Charles Munger helped build one of the greatest fortunes in U.S. history, but he often explained his success in terms that sounded deceptively uncomplicated.
“Take a simple idea and take it seriously.”
“Load up on the very few insights you have instead of pretending to know everything about everything at all times.”
And above all, he stressed the need for patience and a long-term investment view — an approach that has vanished from much of Wall Street in recent decades.
In his trademark curmudgeonly style, Munger advised investors to take stakes in a relative handful of great companies and then “just sit on your ass.”
Munger, the longtime investment partner of billionaire Warren E. Buffett, died Tuesday at a California hospital, according to Berkshire Hathaway, where he was vice chairman. He was 99.
“Berkshire Hathaway could not have been built to its present status without Charlie’s inspiration, wisdom and participation,” Buffett said in a news release.
Though born in Omaha, like Buffett, Munger lived in Los Angeles most of his life. And for the most part, he shunned the media spotlight that Buffett often relished.
However, with a net worth that Forbes estimated at $2.6 billion upon his death, he was able to make a big impact with his philanthropy both locally and elsewhere.
He was a longtime benefactor and board chairman of Good Samaritan Hospital in Los Angeles. He also funded a science center at Harvard-Westlake School in L.A. and a research center at the Huntington Library.
In higher education, Munger said he wanted to foster more dialogue and mixing of ideas on campus. In 2013 Munger donated $110 million in stock for a graduate residence at the University of Michigan. He gave $43.5 million in 2004 for a graduate residence adjacent to Stanford Law School.
But it was a 2016 donation that led to perhaps the biggest controversy of his career. He pledged $200 million to build new dorms at UC Santa Barbara, which had a severe shortage of student housing.
He pushed for the construction of an 11-story warehouse-size building that would feature 4,500 beds in small rooms — similar to but larger than the Michigan dorm. Unveiled in 2021, the massive UCSB structure was dubbed “Dormzilla” by its critics, and the university is reportedly considering alternatives.
Munger sometimes was described as Buffett’s “sidekick,” but that grossly understated his influence on Buffett, who is six years his junior.
Berkshire, with more than $1 trillion in assets, owns such well-known brands as insurance company Geico, the BNSF railroad, See’s Candies, Fruit of the Loom and Dairy Queen.
After meeting Munger at a dinner party in Omaha in 1959, Buffett — then an ambitious but novice investor — said he quickly realized that there was “only one partner who fit my bill of particulars in every way: Charlie.”
Buffett’s wife, the late Susie Buffett, once wrote of the two men that “both thought the other was the smartest guy they ever met.”
In the last few decades Munger’s name has become better known, at least among serious investors, as he shared the spotlight with Buffett at Berkshire’s annual shareholder meeting. The two became a nightclub act of sorts, peppering sage investment advice with one-liners that kept the crowd of thousands enraptured.
One of Munger’s most famous zingers encapsulated his frequently acerbic wit: “I’m right, and you’re smart, and sooner or later you’ll see I’m right.”
Charles Thomas Munger was born on Jan. 1, 1924, in Omaha to Al and Florence Munger. His father was a lawyer, and his grandfather had been a federal judge.
As described by Michael Broggie in the 2005 book “Poor Charlie’s Almanack: The Wit and Wisdom of Charles T. Munger,” Munger’s family fared comparatively well during the Great Depression.
Still, young Charlie was expected to work. One of his first jobs was clerking — for $2 per 12-hour shift — at Buffett & Son, an upscale Omaha grocery run by Warren Buffett’s grandfather. But Munger never met the younger Buffett during their youth.
A voracious reader whose hero was Benjamin Franklin, Munger showed an aptitude for business early on when he began to raise hamsters to trade with other kids.
“Even at an early age, Charlie showed sagacious negotiating ability, and usually gained a bigger specimen or one with unusual coloring,” Broggie wrote.
After high school, Munger enrolled at the University of Michigan as a math major, but he left in 1943 to join the war effort. He enlisted in the Army Air Forces and was trained in meteorology at Caltech in Pasadena.
Though he lacked a bachelor’s degree, Munger in 1946 decided to apply to Harvard Law School. He was accepted after a family friend intervened.
Munger excelled at Harvard, graduating magna cum laude. His first law job was at Wright & Garrett in Los Angeles.
But in his personal life, Munger struggled. At age 21 he had married Nancy Huggins, a family friend. They divorced in 1953, when Munger was 29.
