There Are Fundamental Differences In The Way That Buffett And Munger Do Things

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There Are Fundamental Differences In The Way That Buffett And Munger Do Things by N Mahalakshmi & Rajesh Padmashali, Outlook Business

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Charlie and Warren have been together for over 50 years. What is the glue that holds them together? You’ve seen them at close quarters.

Honesty, rationality, mutual admiration and respect. They are probably two of the most rational people I have ever met. The result is that their thinking dominates their relationship and how they analyse problems and people. But in the end, it is mutual respect.

So, what works? 

Shared values and different roles; Munger sees Buffett’s wide set of abilities that he brings to bear for Berkshire’s benefit. His analytical skills with numbers, financial analysis, ability to assess people, to inspire people, to see around corners, to know that tomorrow’s headline will be based on today’s actions and his desire to be out front. Munger admires all that about Warren. He has a lot of qualities and values like Warren but he doesn’t want to be out front.

He doesn’t see himself as especially appealing to others. In fact, at a DJCO meeting he said something to the effect that, ‘when people bore me, as they often do at a big gathering, I just ignore them and talk to myself’. He recognises that he can be brutally honest in a way that people don’t like. Warren is charming, his role at Berkshire is different from Munger's. If they were both trying to do the same thing, it wouldn’t have worked as well but it works very well the way it is.

Between Warren and Charlie, is it ok for them to agree to disagree or does it always lead to a situation where one convinces the other?

With me and others, Munger's rationality is always present. You can have disagreements without being disagreeable. Charlie influenced Warren to change his investment policy in looking to deploy more capital in buying great businesses at fair prices as opposed to fair businesses at great prices. So, I think Munger influenced that over a period of time in Warren’s thinking. I think there are instances where they continue to see things differently.

What Warren has done with his money philanthropically is very different than what Munger has done with his. Charlie loves to engage his philanthropy, think about it and be a part of it. Warren doesn’t think he is good at it and he just wants somebody else to run that part of his life. So, I think there are fundamental differences in the way that each of them do some things. But at the same time, there is mutual respect and they both understand what motivates the other.

You have been a Berkshire director since 1997 but your association with MTO is much deeper. How long have you known Charlie Munger?

47 years. He founded the firm I came to in 1968 and has always officed with us. He has been very close to the firm and has used it as his lawyer for his business work. He loves the firm and has had a lot to do with influencing its fundamental values. He used to tell us lawyers, ‘The best place to find new work is on your desk, not out glad-handing somebody on the golf course. Do what you are doing, do it well and over time that will produce the next good piece of work.’ So, he has had a big influence on our firm and continues to have that. He is a fountain of wisdom that we consult on everything, from family problems to professional problems.

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Outlook Business

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