Warren Buffett and Charlie Munger: Biography of the Greatest Investing Duo Ever

By Wesley Anderson

Two investing titans, their lives closely intertwined. Now, this ground-breaking book seeks to pull back the curtain on their lesser known early years and give a powerful view of why these men grew to be the influential powerhouses they are today.

 

Inside this detailed account of the greatest investing duo who ever lived, you'll discover everything from their upbringings and family lives to the investing deals that mark their careers. From Warren's rocky start in life and his rise to financial fame, to the key partnerships which formed the duo that shook the world, you'll learn about their key roles in company wars, the partnerships that let businesses rise to glory, and how their investments shaped the corporate world.

 

But aside from the success stories, you'll also get a chance to read about the mistakes and troubles that impacted their careers – along with how they overcame them all. From ill health and the 2008 housing crash to the countless ups and downs of their careers, this incredible account of Warren and Charlie's lives is a testament to how these men persevered against all hardship to cement their places in financial history, along with the life lessons they learned along the way.

 

Covering the lives of Warren's forefathers and the events which shaped the family, buy now and discover the secrets of why these men are known as the greatest investing duo ever!

• Language: English
• Publisher: Wesley Anderson
• Release date: Apr 11, 2020
• ISBN: 9781393528227

Book preview

Warren Buffett and Charlie Munger

Biography of the Greatest Investing Duo Ever

––––––––

By Wesley Anderson

© Copyright 2019 - All rights reserved.

The content contained within this book may not be reproduced, duplicated, or transmitted without direct written permission from the author or the publisher.

Under no circumstances will any blame or legal responsibility be held against the publisher, or author, for any damages, reparation, or monetary loss due to the information contained within this book. Either directly or indirectly.

Legal Notice:

This book is copyright protected. This book is only for personal use. You cannot amend, distribute, sell, use, quote or paraphrase any part, or the content within this book, without the consent of the author or publisher.

Disclaimer Notice:

Please note the information contained within this document is for educational and entertainment purposes only. All effort has been executed to present accurate, up to date, and reliable, complete information. No warranties of any kind are declared or implied. Readers acknowledge that the author is not engaging in the rendering of legal, financial, medical, or professional advice. The content within this book has been derived from various sources. Please consult a licensed professional before attempting any techniques outlined in this book.

By reading this document, the reader agrees that under no circumstances is the author responsible for any losses, direct or indirect, which are incurred as a result of the use of information contained within this document, including, but not limited to, — errors, omissions, or inaccuracies.

Table of Contents

Introduction

Chapter 1: Beginnings

Opportunity Knocks

The Mungers

Fathers and Sons

Meeting Leila

Meanwhile at the Mungers’

A Disaster and a Blessing

Chapter 2: Childhood and Other Stories

Buffett, Sklenicka & Co.

Troubles and Opportunities

Growing up Buffett

Charlie’s Models

Math and Other Subjects

Higher Learning

Warren and the Money Game

The First Lesson

Chapter 3: Disruption

Descent

Washington

Buffett and Son

Problem Child

Chapter 4: College and War’s End

Life Lessons

Rule Number One

Handicapping

Wharton and Back

Chapter 5: To New York via Chicago

Lincoln, Nebraska

Harvard

Columbia

The Insurance Business

The Common Stock Valuation Seminar

Chapter 6: Susie and Warren

Courtship

The Guard and Speaking Lessons

The Courtship Continues

Married Life

Chapter 7: Bad Times and Good Times

Cocoa Beans and Arbitrage

Rockwood & Co.

Union Street Railway

Leaving New York

Chapter 8: Partnerships

Ground Rules and Even More Partnerships

National American Fire Insurance

Buying a Town and Other Adventures

Chapter 9: Gains and a Loss

New Partnerships

Beatrice, Nebraska

Munger Rising

American Express

A Shock

Chapter 10: Mistakes and a Pot of Gold

Getting More Than Bargained For

Things Going Pear Shaped

The Munger Partnership

National Indemnity

Chapter 11: Business and Journalism

A New Partnership

Illinois National Bank and Trust

Study Sessions

The Sun

Conflicts of Interest

Troubles

See’s Candy

Pulitzer

Chapter 12: Relationships

Intertwined Businesses

Developments at The Post

Trouble

An Old Flame

Once in a Lifetime

At Home

Chapter 13: Ups and Downs

Salomon Brothers

Board Members

Failures

Pepsi Dethroned

The End of Cigar Butts

A New Friendship

Saviors...or Not

The Millennium

Asian Adventures

Charity

Ill Health

Chapter 14: Behemoths

Bargains in a Crisis

Fiduciary Duty

Smoke and Fire

Sophisticated Cigar Butts

Delayed Adventures in Tech

Kraft-Heinz

Time

The Mecca of Capitalism

Bibliography

Introduction

In compiling the biographies of the two greatest investors of all time, we’re faced with a dilemma. How does one deal with two very similar yet very distinctly different individuals, so intertwined together? On one hand, we have Warren Edward Buffett, gregarious and quite willing to share his thoughts with the world and on the other, we have Charles Thomas Munger, reticent and about whose life and formative years, not much is known.

