B000U5KFIC EBOK (49 page)

Rather than show her frustration, and perhaps to resist saying, "I
told you so," Nancy Munger scans the sky for birds, and as luck would
have it, spots an eagle hovering near a tall, distant pine. She is an avid
birder and had been told there was an aerie near Rice Lake. When the
bird wings away, conversation turns to her other interest, painting.
"When you paint, you always notice that the dark side of clouds is on the
bottom. The sky is light near the horizon, and darker as you look
higher," explains Nancy.

Molly Munger cheerfully announces that, based on past experiences
of boating with her father, she has worn her swimsuit underneath her
slacks and is prepared to jump in the lake and push the boat out into the
channel if necessary. Finally, the men prevail over the rice, and the fishless fishing party is on its way hack down the string of lakes.

Getting caught in the weeds or stuck on a sandbar when boating is
only one of the Munger family traditions. With long-standing commitments, friendships, and homes to visit, the Mungers' life has settled
into a series of rituals. The Mungers drive from Los Angeles to their
Santa Barbara home on many weekends. "We love this house," said
Charlie.

The Santa Barbara "Mungerville" home sits in a wooded area, far
enough from the beach that the sea view is somewhat restricted, but
close enough to catch a breeze. The wood and stone house can best he described as California country French. There is a large sunroom in the center and a spacious wine cove just off the kitchen. Charlie's study has some
of the same decorative elements as the Cass Lake house-a model sailing
ship, carved wooden ducks, and stacks of books. Books by Somerset
Maugham; biographies of Margaret Thatcher, Mark Twain, and Albert Einstein; The Moral Animal by Robert Wright; Tales from the Drone's Club
by P.G. Wodehouse. And stacked on a side table, The Ultimate Rose Book
and The French Interior.

"BELIEVING THAT THE SECRET OF human felicity is to aim low, I promptly did
that," said Munger, adding that he wanted to be able to say what Samuel Johnson said regarding the writing of his dictionary. "I knew very well
what I was trying to do. And very well how to do it. And I have done it
very well."

Of course Munger means that as a bit of a joke, and he admits he overshot his mark somewhat. Although Munger may never have expected to
be a billionaire and second in command of one of the most unique and
closely watched corporations in the world, he aimed at a life of quality
and strove diligently to bring that about.

Buffett's life and his investment strategy seem to unfold effortlessly
before him, but Munger's course has not been as easy. Both personally
and professionally, he has encountered repeated obstacles and heartaches. That is what most people experience in life, Munger would say.
Anyone who struggles to make the box of his life larger discovers that the
box has walls that must be burst open.

"It's ... necessary to accommodate a lot of failure, and because no
matter how able you are, you're going to have headwinds and troubles,"
Munger told the employees at See's Candy on the company's 75th anniversary. "The Sees who created this business had failed at least once,
and had seriously failed. But if a person just keeps going on the theory
that life is full of vicissitudes and just does the right thinking and follows
the right values it should work out well in the end. So I would say, don't
be discouraged by a few reverses."'

By heeding basic principles and being alert for opportunities,
Munger matte the leap from a respectably successful lawyer to an individual investor who is known internationally for his expertise. His wealth
has provided the independence he longed for as a young man.

"It was a number of ideas, not just one. A lot of ideas. In the nature of
things, really wonderful ideas are virtually sure to win. You can be sure
that if you master the wonderful concepts you're going to get opportunities if you look for them.... But you won't get an unlimited number of
good ideas-so when they come along, seize them."'

Munger has said that accumulating the first $100,000 from a standing start, with no seed money, is the most difficult part of building
wealth. Making the first million was the next big hurdle. To do that a person must consistently underspend his income. Getting wealthy, he explains, is like rolling a snowball. It helps to start on the top of a long
hill-start early and try to roll that snowball for a very long time. It helps
to live a long life.

Warren Buffett is known for an extremely simple lifestyle, with very
few hobbies aside from reading annual reports, regular games of bridge,
and a little golf. (In truth Buffett does a fair amount of travel to spend time with his wide circle of friends and to attend various business
meetings.)

Charlie Munger cannot be described as a lavish person, but he lives
fully and even colorfully. True, he comes running when Berkshire has a
crisis and needs him, and he tends to his duties at the Los Angeles Dail),
Journal, Wesco Financial Corporation, Good Samaritan Hospital, and
Harvard-Westlake School, but accompanied by Nancy, he also visits
friends everywhere from Maine to Idaho, plays golf in Hawaii, and fishes
on various continents and bodies of water for trout, bonefish, Atlantic
Salmon, or whatever may be present and biting. He has traveled with
friends Ira Marshall and Otis Booth to the Australian rain forest and with
family to England, Italy, and other places. He reads voraciously about
everything from dinosaurs, to black holes to psychology. With eight children who have families of their own, simply attending birthday parties,
graduations, weddings, christenings, and holiday events gives him a busy
social life.

As he grows older and wealthier, Munger still avoids a showy life, but
he is willing to accept a little ease. "Warren kids me about flying coach, which I used to do more often," said Munger. "Now, when traveling with
Nancy, we usually go first class or business class." Finally in 2000 Munger
signed up for a timeshare private jet service through the Berkshire
Hathaway-owned company Executive Jet.

A Munger family gathering in England.

While shareholders come to Berkshire and Wesco annual meetings
seeking financial wisdom, they also ply Munger with questions on how to
properly raise a family, another subject in which he has vast experience.

"I am quite pleased with all my children in terms of morality, behavior, and such," said Munger, but he's less certain about how to make them
all hunger to work hard and become even richer than he has made them.

"I've had kids in both moderate and immoderate circumstances," he
said, "and to be honest, my children that were raised when we had less
money have worked harder."

