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What Charlie Munger taught me over breakfast about investing

Peter Cooper
Dec 3, 2021

It was over a typical American-style breakfast – eggs mixed through a lot of cream – in 1993 that a conversation changed my thinking and, in turn, my life.

My investing career had started in 1987 with the NSW State Superannuation Board, and in those days I devoured everything I could about successful investors.

I pored over the works of some incredible people, drawn to their language and personal beliefs as well as their investment philosophies.

People such as Peter Lynch, John Templeton, Roy Neuberger and, of course, the legends of Berkshire Hathaway, Warren Buffett and Charlie Munger.

Their ideas and ideals all resonated with me as they displayed personable values such as generosity of spirit and intellectual humility, not just financial acumen.

There are hundreds of different ways to make money, but it was the values these people lived that attracted me.

Which brings me to Charlie Munger, and this is where it gets personal.

My job regularly took me to the US and in 1993 I made a “cold call” to Charlie’s office in Los Angeles. I was looking for a job.

What Charlie understood, and I was about to learn, was that it would be almost impossible for me to invest the way he did.

I managed to charm his PA over the phone and to my surprise got a call back, with an invitation to meet him for a one-on-one breakfast at the prestigious California Club in Los Angeles.

It was hard to get a word in at times. Charlie’s celebrity status at the California Club meant there was a steady flow of members coming by the table to slap him on the back and congratulate his latest deal.

Over those creamy eggs, Charlie Munger quickly deflated me. After asking what I did and who I worked for, he said point-blank I would not get a job at Berkshire Hathaway. The reason? “You and I are in different industries.”

What Charlie understood, and I was about to learn, was that it would be almost impossible for me to invest the way he did.

I worked for a government superannuation board, and I had to operate within the confines of a public institution. I was subject to performance pressures and measures, while also being accountable to trustees.

Charlie was in private equity and risked his own money and was therefore primarily responsible to himself. Unlike me, he wasn’t confined by limits placed by others.

I also learned that day that Charlie Munger is an incredibly generous man. Over breakfast, he gave me an hour and a half of his time. In that time, I learned so much. The key lesson for me was that, in private investment, you don’t just need to have skin in the game, you’ve got to have soul in the game. Most importantly, this proprietorial attitude must exist at managerial level.

You need a framework to manage business challenges while maintaining core integrity.

Later in life, I would start a business called Cooper Investors. I took every lesson I learned from that breakfast and built it into the DNA of the firm.

One of the great gifts of people such as Charlie Munger is his ability to understand human nature while able to still remove himself from distraction. Those lessons have been immense.

He projects a “force of logic”. He looks at the world with reason, not just emotion.

He is patient. He sits and observes, processing that information and waiting for the moment when preparation and opportunity intersect.

Yet there is also a strong contrarian streak in Charlie. He and Warren Buffett don’t like airlines as an investment, yet they did invest – and successfully.

The other thing that stands out is his decisiveness. A decision made is a decision followed through.

Charlie encapsulates so many of the ideas of such prominent people in business – strong on family and personal values; being independently minded; having clear goals; and knowing the value of taking a middle way.

These are values that have shaped me and my business and that I encourage in my staff – humility and generosity and finding opportunity through calculated risk.

So, on the day of Sohn Hearts and Minds, where Charlie is the keynote speaker, I am again looking forward to listening and learning, just like all those years ago.

Peter Cooper is the founder and Chief Investment Officer of Cooper Investors.

This article was originally posted by The AFR here.

Licensed by Copyright Agency. You must not copy this work without permission.


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