- Charlie Munger, the legendary investor, has passed away aged 99.
- He helped turn Berkshire Hathaway into a $785 billion conglomerate.
- Charlie hated Bitcoin and other cryptocurrencies, which he sees as scams.
Charlie Munger, the legend of investing, and Warren Buffett’s right-hand man, has died, leaving one of the best legacies in the industry. He was 99 years old. His death leaves a big gap in the finance industry that will be hard to fill.
Charlie has been a dominant figure for more than 6 decades as he helped turn Berkshire Hathaway into one of the biggest companies in the world. It is now the 9th biggest firm globally with a market cap of over $784 billion. A substantial part of this market cap, or $150 billion of it, is in cash.
Charlie Munger has been correct about many things. However, together with Warren Buffett, they have missed opportunities over the years. For example, they missed the technology boom that has transformed the world.
They completely refused to invest in companies like Google, Meta Platforms, Nvidia, and Tesla that now dominate their respective industries. Google is a leader in digital advertising and cloud computing while Nvidia is the biggest semiconductor company in the world. Tesla has grown from a mere startup into becoming the biggest automaker.
Berkshire’s investments in technology have had mixed results. It invested and lost money in IBM a few years ago. It was late in investing in Apple, which is now its biggest holding. Its investment in Amazon was also late and not all that successful.
Most recently, Munger rubbished artificial intelligence (AI), saying that he believed in the old-fashioned intelligence, which has worked well for years.
Munger avoided these industries because he did not have a clear understanding about it. For a long time, these companies were growing fast but did not have any profitability. Munger belongs to the value investing arm of finance that looks at free cash flows and profits.
Charlie Munger was also wrong on Bitcoin, the biggest cryptocurrency in the world. Over the years, he has made numerous statements rubbishing BTC and other cryptocurrencies. He said:
“I am not proud of my country for allowing this crap – well, I call it crypto shit. It’s worthless, it’s crazy, it’s not good, it’ll do nothing but harm. It’s antisocial to allow it.”
Like Berkshire has been wrong about gold, I believe that the company is wrong about Bitcoin. For one, BTC has outperformed it in the past decade. In 2023 alone, Berkshire Hathaway stock is up by about 20% while Bitcoin has climbed by 130%.
As I wrote on Tuesday, it always makes sense for value investors to allocate their cash into risky and growth assets. In the case of Bitcoin, it is evolving into a real asset that many people compare with gold. It is also a rare asset with a supply cap of 21 million coins.