Shortly afterward the oldest of their three children, Teddy, was diagnosed with leukemia. He died at age 9.
In 1956 Munger married Nancy Barry Borthwick, a Stanford University economics graduate. They had met through Munger’s friend Roy Tolles. Borthwick had two sons from her first marriage. She and Munger had four more children together.
The size of the family was key to Munger’s fateful decision to shift career tracks from law to investing.
“Nancy and I supported eight children,” Munger said in 1996. “And I didn’t realize that the law was going to get as prosperous as it suddenly got.”
He put it another way to Janet Lowe, who wrote the biography “Damn Right! Behind the Scenes With Berkshire Hathaway Billionaire Charlie Munger” in 2000.
“Like Warren, I had a considerable passion to get rich,” Munger told Lowe. “Not because I wanted Ferraris — I wanted the independence. I desperately wanted it.”
In 1962 Munger co-founded the L.A. law firm Munger Tolles & Hills (today known as Munger Tolles & Olson). But by then his investing pursuits were already taking up much of his time.
Though he began trading investment ideas with Buffett in 1959, from 1962 to 1975 Munger was mostly focused on building his own stock investment fund, Wheeler, Munger & Co., according to biographer Broggie.
Munger racked up strong returns in the fund, but, like most investors, he was hit hard in the deep bear market of 1973-74, amid the first Arab oil embargo.
After the market rebounded in 1975, Munger decided to stop directly managing money for others. Instead, he joined with Buffett in investing via the “holding company” concept: The two would buy businesses and make stock investments through a publicly traded company. They would control the firm by virtue of their large stake in it, but other investors could buy the company’s shares if they wanted to join in as essentially silent partners.
Their primary vehicle was Buffett’s Berkshire Hathaway. Munger became vice chairman of the firm in 1978.
Munger also ran a smaller holding company, Pasadena-based Wesco Financial, which was majority-owned by Berkshire. It was merged into Berkshire in 2011. Separately, Munger headed Daily Journal Corp., an L.A.-based publisher of legal newspapers, including the L.A. Daily Journal.
But Berkshire’s success is what made Munger’s name synonymous with brilliant investing.
Buffett credited Munger with refining the former’s basic “value” approach to investing. Buffett was a devotee of Ben Graham, the father of the value school, which preached the discipline of buying shares only in companies that met rigid financial criteria.
Munger, however, convinced Buffett that a long-term investor could prosper by focusing on the very best companies — even if they didn’t meet all of Graham’s value requirements.
Munger’s approach was crystallized in his most famous investing maxim: “A great business at a fair price is superior to a fair business at a great price.”
Munger “expanded my horizons,” Buffett has said.
That, in turn, led to Berkshire’s purchases of huge stakes over the years in such blue-chip companies as Coca-Cola, American Express, IBM and Wells Fargo, in addition to the dozens of companies Berkshire owns outright.
Munger owned only a small fraction of Berkshire stock, but the success of Berkshire Hathaway made him a billionaire anyway.
Later in life, Munger at times became almost apologetic for his financial success. In a 1998 speech he bemoaned the allure of Wall Street for talented young people, “as distinguished from work providing much more value to others.”
“Early Charlie Munger is a horrible career model for the young, because not enough was delivered to civilization for what was wrested from capitalism,” he said.
He was an outspoken critic of excessive executive pay. He and Buffett drew annual salaries of $100,000 at Berkshire, a pittance compared with what most top Fortune 500 executives are paid.
Though a self-described conservative Republican (in contrast to Buffett, a Democrat), on some issues Munger defied the conservative stereotype. He was a longtime supporter of Planned Parenthood, for example, and fought in the 1960s to legalize abortion.
“I’m more conservative, but I’m not a typical Colonel Blimp,” Munger said in 1996, referring to the jingoistic, reactionary British cartoon character.
Munger’s wife, Nancy Barry Munger, died in 2010.
He is survived by eight children and stepchildren, 15 grandchildren and seven great-grandchildren.
Times staff writer Laurence Darmiento contributed to this report. Petruno is a former staff writer.
Column: They say San Francisco is coming back as a tech hub, but it never really left
Michael Suswal’s first eye-opening encounter with the vibrancy of San Francisco came in 2017.
That’s when he and his fellow co-founders of Standard AI, an artificial intelligence startup funded by the incubator Y Combinator, moved from New York to San Francisco for the summer.
“Initially we planned on going back to New York,” says Suswal, 44. “But after living in the Bay Area for two or three months, between us we had way more network contacts than we had had in our combined 50 years living in New York.”
