Legendary investor and billionaire Charlie Munger has died at the age of 99.
Munger’s family notified Berkshire that “he passed away peacefully this morning in a California hospital,” according to the company’s Nov. 28 announcement.
Munger, who has served as vice chairman of Buffett's empire since 1978, has amassed a net worth of $2.6 billion and is often praised for his sound investing and stock-picking philosophies during his tenure at Berkshire Hathaway.
Although Bitcoin and cryptocurrencies are not investments favored by Munger and Buffett, who have referred to Bitcoin (BTC) as “rat poison” and “rat poison squared,” cryptocurrency traders can still benefit from what Munger has learned from his 60 years of investing experience. Here are some of the investment methods that Munger believes in:
Munger said Berkshire Hathaway typically groups stocks into one of three baskets when evaluating potential investments.
The latter could explain why Munger and Buffett have never invested in Bitcoin and cryptocurrencies, but the point is that they avoid investing in something they don’t know about.
Buffett has previously admitted that he and Munger - both considered tech skeptics - were "too stupid to realize" the potential of Amazon's e-commerce business in the 1990s and underestimated the company's founder, Jeff Bezos.
Berkshire also has no investments in Microsoft or Google. “We blew it,” Munger once said, reflecting on the company’s decision not to invest in Google.
Despite this, Berkshire has stuck to industries it is familiar with, such as banking and food and beverages, and has made huge profits by investing in Bank of America, American Express, Coca-Cola, and later Apple, which it decided not to invest in.
Munger and Buffett have also mastered the art of valuation by asking about a company's balance sheet before making an investment decision, which Munger has said is the only sensible way to invest.
While blockchains and protocols are generally not valued via discounted cash flow models or other traditional methods, a wealth of insights can be gained from on-chain data — from the number of daily active users and transaction volume to the total value locked (relative to market cap) and net inflows and outflows.
Munger has never been one to dive headfirst into new trends, preferring to remain more conservative when it comes to investing.
He has previously said that many "highly intelligent" people are bad investors because they have bad tempers. "Great investors," on the other hand, act cautiously and thoughtfully: "You need to control raw irrational emotions," Munger said in another comment.
Charlie Munger says Bitcoin is a 'disgusting' product that 'appeared out of thin air'
Munger, who has been involved in investing for more than 60 years, said patience is also very important when building wealth.
“The big money is not made in buying or selling, but in waiting.”
Munger has seen Berkshire's portfolio decline several times over the decades, such as the Black Monday crash in 1987, the financial crisis of 2007-2008 and most recently the COVID-19 pandemic.
He once stressed that long-term investors must learn to hold on to their investments when adverse macroeconomic conditions trigger market declines:
“There are periods where there’s a lot of pain and there are other periods where there’s a lot of prosperity,” Munger said in another comment. “You just have to learn to live with them.”
Munger was born on January 1, 1924, which means he died 34 days short of his 100th birthday.
"Berkshire Hathaway would not have been able to grow to its current position without Charlie's inspiration, wisdom and involvement," Buffett said in a statement.
