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The wealthiest guy in the room
The room was a gathering at Happy Hollow Golf Club that Warren Buffett held after a Berkshire annual meeting. Bill Gates was there, along with all the big CEOs, and Micky Malka, about 24 or 25 years old, was the youngest person by an order of magnitude. Munger sat down next to him and remarked that he must be very wealthy to be there. Malka answered that he owned only one share.
Munger told him he had it wrong. Everyone else in the room was in their last chapter, and Malka was just starting his, with the power of time on his side. He would compound for the next 70 years of his life, and he only needed to get rich once. With that, Munger announced he was going to eat and sat down to his meal.
Why does time matter so much for compounding?
Compounding means earning returns on earlier returns, so growth speeds up the longer money stays invested. Morgan Housel wrote in The Psychology of Money that more than 99 percent of Warren Buffett's net worth came after his 50th birthday. The early decades matter mainly because they set the base that later decades multiply. Buffett bought his first stock at age 11.
Why do Berkshire shareholders fill an Omaha arena?
Berkshire's annual meeting in Omaha, Nebraska, has been nicknamed Woodstock for Capitalists. Buffett and Munger sat on stage for hours answering shareholders' questions on everything from insurance to politics. Tens of thousands of people travel to it, and an exhibition floor sells products from Berkshire's subsidiaries. Buffett was born in Omaha and ran Berkshire from there for decades.
How did Munger change Berkshire's strategy?
Munger joined Berkshire as vice chairman in 1978. Buffett has credited him with pushing Berkshire away from buying cheap, struggling businesses and toward excellent businesses at fair prices. See's Candies, bought in 1972, is the purchase often cited as the turning point. Munger remained vice chairman until his death in November 2023.
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