Berkshire Hathaway vice-chairman Charles T Munger died yesterday – the man Warren Buffett credited with the change of investment strategy which led to the conglomerate investing massively in AAPL …
The New York Times reports that Buffett’s original investment strategy was buying what he called “cigar butt” companies.
Buffett had made his name in the 1950s buying troubled companies at deep discounts. (He called them “cigar butts,” because investing in them, he said, was like “picking up a discarded cigar butt that had one puff remaining in it.”)
It was Munger who completely changed his approach.
Mr. Buffett has described him as the originator of Berkshire Hathaway’s investing approach. “The blueprint he gave me was simple: Forget what you know about buying fair businesses at wonderful prices; instead, buy wonderful businesses at fair prices,” Mr. Buffett once wrote in an annual report […]
Mr. Munger counseled Mr. Buffett that if he wanted to build a large, sustainable company that would outperform other investors, he should buy solid brand-name companies. “He was the architect and I was the general contractor,” Mr. Buffett said of their relationship.
Munger had a simple approach anytime the pair disagreed over a decision.
“We’ve never had an argument,” Mr. Buffett said. Repeating one of Mr. Munger’s favorite lines, Mr. Buffett said that when they did differ, Mr. Munger would say, “Warren, think it over and you’ll agree with me because you’re smart and I’m right.”
Buffett said earlier this year that Apple is the best business Berkshire owns. Back in 2020, the success of that investment was summed up in one sentence.
“Warren Buffett’s Berkshire Hathaway has made more money on Apple in four years than either company was worth 20 years ago” – Theron Mohamed
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