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As Berkshire Hathaway vice chairman, his sharp wit dazzled generations of investors

No equal business partner has ever played second fiddle better than Charlie Munger.

Warren Buffett’s closest friend and consigliere for six decades, the billionaire vice chairman of Berkshire Hathaway died Tuesday at age 99 in a California hospital. A news release from Berkshire confirmed his death.

In public, especially in front of the tens of thousands of attendees at Berkshire’s annual meetings, Munger deferred to Buffett, letting the company’s chairman hog the microphone and the limelight. Munger routinely cracked up the crowd by croaking, “I have nothing to add.”

In private, Buffett, who is 93, often deferred to Munger. In 1971, Munger talked him into buying See’s Candy Shops for a price equivalent to three times the chocolate stores’ net worth—a “fancy price,” Buffett later recalled, far higher than he was accustomed to paying for businesses.

See’s would go on to generate some $2 billion in cumulative earnings for Berkshire over the coming decades.

As Buffett wrote in 2015, “This purchase ended my pursuit of ‘cigar-butt’ investments—mediocre companies at ‘bargain’ prices—and set me in pursuit of splendid businesses selling at [reasonable] prices.” He added, “Charlie had been urging this course for some years, but I was a slow learner.”

Buffett nicknamed Munger the “abominable no-man” for his ferocity in rejecting potential investments, including some that Buffett might otherwise have made. But Munger, who was fascinated by engineering and technology, also pushed the tech-phobic Buffett into big bets on BYD, a Chinese battery and electric vehicle maker, and Iscar, an Israeli machine-tool manufacturer.

Munger was a brilliant investor in his own right. He began managing investment partnerships in 1962. From then through 1969, the S&P 500 gained an average of 5.6% annually. Buffett’s partnerships returned an average of 24.3% annually. Munger’s did even better, averaging annualized gains of 24.4%.

In 1975, shortly before he joined Berkshire as vice chairman, Munger shut down his partnerships. Over their 14-year history, his portfolios gained an average of 19.8% annually; the S&P 500 grew at only a 5.2% rate.

The two men had long invested differently. Buffett, under the influence of his mentor Benjamin Graham, would buy almost any business, even if it was near-dead, so long as it was cheap.

Among such “cigar butts” was Berkshire Hathaway itself, which had been a dilapidated textile manufacturer when Buffett bought it in 1965.

As Buffett turned Berkshire into a holding company for insurance and other firms, he kept looking for mediocre businesses at bargain prices. Munger instead focused on great businesses at acceptable prices, reckoning that their ability to produce cash in the future would more than compensate for paying a premium price up front.

Over years of discussion, Munger persuaded his partner to change.

“I have been shaped tremendously by Charlie,” Buffett said in 1988. “Boy, if I had listened only to Ben [Graham], would I ever be a lot poorer.”

In 2015, Buffett wrote that Munger taught him: “Forget what you know about buying fair businesses at wonderful prices; instead, buy wonderful businesses at fair prices.”

Berkshire “has been built to Charlie’s blueprint,” Buffett added.

Charles Thomas Munger was born in Omaha, Neb., on New Year’s Day, 1924. His father, Alfred, was a lawyer; his mother, Florence, was a homemaker and avid reader.

Munger majored in mathematics at the University of Michigan, then left school to enlist in the U.S. Army Air Corps during World War II. The military first sent Munger to study thermodynamics and meteorology at the University of New Mexico and the California Institute of Technology, then posted him to an air base in Nome, Alaska, where he served as a weather forecaster.

After the war, Munger talked a dean at Harvard Law School into admitting him without a college degree. He graduated magna cum laude.

He considered joining his father’s practice in Omaha before settling in Southern California. He and several partners eventually opened their own law practice in 1962. Today the firm, known as Munger, Tolles & Olson, employs about 200 lawyers.

His first marriage, to Nancy Huggins, ended in divorce. He married his second wife, Nancy Barry Borthwick, in 1956. She died in 2010. They had four children together and two each from their prior marriages.

