How Buffett and Munger Helped Americans Become Smart Investors

Warren Buffett has always wanted to make money. As a child growing up in Omaha, Neb., he traded Coca-Cola and gum with other kids, sold stamps and golf balls to adults and worked in his father’s grocery store.

But in April 1942, at the age of 11, he bought his first stock, buying three shares in the utility company Cities Service, and his investing career took off, as stock analyst Alex W. Morris explains in “Buffett and Munger Unscripted: Three Decades of Investment and Business Insights from Berkshire Hathaway Annual Meetings of Shareholders” (Harriman House).

“Much of what I’ve learned about investing and business came from Buffett and Munger,” he writes. “For that I will be forever grateful.”

Fast forward a lifetime, and Buffett, now 94, is the eighth-richest man in the world — and it’s been quite a ride.

Buffett began buying shares in the giant Berkshire Hathaway in 1962 and, three years later, took a controlling stake in the business.

Charlie Munger, meanwhile, joined the operation as vice president in 1978.

For decades, the company’s Annual General Meeting (AGM) of shareholders in Omaha became a must-see event, as investors and analysts quizzed the couple and tried to uncover their investment secrets and strategies.

But unless you personally participated, you only had access to what people remembered and reported. “For one of the financial world’s most popular events, Berkshire Hathaway’s annual meetings have long been available only to a relatively small group,” Norris writes.

However, in 2018, Berkshire released archives from all shareholder meetings dating back to 1994, in which Morris began the “daunting task” of tracking hundreds of hours of video and more than 1,700 questions asked by attendees. on which his book is based. .

“Buffett and Munger’s answers represent a treasure trove of investment and business wisdom,” he writes. “The purpose of this book is to unlock that trophy and make it accessible to everyone.”

In large part, Buffett and Munger’s success has been driven by intuition, and the key, Buffett said, is knowing the right investments when the market is in swing.

“Markets produce wilder and wilder things over time,” he told the 2000 conference. savages create their own truth for a time.”

Successful investing is also about learning from your experiences, good and bad.

“What you have known before is never enough [in investing]”, Munger said at the 2018 meeting. “If you don’t learn to constantly review your previous conclusions and improve, you are like a man with one leg in a donkey race. “You should get up every morning and try to go to bed that night a little wiser than when you got up,” he said.

There are some investments that Buffett and Munger never touch — like gold.

“If you owned all the gold in the world, you could take a ladder and climb to the top of it and think you were the king of the world. You can stroke it, polish it, stare at it – but it won’t do anything,” Buffett said. “All you’re doing when you buy is you’re hoping that someone else will pay you more to own something that, again, they can’t do anything about.”

Munger agreed. “[It’s like] people who think they can protect themselves by buying soup can paintings,” he said. “I don’t recommend that either.”

The book also acts as a closed financial history of the world over the past three decades, as the pair ruminates on issues that have come and gone, such as the Y2K bug at the turn of the millennium.

“It’s fascinating that a whole bunch of people with 160 IQs can create such a problem — that’s why we stick with simple things,” Buffett said in 1998.

However, they did not always get it right. In 2000, Buffett told the AGM that the Internet was a “wonderful thing” for society but a “net negative for capitalists” in that he predicted reduced profitability and increased costs for many companies. Munger agreed.

“So you can all be happy that species advancement will affect your economic future for the worse,” he added. It is clear that the Internet has brought untold fortunes to investors.

However, the couple’s investment success has seen them amass large personal fortunes.

In November 2024, Forbes magazine estimated Buffett’s net worth to be $149.7 billion, and when Munger died in November 2023, at the age of 99, he was worth $2.6 billion, but had also given over $550 million in donations to hospitals, universities and other institutions.

Now 94 years old, Warren Buffett continues to be one of the most respected and successful investors in financial history.

His secret? “I have a friend who says, ‘The first rule of fishing is to fish where the fish are,'” he said. “And the second rule of fishing is to never forget the first rule.

“We’re good at fishing where the fish are.”