Charlie Munger was one of the great teachers of our generation.
He wasn’t just Warren Buffett’s longtime business partner. He was a billionaire investor, an unapologetic capitalist, and a walking vault of clear thinking and timeless wisdom.
Two years ago, Charlie passed away at the age of 99. Today, I want to revisit the lessons he left behind—and show you how we apply them to investing here at RiskHedge.
Let’s start with the big one…
Great investors must evolve.
In the early days of Berkshire Hathaway (BRK.B), Buffett hunted for “cigar butt” stocks.
These were companies on the verge of going broke and trading for less cash than they had in the bank.
Munger changed that.
He taught Buffett to invest in quality companies that could dominate for years rather than those that might have “one puff left in the cigar.”
Before Munger: Buy reasonable businesses at great prices.
After Munger: Buy great businesses at reasonable prices.
Buffett credits this shift with turning Berkshire into the $1 trillion juggernaut it is today.
But even Munger admitted that he and Buffett missed the tech wave…
Since the financial crisis, the tech-heavy Nasdaq has outperformed Berkshire 2-to-1.
Amazon (AMZN), for example, has grown its sales by an average of 30% per year and now rakes in over half a trillion dollars annually. Its stock is up 7,000% since 2000.
Yet many investors skipped over Amazon because it “looked expensive.” Big mistake.
Here’s what I believe Munger would say if he were starting over today:
Winners keep winning. New highs are often just steppingstones to more new highs.
Businesses that grow rapidly for decades are a new breed, which is why they trade at a higher valuation.
So, how can we apply this to today’s market?
The lesson: Buy companies growing rapidly while they’re still trading at reasonable valuations.
That’s what we do in our Disruption Investor advisory—and our track record speaks for itself.
Take Nvidia (NVDA), a Disruption Investor Hall of Famer.
When we bought NVDA in September 2020, it was a $320 billion market cap chip company. The other week, it became the world’s first $5 trillion company.
We were early to the artificial intelligence (AI) buildout, taking profits on NVDA twice as it exploded higher. We’re currently sitting on a 602% gain, meaning every dollar we’ve invested has grown by 6X.
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We’ve recently added new positions in companies that will fuel the next wave of AI… as well as leaders in the robotaxi revolution and nuclear energy.
Each one is trading “cheaply” compared to its growth potential—and each could become the “new Nvidia” of the industry it participates in.
If you’d like to learn more about these companies—and get access to our entire Disruptor 20 portfolio—we’re currently running a Black Friday sale on Disruption Investor that gives you up to one year free on your purchase.
But the opportunity to join at this special discounted price ends soon.
You can find all the details on what you’ll receive as a Disruption Investor member here on this page.
A few final “Mungerisms”…
It’s never too late to get rich: Munger didn’t team up with Buffett (and get rich) until his mid-50s. If you want something, go get it. It’s never too late.
Skip the mansion: Charlie lived in the same “normal” house for 70 years. He said moving into a mansion would have ruined his kids. Important lesson there!
Stay optimistic: Early in life, Charlie lost his son to cancer, got divorced, and gave up everything in his separation—including his home. Yet he still went on to build a $2 billion fortune and a large, happy family.
Here he is (center in the white shirt) with his wife Nancy, their nine children, and many grandchildren:
What a life.
Charlie overcame unspeakable tragedy by finding his passion and working his butt off to become one of the richest men in America.
If Charlie can achieve his dreams, what’s stopping us?
None of us get out of here alive. Let’s get after it while we still can.
Stephen McBride
Chief Analyst, RiskHedge