Where else would you go that would have more support, more connections, the right type of environment and the right investors?
— Michael Suswal, Generation Lab
When COVID hit, Suswal told me, he moved to Seattle and worked from home. Last year, when he and a partner opted to co-found a new company, they pondered the best place to start.
“We thought, where else would you go that would have more support, more connections, the right type of environment and the right investors? Building a company is hard. It takes everything you’ve got, and even then there’s an 80% chance of failure. So why would you stack the deck against yourself? It was a no-brainer to come back here.”
Generation Lab, which Suswal co-founded with longevity expert Alina Su and UC Berkeley bioengineering professor Irina Conboy, aims to market a technology that can help customers identify and manage long-term medical conditions.
Suswal’s take is different from what you might have heard from the news media and red-state politicians over the last few years. They spin a narrative of a region — indeed, the entire state of California — in secular decline. Of a Silicon Valley whose best days are behind it. Of wholesale flight of money and talent to new, welcoming places such as Miami and Austin.
But there has never been much truth to that narrative generally, and it’s more dubious than ever today, when the Bay Area has emerged as a center of artificial intelligence investing.
There is no shortage of newsy nuggets to illustrate the “doom loop” narrative about San Francisco.
On Tuesday, for instance, Macy’s announced that it would close its gigantic store overlooking Union Square sometime in the next three years. But the closure is part of a major corporate retrenchment involving the closings of 150 stores nationwide, 30% of the total.
Nor is there anything historically new about San Francisco-bashing. The practice dates back to the Gold Rush, when the city’s powerful attraction as a jumping-off place for Forty-Niners seeking their fortunes in the nearby hills generated an equally potent counter-narrative.
Hinton R. Helper, a visitor from North Carolina who would eventually gain notoriety as a white supremacist, reported in 1855 on the city’s “rottenness and its corruption, its squalor and its misery, its crime and its shame, its gold and its dross…. Degradation, profligacy and vice confront us at every step.”
It’s a short distance from Helper’s screed to the map that Florida Gov. Ron DeSantis displayed during a televised debate with Gov. Gavin Newsom in November, purportedly showing deposits of human waste around San Francisco. (That didn’t help DeSantis’ presidential campaign avert an early demise, any more than Helper’s critique stemmed the flow of fortune-seekers into California.)
It’s true that the frenzy in artificial intelligence investing has brought a jolt of capital to the entrepreneurial economy of the Bay Area, but that’s merely the latest iteration of a story that dates back to the emergence of Silicon Valley in the late 1960s — or even to the founding of Hewlett-Packard in Palo Alto in 1939.
The region has undergone a long sequence of technology booms and busts over the decades, but each bust has set the stage for the next boom. In the 1980s, the valley’s chipmakers lost their dominance in semiconductor memory to Japanese competitors.
But within a few years, as UC Berkeley economist and political scientist AnnaLee Saxenian observed in her definitive study of the region, “Regional Advantage,” in 1994, new semiconductor and computer startups such as Sun Microsystems had emerged and Silicon Valley had “regained its former vitality.” By 1990, Silicon Valley was home to “one-third of the 100 largest technology companies created in the United States since 1965,” Saxenian wrote.
The key to its enduring stature atop the innovation economy has been the Bay Area’s infrastructure of institutions (Stanford and UC Berkeley) and legal, technical and financial professionals, and its population of technology workers — all having created “dense social networks and open labor markets.”
By contrast, the Silicon wannabes tend to put all their eggs in one basket, and when that basket’s contents spill out, there’s little to fill it up again.
Miami is a telling example. Its mayor, Francis X. Suarez, tried to establish the city as the center of cryptocurrency financing and innovation. The FTX crypto exchange bought naming rights to the arena where the NBA’s Miami Heat play. International conferences for bitcoin and crypto adherents filled the conference center in 2022.
Miami associated itself with the first “city coin,” a crypto token that Suarez claimed would help boost the municipal budget.
The effort hasn’t panned out. FTX collapsed as its founder, Sam Bankman-Fried, was indicted and subsequently convicted of fraud; the Heat’s arena now carries the name of Kaseya, a Miami software firm.
Attendance at crypto conferences has dwindled. MiamiCoin, which was valued at 5 cents when it came on the market in August 2021, now trades for about 16-thousandths of a cent, if anyone cares — there doesn’t seem to have been a trade in eight months. The city is searching for relevance in the modern technology landscape.