Munger also confronted tragedy: In 1955, his son Teddy died of leukemia at age 9. Munger later recalled pacing the streets of Pasadena in tears at “losing a child inch by inch.” More than six decades later he would still choke up at the memory of his son’s suffering.

In 1978, a surgeon bungled a cataract surgery, leaving Munger blind in one eye, which later had to be surgically removed. The investor refused to blame the doctor, noting that complications occurred in 5% of such procedures. For him, as always, it was about the numbers.

Munger taught himself Braille, then realized he could still see well enough to read. He ended up driving his own car, often to the consternation of friends and family, until his early 90s.

The two men who would run Berkshire Hathaway met in 1959 when Munger, who had already moved to Los Angeles, went to a dinner in his hometown that Buffett also attended.

They already knew each other’s names: Munger worked in Buffett’s grandfather’s grocery store as a boy. One of the first investors in Buffett’s partnership gave him money because, he said, “You remind me of Charlie Munger.”

Buffett’s first wife, Susan, recalling that dinner, said in 1998: “I think Warren felt that Charlie was the smartest person he’d ever met, and I think Charlie felt Warren was the smartest person he had ever met.”

They instantly hit it off and before long became inseparable, often talking by phone several times a day.

A photo from a trip to Savannah, Ga., in the 1980s captures the two investors looking eerily alike: talking and striding in lockstep, both wearing khakis and open-collared blue dress shirts. Everything from their height to their hairlines, from their eyeglass frames to the wrinkles in their clothes, seems to match.

Munger’s hero was Benjamin Franklin, whom he admired for his curiosity, ingenuity and wit. Munger’s own common sense, biting humor, pathological bluntness and disdain for conventional wisdom made him a celebrity among investors.

During the question-and-answer sessions at Berkshire’s annual meetings, Munger would sit silent as Buffett spoke in elaborate paragraphs. The adoring audience knew Munger was waiting to uncork a zinger.

At Berkshire’s annual meeting in 2000, a shareholder asked how the speculation in Internet stocks would affect the economy. Buffett answered with nearly 550 words. Munger growled, “if you mix raisins with turds, they’re still turds.”

When a shareholder asked at the 2004 meeting how Berkshire sets pay for executives, Buffett spoke for more than five minutes. Munger drawled, “Well, I would rather throw a viper down my shirtfront than hire a compensation consultant.”

In an op-ed for The Wall Street Journal in 2023, published when he was 99, Munger called for the U.S. government to ban bitcoin and other cryptocurrencies, writing that crypto is “a gambling contract with a nearly 100% edge for the house.” Earlier, he had described bitcoin as a “scumball activity” and “rat poison.”

Munger’s laconic image was only an act he put on to avoid upstaging Buffett. When he wasn’t sharing the limelight with Berkshire’s chairman, Munger was loquacious. At regular lunches and dinners with friends and family, and at the annual meetings of Daily Journal, a small media company he chaired, he would speak for hours.

As many friends noted, if he paused to take a sip of water and someone else started to talk, Munger would imperiously raise his index finger to prevent the other speaker from cutting in before he could finish swallowing.

His stamina was extraordinary, too. In 2019, when Munger was 95, two Wall Street Journal reporters showed up at his modest house in Los Angeles at 6 p.m. He talked nearly nonstop until almost midnight. Several times after 10 p.m., one or both of the reporters haltingly began to stand up to leave; Munger motioned them to sit back down.

In August 2023, at age 99 and mostly wheelchair-using, Munger insisted on joining his large family, including more than a dozen grandchildren and great-grandchildren, on the annual fishing trip they had been making to Minnesota for decades.

At that time, Munger was “mentally even better than he’s ever been before,” said his friend Peter Kaufman, chairman of Glenair, an aerospace-parts manufacturer.

Content with his public persona as Buffett’s cantankerous sidekick, Munger amassed his own fortune.

He donated to institutions ranging from Stanford University and Los Angeles’s Good Samaritan Hospital to Planned Parenthood. He was also an amateur architect and lived in the house he had designed himself in the 1950s. Late in life, he became obsessed with designing buildings for university and high-school campuses.

