Poor Charlie's Almanack: The Essential Wit and Wisdom of Charles T. Munger · chapter 5 · member edition

Investment Track Record

Munger’s 19.8% CAGR at Berkshire is verified from SEC filings. The BYD pick returned 8-10x. See’s Candies generated $2B+ on a $25M investment. But the record includes blind spots (missing Google, Amazon) and errors (Alibaba loss at DJCO). Berkshire’s outperformance narrowed significantly from 2009-2020.

So what

Munger’s investment track record is extraordinary and verified by decades of SEC filings. The headline numbers are real. But the full picture is more nuanced: outperformance has narrowed since 2009, the Alibaba bet was a late-career error, and massive misses on tech giants exposed blind spots in the mental models framework. The most honest takeaway: Munger was one of the greatest investors ever, AND his approach has significant limitations, AND survivorship bias means we should be cautious about generalizing from his example.

Verdict

MostlyAccurate

Claims checked in this chapter (11)

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Berkshire Hathaway achieved a compound annual return of approximately 19.8% from 1965-2023, turning $1,000 into over $43 million vs $312,000 for the S&P 500.
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Munger personally championed the BYD investment in 2008, buying 225 million shares at 8 HKD ($232 million), which grew to a multi-billion dollar position.
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Daily Journal Corporation, under Munger's chairmanship since 1977, built a concentrated investment portfolio that generated substantial returns, though the Alibaba position resulted in significant losses.
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Berkshire missed major investment opportunities including Google, Amazon, and early Microsoft, and Munger has acknowledged these as errors.
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See's Candies, purchased for $25 million in 1972, generated over $2 billion in cumulative pre-tax earnings for Berkshire by 2023.
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Wesco Financial under Munger's chairmanship (1984-2011) grew book value at ~9.8% annually, significantly underperforming Berkshire's ~19.8% over the same period.
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Munger championed the BYD investment through Li Lu's Himalaya Capital, with Berkshire's $232 million stake growing to approximately $7.7 billion at peak.
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Berkshire's Salomon Brothers investment in the late 1980s nearly destroyed the firm, requiring Buffett to serve as interim chairman during a Treasury bond trading scandal.
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The Dexter Shoe acquisition -- $433 million in Berkshire stock in 1993 -- became Berkshire's worst investment, with the shares used growing to be worth over $8 billion by 2014.
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Munger served on the Costco board (1997-2023) and was a vocal advocate for the company's business model, with Costco stock returning approximately 1,800% during his tenure.
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Munger's partnership (Wheeler, Munger & Company) earned ~19.8% annually from 1962-1975 versus 5.2% for the Dow, but suffered drawdowns of 31.9% in 1973 and 31.5% in 1974.