This reticence is not the product of whitewashing or concealing anything, it’s merely the product of the nature of the man. While Munger is perfectly fine talking about his thought process and about thinking in general, he’s not very eloquent when it comes to his own life experiences.

Buffett, on the other hand, cannot be accused of reticence. It is surprising that he thinks of himself as introverted when one would assume the exact opposite given his public persona. Buffett has been kind enough to open his life to Alice Schroeder in his biography and this remains the only work dedicated to his life and upbringing.

The duo’s business exploits form an integral part of their lives and we should be thankful that all of this has played out largely in the public eye via security filings and other public proclamations. The Berkshire Hathaway annual meetings have provided a lot of material for this book as have the annual reports penned by Buffett.

This book aims to shine a light on the lives of these extraordinary men and their wealth of experience, which is many multiples bigger than their combined net worth. We will see how despite some surface level contradictions, both men are actually quite similar and how they have influenced one another over the course of their long lives.

The reader must excuse us for a few shortcomings. First, beyond cursory facts and quotes uttered by the man himself, there is not much detail about Munger’s earlier years prior to his working with Buffett as the co-chairman of Berkshire. Thus, this book is slightly weighted towards Buffett overall and is almost all about Buffett initially.

Second, it is impossible to possess any mechanism by which we could drill into the minds of the men themselves and extract the real reasons and motivations for their actions. Where possible, we have referenced sources which have led us to form certain conclusions but there is some conjecture involved when writing a book of this sort. The reader would do well to keep this in mind as they go along.

Third, there is already extensive media devoted to each and every utterance of both men and their investment philosophy. This book will not attempt to collect those words. Instead, it aims to shine a light on the parts of their lives which are not as well known, such as their earlier days. So those looking for a complete thesis on why they invested in company X are better off reading The Warren Buffett Way by Robert Hagstrom.

As you progress through this book, you will learn some facts which will surprise you and you will also be introduced to tangential characters who deserve biographies in their own right. The fact that men and women of such stature form mere tangents points to the immense stature of this book’s primary subjects.

All the information presented in this book, where it concerns personal relationships between the subjects and their family, is cited with sources in order to justify any conclusions made. You should keep in mind that this information is not presented as gossip but instead, to paint as rounded a picture as possible.

A well-rounded picture is perhaps impossible to paint since the business exploits of these men cast such a large shadow over everything else; it’s close to impossible to attempt to balance the positive with the negative.

Having said all that, let’s begin our journey and go back to the very beginning.

Chapter 1: Beginnings

The year is 1867. Omaha in the American state of Nebraska, in the American Midwest, is a collection of wooden huts. Omaha is so desolate that even one horse towns can claim bigger populations. In this middle of nowhere place, a young teenager named Sidney arrives from Long Island, New York.

Sidney might be thought of as a bit mad to leave the relative prosperity of Long Island and the adjacent New York City for Omaha. As a town, Omaha was never known for anything productive other than being a stopover for gold prospectors who were on their way to seek their fortune further west. As such, it had a fully deserved sinful reputation in this conservative, Christian state.

There were events afoot that would change all this though. After the civil war had ended, a plan to link the coasts of the unified states was being drawn up and no one less than Abraham Lincoln himself had proclaimed that Omaha was to be one of the centers for this new railroad.

It is with this in mind that Sidney Homan Buffett first moved to Omaha.

Opportunity Knocks

In what can now be viewed as an inspired decision, Sidney Buffett moved out west in order to join his maternal grandfather’s business. Soon, the arrival of Union Pacific gave the sleepy town of Omaha a new sense of purpose and identity. There was opportunity abound and the population of this once sleepy town grew exponentially.

In all of this Sidney decided he had spotted an opportunity. The new people arriving needed grocery staples and with this in mind, he opened Omaha’s first ever grocery store. While it’s easy to see the wisdom in this now, we must keep in mind Omaha was still a town in the middle of nowhere with the railroads still being a promise and not a fully formed reality.

