Charlie Munger's Final Stock Portfolio Reveals Investing Lessons for All of Us

The recent passing of Charlie Munger, the legendary investor and long-time partner of Warren Buffett, has left the financial world reflecting on the legacy of a man who played a pivotal role in shaping Berkshire Hathaway. 

Munger was considered one of the most influential investors in history made famous by an unwavering disciplined approach to investing and punchy anecdotal advice. Millions followed Munger’s investment strategies throughout his life, and his end-stage portfolio picks have garnered particular interest.

Munger’s final Daily Journal portfolio

Charlie Munger's tenure at the Daily Journal Corporation was marked by steady leadership and a keen eye for investment opportunities. After taking charge of the company's board in 1977, he transitioned into managing its investments during the 2008 financial crisis. Under Munger's guidance, Daily Journal's stock portfolio grew from nothing to an impressive $300 million within 15 years.

Daily Journal's final portfolio update, filed after Munger's passing, reveals the veteran investor's commitment to his strategy of concentrated, long-term bets. Munger's hands-off approach is evident in the company's decade-long holdings of Bank of America, Wells Fargo, and US Bancorp. Despite the modest returns on Wells Fargo and US Bancorp positions compared to the S&P 500, Munger's conviction in holding these stocks remained steadfast.

One of Munger’s, and Buffett’s, main investment philosophies was value. Munger stayed focused on investing in companies he believed he could hold long-term and that he believed were fundamentally good, valuable investments. He shied away from trendy or short-term investments and believed that market downturns were one of the best times to pick up good value companies at a discount.

Not every bet was a winner

While Munger's investment record was largely successful, not every move resulted in substantial gains. The portfolio's performance was less impressive in comparison to the broader market, with Wells Fargo and US Bancorp positions experiencing modest growth over a decade. However, Munger's strategic allocation to Bank of America showcased a more favorable return, rising almost 120% during the same period.

Concentrated bets and timing

Munger's distinctive investment style is underscored by his concentrated bets and meticulous timing. The portfolio's standout performer appears to be an early bet on the Chinese electric vehicle maker BYD. This strategic move not only contributed significantly to Daily Journal's unrealized gains but also allowed for an impressive 15-fold return on a $3.3 million investment in late 2021.

Munger's willingness to reassess and learn from mistakes is evident in his brief yet impactful bet on Alibaba. Starting in 2021, Munger quadrupled his position, only to halve it the next quarter after reevaluating his stance on the Chinese e-commerce giant. This move reflects Munger's ability to acknowledge errors and take corrective action, a trait that defined his investment philosophy.

Munger's investment principles

Daily Journal's filings underscore Munger's commitment to fundamental investment principles, including making concentrated bets, holding for the long term, and resisting the urge to panic or constantly adjust the portfolio. Munger's approach was characterized by a patient and disciplined strategy that sought compelling prices and rarely involved selling.

Bottom line

Charlie Munger's final investment portfolio at Daily Journal serves as a testament to the enduring principles that guided his illustrious career. As investors reflect on Munger's legacy, they can draw invaluable lessons in patience, conviction, and the power of concentrated, long-term investments. Despite not every move resulting in outsized gains, Munger's disciplined approach leaves a lasting impact on the world of investing.