The same sources that talked up the flight of entrepreneurs from the Bay Area to Miami, Austin and other Silicon wannabes are now running articles about startup founders moving back; often the return is accompanied by complaints about the lack of a true innovation culture in their new homes, as well as traffic congestion and housing prices soaring out of reach — much the same as one would find in any large city.
As my colleague Hannah Wiley reported recently, San Francisco’s adherents are trying to seize the narrative reins by reminding people that the city and region offer unique advantages to entrepreneurs, especially in technology-related fields.
One is Angela Hoover, 25, who launched her consumer-oriented AI search firm, Andi, in Miami with backing from Y Combinator. At first, Miami seemed inviting because it seemed to be host to a healthy startup community.
Attending AI events in San Francisco, however, made it “abundantly clear that the AI community was in San Francisco. It almost feels like you have a front-row seat to a play, and at the same time you’re in the play,” Hoover said.
“Despite what all the doom-and-gloom critics say, [the Bay Area] is still a hotbed of innovation,” Ali Diab, chief executive of Collective Health, told me. That’s what prompted the firm, which manages employer health plans, to return its headquarters to downtown San Francisco after allowing its workforce to disperse to a work-from-home system during the pandemic.
“Obviously, you have the AI revolution being driven from here,” Diab says, “but you also have powerhouse enterprise software companies like Salesforce and Slack.”
Collective Health also discovered that the cost of office space in San Francisco was lower than elsewhere in the Bay Area, including Silicon Valley proper. About 120 of Collective Health’s 783 employees work in San Francisco, with the others distributed among offices in Chicago, Texas and Utah, or working remotely.
Diab was an early critic of the “doom loop” argument against San Francisco, observing in a mid-October op-ed in the San Francisco Chronicle that “as a Bay Area native, I’ve had to listen to people predict the demise of my city for my entire life.” In truth, he wrote, “the oft-cited challenges San Francisco faces are no different from those experienced by any other major city in the United States.”
Housing is “prohibitively expensive in almost every major American city,” he added. “New York, Chicago and Los Angeles haven’t solved their homelessness problems and neither have many other large cities.”
The story of a Bay Area exodus always was overstated. The image of Texas’ attraction for entrepreneurs has never moved much beyond three major tech companies that moved their headquarters there from California — Hewlett Packard Enterprise in Houston and Oracle and Tesla in Austin.
And the significance of these moves may be more imagined than real. In 2020, when Oracle announced its move to Austin from Redwood City, south of San Francisco, it said it was building a campus for 10,000 employees; the company has 164,000 workers worldwide.
When Elon Musk sought a location for Tesla’s “global engineering headquarters,” the seat of the company’s innovative brainpower, he found it in Hewlett Packard’s former corporate headquarters — not in Austin, but Palo Alto. He announced his decision to move into that space in February 2023 at a joint event with Gov. Newsom.
Other states have never come close to California in the volume of their venture investments. In 2022, according to the National Venture Capital Assn., California firms raised $78.3 billion in venture funding, more than 40% higher than second-ranked New York. Florida ranked fifth with only $2.6 billion, followed by Texas with $2.4 billion (and Texas’ total fell by about half from the previous year).
San Francisco companies attracted nearly $31 billion in venture funding in 2022, according to CBRE. The Bay Area all told attracted $61 billion, accounting for 35% of all venture funding in the U.S.
Venture investing fell appreciably in 2023, and venture-backed companies experienced a spike in “down rounds” — in which their valuations are lower than they were in the previous round of venture infusions — starting in late 2022. But those trends appeared across the entire venture funding universe, and were more likely related to the run-up in interest rates and fears of a recession than to any California-centric phenomena.
In any case, AI was a distinct bright spot, accounting for about 1 in 5 of all venture deals in 2023 and one-third of all venture dollars invested, according to the accounting firm EisnerAmper.
No one doubts that San Francisco and the Bay Area present challenges. Suswal says he was concerned that recruiting staffers to come to the area would be difficult. When he himself was considering moving back to San Francisco from Seattle last October, he “bought into a lot of the negative aspects of the city that were being published at the time,” he says. “But the city is in better shape than it gets credit for. … All the best people come here, because it’s well worth it.”
Northrop Grumman could eliminate as many as 1,000 jobs in Southern California
Defense contractor Northrop Grumman Corp. has told its employees that it could cut as many as 1,000 jobs in Southern California.
