifetime so he can support important work now. Buffett plans to leave his fortune to charities, so he believes that he can do the most good by keeping his money in the market until he dies.

Munger also has a much larger family than Buffett. Warren Buffett has three children. Charlie Munger has nine children, including two step-children from his second marriage.

Raising such a large family would have required a lot of money. Every dollar that Munger spent supporting his family took away from the overall amount that he could invest. Even a few thousand extra dollars per year can turn into millions of dollars in the hands of expert investors like Munger and Buffett.

Regardless, Munger has more money than nearly anyone else. Somehow, he continues working even though he’s nearly 100 years old.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.

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