Charlie Munger’s approach to business, life
When it comes to finance, there is no shortage of self-proclaimed “gurus” who try to lead, scare, or sell investors on their strategies. However, not all of them are driven by accuracy or truth. Some are simply focused on convincing their audience that they have all the answers. But every once in a while, there comes along someone who seeks a deeper understanding of what truly influences markets and investors. Charlie Munger, the late vice chairman of Berkshire Hathaway and Warren Buffett’s longtime business partner, was one such individual.
Throughout my professional career, I have dedicated myself to studying Munger. He was more than just an investor; he was a philosopher. His insatiable curiosity and grounded wisdom not only shaped his business approach but also his entire outlook on life. Munger strived to live by a few core ideals: curiosity, humility, preparation, simplicity, and gratitude. These principles brought him immense wealth and success, and I believe they hold value for anyone willing to learn from his wisdom.
Munger was relentless in his pursuit of understanding how the world, particularly businesses, functioned. For him, researching a company meant not only delving into its finances but also grasping the essence of its business model. What set this company apart in the market? To Munger, this process was straightforward, but for others, it proved to be a challenging task to replicate. He once mentioned that this pursuit kept his mind sharp and prevented it from aging. I have personally experienced this phenomenon: when I immerse myself in a new idea or tackle an unfamiliar task, I feel a renewed sense of vitality. While many of us get bogged down in complexity, Munger had a talent for cutting through the clutter to find clarity.
While his curiosity kept him engaged, it was Munger’s humility that kept him out of the limelight. He embodied what I refer to as “quiet wealth.” You would never see him flaunting luxury cars or extravagant mansions. His wealth was not defined by material possessions but by the freedom it afforded him. This freedom allowed him to choose who he spent time with and when he worked or rested. He could pursue what truly mattered to him, going all-in when necessary. He demonstrated that the quality of life we create, not the possessions we acquire, is the real measure of success. I once witnessed Munger giving the more comfortable aisle seat to his wife at a Berkshire annual meeting, while he took the cramped middle seat behind me. His humility left a lasting impression on me and prompted me to reassess my own priorities. What is the value of “more” if it comes at the expense of freedom? Money should serve as a tool, not as a trophy.
As an advocate for a long and fulfilling life, Munger emphasized the importance of preparation. He considered health to be non-negotiable. He would often say, take care of your mind and body. He recognized that many people sacrifice their well-being in pursuit of wealth, only to realize that no amount of money can buy back their health. This sobering realization motivated Munger to maintain a steady pace and keep moving forward. While I have occasionally prioritized work over exercise, I try to remind myself that neglecting the present will not lead to a better future.
Munger’s inclination towards simplicity also extended to his investment philosophy. He advised investing in businesses that even an idiot could run, believing that complexity was a pitfall. He believed that talent is transient and leaves at the end of each day. On the other hand, a straightforward business model endures, even in the absence of talent. He favored investing in businesses that were essential to everyday life, like toothpaste. These types of businesses, with a significant competitive advantage, are hard to come by in a world filled with complexity. However, Munger understood that simplicity often yields the best results. Berkshire Hathaway’s success was built on this principle, which continues to guide my investment approach today.
Beyond the realm of business, Munger possessed a keen insight into human nature and cautioned against envy. He referred to it as a “stupid sin,” one that is both destructive and miserable—a thief of joy. Why resent someone who is progressing faster than you? Envy not only robs you of peace but can also have detrimental effects on your portfolio. Buffett echoed this sentiment, warning that envy can derail investors. Comparing your returns to those of others often leads to impulsive decisions driven by the fear of missing out.
Instead of envy, Munger and Buffett advocated for gratitude. By focusing on what you have and appreciating it, you shift your perspective from lacking to abundance. This shift in mindset encourages learning from others rather than resenting them. What factors contributed to their success? How can those factors be replicated or built upon? Envy fixates on the present, while gratitude—combined with curiosity—lays the foundation for the future.
Although Munger’s teachings were rooted in investing, his principles transcend far beyond the financial realm. They encourage us to shape our lives based on our own standards of success. In today’s fast-paced world, where our attention is constantly divided by various distractions, focusing on our contributions rather than comparing ourselves to others’ achievements can lead to a more fulfilling and prosperous life. Whenever I feel overwhelmed, I try to refocus by asking myself: What resources do I possess? What can I create? Munger lived by these principles, creating a blueprint for success.
Steve Booren is the founder of Prosperion Financial Advisors in Greenwood Village. He is the author of “Blind Spots: The Mental Mistakes Investors Make” and “Intelligent Investing: Your Guide to a Growing Retirement Income.” He was recognized by Forbes as a 2024 Best-in-State Wealth Advisor and named a Barron’s 2024 Top Advisor by State.