Alongside investment gains came a cult following. Munger chaired Wesco Financial, a Berkshire unit whose shares remained publicly traded until its corporate parent absorbed the firm entirely in 2011. Fans flocked from as far away as China and India to hear him speak at Wesco’s annual meetings, and later Daily Journal’s.

An anthology of writings by and about Munger called “Poor Charlie’s Almanack,” edited by Kaufman, became an international bestseller.

Munger never stopped preaching old-fashioned virtues. Two of his favorite words were assiduity and equanimity.

He liked the first, he said in a speech in 2007, because “it means sit down on your ass until you do it.” He often said that the key to investing success was doing nothing for years, even decades, waiting to buy with “aggression” when bargains finally materialized.

He liked the second because it reflected his philosophy of investing and of life. Every investor, Munger said frequently, should be able to react with equanimity to a 50% loss in the stock market every few decades.

Munger retained his sense of humor into his 90s, even though he was nearly blind, could barely walk, and his beloved wife, Nancy, had died years earlier. Around 2016, an acquaintance asked which person, in a long life, he felt most grateful to.

“My second wife’s first husband,” Munger said instantly. “I had the ungrudging love of this magnificent woman for 60 years simply by being a somewhat less awful husband than he was.”

The widow of the late casino mogul plans to sell $2 billion of stock to acquire a stake in the NBA franchise

One week before the NBA touches down in Las Vegas for the final of its inaugural In-Season Tournament, Sin City has forged another link to the hardwood. The family of the late casino mogul Sheldon Adelson has agreed to buy a majority stake in the Dallas Mavericks from entrepreneur Mark Cuban, a source familiar with the deal said Tuesday.

Las Vegas Sands disclosed plans by Miriam Adelson, Sheldon Adelson’s widow, to sell an estimated $2 billion in stock in the company, which a regulatory filing said would be “used to fund the purchase of a majority interest in a professional sports franchise…subject to customary league approvals.” NBA reporter Marc Stein first reported that the franchise in question would be the Mavericks.

Since he purchased the Mavericks in 2000, Cuban has stood out among the NBA’s buttoned-down ownership class. He regularly forgoes a luxury suite to sit near his team’s bench, and he cuts an emotional figure courtside. Cuban pumps his fists and shouts to support the Mavericks; he has racked up fines for berating officials when their whistles don’t go his way. The tab of fines he’s incurred from the NBA over the years goes well into the millions.

There has been a method to what has sometimes seemed like madness. The Mavericks have reached the postseason 18 times during Cuban’s tenure, including two appearances in the NBA Finals, winning a championship in 2011. They have also been the American home of two of basketball’s most iconic European players: the Hall-of-Fame forward Dirk Nowitzki, who was the centerpiece of the title team, and the 24-year-old wunderkind Luka Doncic, one of the top scoring and assist threats in today’s game.

Sheldon Adelson, who died in 2021 at the age of 87, rode his success in the casino industry to a fortune worth more than $30 billion and a standing as one of the country’s most prolific Republican donors. Together, he and Miriam, a physician who founded two research centers for fighting substance abuse, contributed $20 million to Donald Trump’s 2016 campaign. In 2018, President Trump awarded Miriam Adelson the Medal of Freedom.

Las Vegas Sands has lobbied in recent years for legalization of casinos in Texas, an effort that has so far failed.

Regional and smaller lenders could be exposed as central bank tightens policy

Japan’s regulators are raising pressure on regional banks to pre-empt the kind of risks that took down Silicon Valley Bank as the country prepares for its first interest rate rise in more than a decade.

Even as Japan’s biggest banks churn out record profits and anticipate further gains from domestic rate increases, the country’s central bank warned in its recent Financial Stability Report that regional banks and shinkin financial co-operatives were exposed to interest rate risk after piling into long-term loans and securities.

Rising rates are normally welcomed by commercial banks, which can profit from a wider margin between what they charge for lending and what they pay to borrow. But dangers on the other side include so-called duration risk, which measures the exposure of long-term bonds to unexpected changes in interest rates. The risks can crystallise if banks are forced to sell long-term assets that are losing value as interest rates rise.