The Munger children, most of whom see through their father's curmudgeonly exterior, are unlikely to be ruffled by such comments. As for
his gruffness, "It's very much an act, it's self-parody, it's a joke on himself," said Molly Munger. "You know people who are stiff, ponderous.
He's not. He doesn't expect you to believe it. He's utilizing that particular
characteristic. He has a huge range. This was the one that suited him."

The Munger children, despite their attraction to law as a career, are
quite different from one another, yet each seems to have taken some characteristic from Charlie. Molly Munger is a vivacious, striking blonde
whose face is shaped very much like her father's. Charles, Jr., like Charlie,
Sr., is fascinated with science. Charlie, Sr. is famous for carrying a book
and reading, no matter how wonderful the surrounding scenery might be.
His daughter Emilie is the same. Emilie's husband once walked into their
home and smelled smoke. When he checked around, he found smoke billowing from the kitchen, where food was burning in the oven. Emilie was
sitting in the kitchen, so involved in a book that she was unaware of the
pending disaster. On another occasion, she was waiting for a flight at an
airport and went into a shop. Emilie found a book, sat on the floor and
began to read. She became so engrossed that she missed her airplane. Finally, the terminal was closed and Emilie, still on the floor quietly reading,
was locked in the store. She had to telephone for help to get out.

Despite the fact that some of his children have adopted religious
beliefs he doesn't embrace and others spend their life in activities that
probably won't be highly financially productive, Munger swells with
pride when telling of Charles, Jr.'s work in science education or his wife
Mandy's election to her local school board.

"He thinks I'm an ultra liberal, but part of that is for effect," said
Molly, who spends an enormous amount of time on work her father would describe as left wing and who as an adult converted to Catholicism. "He likes to play the curmudgeon, but I don't think he thinks I'm a
crazy person."

MUNGER HAS SAID THAT HE and Buffett don't want to go down in history as
shrewd, miserable accumulators. "We didn't want to be remembered by
friends and family for nothing but pieces of paper."

And so, Charlie has decided it's all right to be whimsical once in
a while.

"I'm building a boat," declared Munger in the fall of 1998. "We're
within 60 days of finishing. Call it Munger's folly. It's not an economic
activity, but it's very creative. Nobody has built a boat exactly like it."

The 84-feet-long, 41-feet-wide catamaran was in a shipyard-of
sorts-in Florida, being constructed of epoxy resin, composite materials
similar to those used in aircraft, and Keviar. Briefly it was the largest boat
of its kind in the world until someone built a catamaran with a mast just a
few inches higher than the Channel Cat's 102-foot pole. The Channel Cat
was completed in early 1999, but not without difficulty.

King Williams-who along with Charlie designed the boat-says the
story began one afternoon several years earlier when he was working on
his fishing boat, which was moored at the long pier in Santa Barbara.

Williams is a former submariner and deep sea diver, first for oil companies, then on his own. He made his living diving for sea urchins in the
Channel Islands, where the best specimens in the world are found. The
urchins were sold in Santa Barbara and shipped overnight to Japan,
where they are a culinary delicacy. Unfortunately, Williams had spent
too much of his career under water and was beginning to suffer the
bends when he was diving.

Williams's old East Coast lobster boat attracted a lot of attention
from tourists strolling along the dock. "These two older men were looking at my boat, admiring it," said Williams. "They introduced themselves.
Charlie Munger and a friend. I had no idea who they were." The two men
asked all sorts of questions, and after a while Williams offered to take
them out for a spin on the boat.

After that Charlie called occasionally and he and Williams went
out for lunch and talked mostly about two subjects Munger finds everfascinating-fishing and boats. Gradually, the two became friends. As he
had done before, senior financier Charlie Munger found an unlikely ally,
King Williams III, a deep sea diver whose hobby is hang gliding off the
Santa Barbara cliffs.

Williams is a big, easy-going fiftyish man with a ready laugh, who
seems to have no fear of anything physical. Munger does not intimidate
him either, but Williams has learned a lot in the relationship. "Charlie
used to ask me a question, and I'd shoot back an answer," said Williams.
"A couple of days later I'd think, `why did I say that? That's not what he
wanted to know.' Now I think carefully before answering him. I like to
say that now I'm up to just one day behind him."

Their conversation occasionally took a philosophical turn.

"Charlie once asked me, `King, if you could do anything in the world,
what would it be?' I said I'd build the biggest catamaran I could and sail
off across that ocean and you'd never see me again." Munger then quizzed
him about why he would build a catamaran, and they got to talking about
that type of boat and what made it good and had. Though Williams was
unprepared for what happened next, like the typical adventurer, he was
game for it. "One day he said, `go find a catamaran.'" Unfortunately the
boat they discussed did not exist, and the luxury tax had pushed many
yacht builders out of business, making U.S. builders difficult to find.
Williams finally located a yacht manufacturer who said he could do the
job in Green Cove Springs, a small town in Florida.

Three months into the project, things went off track. To be sure,
Williams and Munger wanted to do some things with the boat that were
outside the realm of ordinary experience. Problems at the original shipyard were such that Munger complained there were "rogues, scallywags
and pirates in Florida."

"I went down, things weren't going well," said Williams. "Charlie
said, 'Well, you can build a boat.' So I fired the guys."

Williams and his wife Rachel quickly packed up and went to Florida
to take charge of the work. The unfinished boat was already so big that
moving it would be awkward, but there was no other choice. Williams
had to go into the shipyard with the sheriff, a warrant, and house movers.
He arranged for a power company crew to drive down the road ahead of
the boat, lowering power lines so that the boat would not snag them.