The affected employees are part of the company’s space sector and work at facilities in Redondo Beach, Manhattan Beach and Azusa. The company said it is working to match those employees with other, existing jobs within the company.
Although Northrop Grumman did not specify a reason for the cuts, the U.S. Space Force recently canceled a multibillion-dollar program to develop a classified military communications satellite with the company after cost overruns, a schedule delay and development difficulties, according to Bloomberg.
Recently, space has been a difficult place to do business. Earlier this month, NASA’s Jet Propulsion Laboratory laid off 530 employees, or 8% of its workforce, in anticipation of massive federal budget cuts.
Northrop Grumman said it has notified the state’s Employment Development Department and filed a Worker Adjustment and Retraining Notification Act notice about the job cuts, as required by law.
“This is ongoing, and a higher number of employees will receive WARN notices than may ultimately be impacted,” the company said in a statement.
Although Northrop Grumman is based in Falls Church, Va., California is a major hub for the company. The defense contractor’s historic 110-acre Space Park facility in Redondo Beach was built at the height of the Cold War and is the birthplace of the intercontinental ballistic missile, as well as the rocket engines that lowered the first crew onto the moon and, more recently, the building of the James Webb Space Telescope.
The company also has a major aircraft facility in Palmdale, where it is building the new B-21 stealth bomber, the center fuselage for the F-35 fighter jet, the RQ-4 Global Hawk drone and the MQ-4C Triton drone.
Northrop Grumman also has facilities in San Diego, Sunnyvale, Northridge, Woodland Hills and Ventura County. In all, the company employs about 30,000 people across the state.
Video shows burglar vandalizing East Hollywood restaurant, causing $80,000 in damage
It was a typical Sunday at El Zarape.
Families enjoyed Mexican food and good vibes at the East Hollywood restaurant inside a strip mall on Melrose Avenue as CicLAvia shut the street down to traffic.
But the next morning, when the first cook of the day showed up Monday at the restaurant, an entirely different scene awaited. She called the owner, Beto Mendez, right away.
At first, Mendez thought it might be some graffiti on the outside of the restaurant. He was wrong.
“The minute I got there I was in shock,” Mendez told The Times in an interview. “I saw the place completely destroyed.”
Mendez said there was $80,000 worth of damage inside.
Chairs were flipped over and tables were askew. One bar had been bashed in with a hammer while all the TVs were spray-painted with graffiti. Spray paint covered one of the bar’s surveillance cameras and seemingly all of the restaurant’s walls. A safe with $20,000 was taken.
The incident was first reported by L.A. Taco.
Surveillance video shows a man in a light-colored hoodie and dark pants and Nikes shaking a can of spray paint inside the bar before any damage was done. The man then sprays one of the surveillance cameras with paint, video shows. While Mendez could not see any other people in the videos, he assumed that there was more than one vandal, based on the amount of damage, which included “C14” tagged on the walls.
Police told Mendez that the vandalism was related to the C-14 gang, also known as Clanton, he said. The Los Angeles Police Department did not immediately provide comment on the situation.
C-14 is a gang that has existed in Los Angeles for about a century, originating on Clanton Street, which was later renamed 14th Place, according to a website that documents street gangs.
The gang is active in the neighborhood, with tags up and down Melrose.
The group even tagged a local house of worship, Trinity Episcopal Church, scrawling “C14” on its marquee in spray paint.
“This area is like an epicenter for a couple gangs,” said a man who works near El Zarape, who asked to remain anonymous out of safety concerns. “MS-13 and C-14 as well as some other little local cliques. There’s a lot of tagging all around the neighborhood.”
“If someone tagged the inside of the restaurant, it’s pretty serious,” he said.
For Mendez, the destruction of his restaurant could not come at a worse time. Just two weeks ago, his ex-wife died. Mendez shared custody of their two teen daughters with her and now has full custody of them.
“They have that pressure and that stress of losing their mom already and I haven’t really told them nothing about the restaurant right now,” he said. “I would rather keep it to myself and handle it.”
Mendez is trying to raise money to reopen the restaurant and fix the damage via GoFundMe.
While Mendez said that the restaurant has had relatively few problems in the seven years it has been open, there was an incident after the Super Bowl on Feb. 11, according to Mendez and the other person who worked at a nearby business.
That day, the two men said, after the Kansas City Chiefs beat the San Francisco 49ers in Las Vegas, a man fired a gun into the air near El Zarape, then barricaded himself inside and police SWAT teams had to respond to arrest him.
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