Regulators are growing concerned that stress on regional banks could deepen next year if the Bank of Japan finally ends its negative rate policy.

BoJ governor Kazuo Ueda told the Financial Times Global Boardroom conference this month that the country’s banking system was robust enough to withstand some increase in short-term interest rates if it were to begin policy normalisation. But he added: “It’s a matter of degree so . . . we’ll have to monitor the situation carefully.”

As of the end of September, Japan’s 97 regional banks reported unrealised losses on bonds and investment trusts totalling about ¥2.8tn ($19bn), up 70 per cent from the end of June, according to calculations by Nikkei. The amount jumped after 10-year Japanese government bond yields rose when the BoJ loosened its yield curve control policies in July.

“In the worst-case scenario, the banks can hold on to these unrealised losses,” said Toyoki Sameshima, analyst at SBI Securities. “But that means they won’t be able to make new investments to buy higher-yielding bonds when interest rates rise, so there is a risk of stagnation.”

Japan’s Financial Services Agency reacted to the failures of SVB and other US banks in March with scrutiny of smaller regional lenders, particularly those that could be exposed to similar risks. SVB was brought down by a huge portfolio of government bonds — which had no credit risk but massive, unhedged interest rate risk — and its base of uninsured depositors who swiftly ran for the exits.

Unlike Silicon Valley Bank, Japanese banks are home to small, sticky retail deposits, with most insured up to ¥10mn. However, while systemic risks of deposit flight seem low, analysts are on the hunt for outliers.

“One Japanese major bank was able to increase its deposits by over 40 per cent in around six months via a campaign that promised high interest rates,” said Nomura banking analyst Ken Takamiya.

“As this means there are depositors willing to shift their deposits to earn higher interest rates, the FSA is not ruling out the possibility of a flow in the opposite direction if concerns over credit spread,” he added.

While regulators scour the balance sheets of regional banks, shares in Mitsubishi UFJ Financial Group, Mizuho Financial Group and Sumitomo Mitsui Financial Group have risen about 40 per cent this year on the back of hopes for rate increases. The country’s three big banks are less exposed because they have a more diversified business model and have shifted to short-duration assets.

If the BoJ does end its negative interest rate policy by next spring, as is widely expected, it estimates that each percentage point increase in domestic interest rates will give an earnings boost of about ¥3tn to local lenders.

The central bank has come under increasing pressure to dial back its decade-old monetary easing measures in the face of rising inflation and a weakening yen. Its exit could have major ramifications for international bond markets, as Japanese financial institutions own trillions of dollars of overseas debt and are likely to invest more at home when interest rates start to rise.

In October, the BoJ decided to allow yields on the 10-year Japanese government bond to rise above 1 per cent, a step towards ending its seven-year policy of capping long-term interest rates.

The FSA remains sanguine about the overall risks in the Japanese banking system but is wary of the lack of experience bankers have in managing a tightening cycle.

There is also the new unknown of the growth of online banking, which has made it easier for depositors to transfer their money instantly as was the case in the US bank failures.

“It’s been a very long time since interest rates have risen in Japan,” said one FSA official. “Things are very different from last time when there was a rate hike since there wasn’t really online banking . . . we don’t know what will happen this time, and we are preparing ourselves for unexpected circumstances.”

Still, FSA officials have stressed that the risk of a deposit run at Japanese financial institutions remains low and analysts say the boost to net interest income from rate rises will outweigh the short-term paper losses suffered by banks.

Another risk to banks is that interest rate rises might spark more bankruptcies among small and medium-sized companies — particularly among so-called zombie companies that are more than 10 years old and have remained in business, aided by ultra-low rates, despite persistent losses. According to data provider Teikoku Databank, there were 188,000 such zombies as of March 2022.

Sameshima said banks were likely to take a cautious stance in cutting off lending following lessons drawn from the global financial crisis in 2008, when they allowed many small groups to go bankrupt too quickly and blew holes in their own balance sheets.

“The number of bankruptcies will rise, but the nature of the bankruptcies will be different from the ones we saw after the Lehman crisis,” Sameshima said. “The banks will try to think of a business strategy and firmly support the ones that look capable of surviving.”