Warren Buffett and Charlie Munger: A Century of Investing

Over the past few days, I have read articles and listened to videos on two of the greatest investors America has ever known. Warren Buffett and Charlie Munger stand at the ages of 90 and 97 respectively. Despite staring the century mark in the eye they are still Co-Chairmen of Berkshire Hathaway ($BRK.A). This is a multinational conglomerate holding company headquartered in their hometown of Omaha, Nebraska.

With them each beginning their investing journeys in their 20s, they both have quite the track record. Coming from next to nothing, Charlie Munger is now worth $2.03 billion, and Warren Buffett is worth $109.5 billion. In their lives they have learned plenty about investing, but their experiences are applicable to life as a whole. I will be sharing briefly about my favorite takeaways and how I will apply them to my portfolio/life. Links to some of the medias will be provided below.

Warren Buffett Charlie Munger
Charlie Munger (Left) and Warren Buffett

Paying Mind to The Strike Zone

No, neither Munger nor Buffett were baseball players. But they did keep a close mind to their batting averages, and swung very carefully. For those unfamiliar with baseball, a player’s batting average is the average number of times they got a hit when they go up to bat. If a player has a .300 batting average (30%), they are almost guaranteed to be a hall of famer. Due to the count in baseball, batters cannot just wait until they get a pitch they know they can hit, ones in their “sweet spot”. If they did, strikes in other areas of the zone would fly by them, and they would strike out. This forces them to swing at pitches they don’t like, lowering their batting average.

As investors, Warren Buffett and Charlie Munger are not forced to swing out of their sweet spots. They have the power to always wait on the right pitch, and swing big when they are ready. What the geniuses intend with this thinking is to do your research, and trust it. When you find a company with a great business plan and preferable financials, go big. Don’t buy once, buy whenever you can. Buffett said when decided to swing big on Coca-Cola ($KO), he was buying thousands of shares every day, no matter if it was up or down. Today, 1.8 billion ounces of Coca-Cola are consumed everyday and it is one of the best dividend stocks.

While this is not a knock on diversification, it is an emphasis on swinging big. It is okay to buy other stocks to balance your portfolio. If you find a grand slam opportunity, swing!

Know Your Competency

My favorite takeaway from what the two investors discussed was knowing your competency. Knowing your competency is being aware of all you know about a subject, showing what you need to know more of and what you can speak on. Warren Buffett can not talk to you about every single stock in the market. Charlie Munger cannot go as in depth about $AMC as he can about $KO. The catch is, they are aware they don’t have this knowledge, and they are okay with us. This reminds me of a quote that was said by another genius.

“If you are the smartest person in the room, you are in the wrong room.”- Confucius

This quote speaks to Warren Buffet and Charlie Munger and their desire to gain more knowledge. They spoke on how they strive to surround themselves on those hungry for knowledge and success, and not with people who want to be average. However, the quote also speaks to recognizing your competency, and not ever getting a huge ego. Even if you make $10,000 in one day, you cannot think you are the best investor to walk the Earth. You must appreciate your success and developed knowledge, and use it to grow.

Final Thoughts

There are plenty of other teachings provided by Warren Buffett, ones we will certainly discuss more in the future. For their lifetimes of success, we can talk all day about their many accomplishments. Gathering knowledge about investing is a crucial part of being an investor. Who better to learn from then some of the best to ever do it!

Links to Warren Buffett and Charlie Munger Content:

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