Reviewed by Steve

I liked the book because it focused on Munger’s childhood, his parents, grandparents, private and public life, and how his background and education explained his financial and money philosophy, the outcome of his investing history, and his overall celebrated life. The extremely wealthy and talented people can experience things that we ordinaries can only dream of. From the start, Munger had many God-given talents, along with social and family privileges, and thus, a huge head start.  But it is not just his brilliant analytical skills and his socially entitled history. Munger never abandoned those basic, common-sense principles as humans we all share! His lifelong business partner, Buffett, shared these commonsense life values too. Far too many investment books are way over the top analytically with the sole goal of becoming wealthy and forgetting what we are here for as humans. This book does the job so well; this little nobody of a reviewer can identify with Munger!

While 99% of Americans will never attend Harvard Law School, University of Michigan, and California Institute of Technology, we are all capable of frugal living, for example. Some of the book reviewers here were disappointed in the book because the author wrote much about Munger’s “soft skills,” the nonanalytic, social, and emotional experiences. I believe that Charlie’s (and Warren’s) life principles are just as important, if not more important, than their business and analytical powerhouse competencies.

I frequent several investment forums daily. The endless debate about which investing strategy has the better returns: indexing vs. active management (and individual stock picking). Actually, this debate was put to rest years ago with indexing beating the active managers because of low costs, long-term thinking, diversification, and staying the course. But no! The active management fanatics bring up Munger and Buffett as examples of active management beating the indices and passive strategy by huge margins. Past data, unfortunately, support these misinformed investors of the active management strategy as Berkshire Hathaway handily beat the indices going back to 1965, averaging a 25% return each year. The S&P 500 returns about 12% during that same time. But that’s not the entire picture.

What led to Munger’s investing success was straightforward. According to this book and others, Munger and Buffett possess many investment opportunities that I will never have access to. I can safely say that 99% of retail and Do-it-Yourself investors have no access either. Munger and Buffett’s active management is much more comprehensive and deeper than just choosing an actively managed mutual fund with the latest fund manager super-duper star.

As I reflect on the author’s book about Munger, I listed two features that differentiate the celebrated Munger (and Buffett) vs. us regular investors.

Life Principals are available to all us regular investors, but Munger and Buffett “actively” participate every day for decades. We would do well to listen and practice these principles in our investing life:

1. Work as a team
2. Frugal living
3. Long-term thinking. Some of their holdings go back 45-50 years.
4. Philanthropic causes that help the less fortunate
5. Drive ordinary cars
6. Never listened to any Wall Street and financial media noise machine
7. Transparent
8. Stay married. I remember when I first got acquainted with Buffett when he said that he treats his investments like a marriage. For the long haul.
9. Munger and Buffett have frequently admitted how lucky they are to live in the United States. (I like to add that they have not reported any serious mental or physical illnesses, strokes, heart attacks, dementia, etc., except for Munger’s botched cataract surgery).

Experiences that only Munger and Buffett (and a handful of other financial professionals) have 100% accessible to all on this list:

1. Board members on companies they invest in
2. Purchasing, owning, and sometimes MANAGING companies
3. Ivy League graduates who studied with the best, Harvard Law School, Ben Graham, etc.
4. Had great parents and grandparents who also went to Ivy League schools, business owners and attorneys, and very successful parents and grandparents!
5. Only a small percentage of human beings live and work with purpose and have the intellectual and physical energy to live past 90 with similar energy of 20 somethings!
6. Accessible to mainstream media 24/7
7. Access to high-profile financial professionals, U. S. Presidents and their administrations, politicians, academia, and CEOs of major corporations worldwide 24/7
8. According to Census data, the average number of children per family is less than 2. Reasons for small families can be complex, but I think it’s safe to assume the wealthy can easily afford eight children. Of course, exceptions exist, but not many.

Both men have lived so long that if they had retired when they were 65, only a handful of financial professionals would have heard about them. According to The Psychology of Money author, Berkshire Hathaway earned 95% of its current wealth in the last 25 years.

Finally, I never needed those experiences that Munger and Buffett had. The first list of shared experiences was more than enough to make this ordinary investor life with a comfortable retirement.

I recommend this book and give it five stars. The author and Munger deserve it.

Steve’s Bio

Stephen A. Schullo, Ph.D. (UCLA ’96) taught in the Los Angeles Unified School District (LAUSD) for 24 years and UCLA Extension teaching educational technology to student teachers. Steve wrote investment articles for the United Teacher-Los Angeles (UTLA) union newspaper for 13 years. Thrice featured retirement plan advocate in the Los Angeles Times and U.S. News and World Report. He co-founded an investor self-help group 403bAware for teacher colleagues and wrote 7,500 posts in three investment forums since 1997. Frequently quoted by the media, he testified at California State legislative hearings and was honored with the “Unsung Hero” award by UTLA for his retirement planning advocacy.

For the last fifteen years, he serves as a volunteer on LAUSD’s Investment Advisory Committee as a “Member-at-Large” and former co-chair. The committee contains collective bargaining reps from the unions and monitors the district’s tax-deferred retirement plans, 457b/403b, of 55,000 former and current LAUSD employees, worth $3.1 billion in total assets.

He started this blog in 2012 to help all PreK-12 public school educators nationwide, especially his Los Angeles Unified School District colleagues. He belongs to a small national group of 403(b) advocates (mostly teachers) who want to bring closer attention to the 403(b). During the last 25 years, over 40 newspaper articles have been published and each one says the same thing, TSAs (Tax Sheltered Annuities) are terrible 403(b) plans. Over and over again, the articles report that the salesperson gets the benefit from lucrative commissions and high costs. Nobody in educational leadership reads these articles NOR talks about the proper place for annuity products publically. We come together at 403bwise.org. Come on over if you want to join us so we can help our colleagues avoid these self-conflicted retirement plans, TSAs.

For a copy of both books, click on my home page and scroll down to the two books. Click on each book and download it FREE. No obligations as I am not a financial adviser.

Email Steve at steve.schullo@latebloomerwealth.com or ask your question after each post.