Indeed, the prevailing viewpoint at the time can be ascertained from his grandfather, Zebulon’s, letters to him which usually voiced concern and were full of grandfatherly advice (Schroeder)¹:

Try to be punctual in all your dealings. You will find it difficult to deal with some men, deal as little as possible with such...Save your credit, for that is better than money...If you go into business, be content with moderate gains. Don’t be too hasty to get rich...I want you to live so as to be fit to live and fit to die.

Armed with this timeless advice, which might as well double as the Buffett family motto, Sidney eventually built the grocery store into a success, in lockstep with Omaha’s burgeoning size, and soon married Evelyn Ketchum. They had a few tragedies in the form of their children dying early in their lives. One of their children who survived was a boy named Ernest.

If there ever was a man who could fit the role of the family patriarch, it was Ernest Buffett. As a boy, he didn’t have much use for schooling and joined his father behind the counter of their grocery store at an early age. By all accounts, Ernest was an extremely vociferous and passionate personality, the sort of man who felt what he said was best and you would be damned if you didn’t acknowledge it. Buffett would say later on that his grandfather always seemed to speak in exclamation points. (Schroeder)³

Ernest took to the grocery business like a duck to water and soon set about stamping his authority upon it. He took his job seriously and with an almost religious fervor. As a young man, he married a woman named Henrietta Duval and they had five children; 4 boys, Clarence, George, Howard, and Fred; and a girl, Alice.

The Buffetts, being amongst Omaha’s pioneering families took their image and their position within society quite seriously. A characteristic of all Buffetts seems to have been their tendency to preach. Indeed, this can be seen even in Warren’s tendencies to explain and talk in length about his business and the way he conducts it.

Henrietta is said to have loaded the family wagon with her children and traveled the countryside with an intention to preach to the families living outside of Omaha. The Buffett couple was, by all accounts, iron disciplinarians and believed in the discipline of hard work and of earning one’s way in life. Here are the words of Ernest Buffett (Schroeder)⁴:

I might mention that there has never been a Buffett who ever left a very large estate, but there has never been one who never left something. They never spent all that they made, but always saved part of what they made, and it has all worked out pretty well.

Henrietta insisted on her children receiving a college education and to improve their lot in life, not that their current lot was poor. All the Buffett children worked at the store growing up and while their childhood was comfortable, it can be classified as what we would consider middle class these days.

The Buffett's second youngest son and Warren’s eventual father, Howard, was born in 1903 in Omaha.

The Mungers

The early history of the Munger family is not publicly known. All that is known is that the Munger’s lot was consigned to poverty early in their family history. The first person to drag the family out of their miserable state was T.C Munger, who would go on to become a respected federal judge.

Self-educated and born in poverty, T.C. Munger was a feared and well-respected man and his fame dragged the Munger name right into the living rooms of every American household. Nominated by President Theodore Roosevelt to the position in 1907, the judge was known to believe in the propriety of self-reliance and man’s righteous conquest of nature.

The judge had a son named Alfred, who also went on the become a successful lawyer and the Mungers at some point also moved to Omaha, Nebraska.

Fathers and Sons

While Alfred Munger worked his way to becoming a successful and respected, if not rich, lawyer in Omaha, Howard Buffett chafed at the rigidness of the Buffett household. Given his status as one of the younger children, he didn’t get to enjoy too many new things. His clothes were those of his elder brothers and about town, he was seen as the son of a grocery store operator. The flashy fraternities, as a result, looked down upon him and Howard was an outsider. (Schroeder)⁵

This rejection Howard faced from the fraternities can be explained by the fact that by the early 1900s Omaha, while grown in size, had become a town with rigidly controlled business interests. As is often the case with small towns, the main industries of banks and stockyards were controlled by a select few families.

Added to this was the new found fortune from the now prohibited alcohol business. All of this left Howard with a seething resentment towards all snobbery associated with wealth acquired via inheritance and birth. It was an attitude he would eventually pass on to his son Warren. This is demonstrated by Warren’s quote below (Schroeder)⁶:

"Imagine there are two identical twins in the womb, both equally bright and energetic. And the genie says to them, ‘One of you is going to be born in the United States, and one of you is going to be born in Bangladesh. And if you wind up in Bangladesh, you will pay no taxes.

What percentage of your income would you bid to be the one that is born in the United States?’ It says something about the fact that society has something to do with your fate and not just your innate qualities.

The people who say, ‘I did it all myself,’ and think of themselves as Horatio Alger – believe me, they’d bid more to be in the