Charlie Munger: Card Odds, the Lollapalooza Effect and Windowless Dorms

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Charles Thomas Munger was born in Omaha on January 1, 1924, and as a teenager worked at Buffett & Son, the grocery owned by Warren Buffett's grandfather Ernest. He left the University of Michigan's math program to join the Army Air Corps, which sent him to Caltech to study meteorology, and with help from former dean Roscoe Pound he entered Harvard Law School without an undergraduate degree, graduating magna cum laude in 1948. Card games taught him to fold often and bet heavily only with a clear edge. After his divorce from Nancy Huggins, his nine-year-old son Teddy died of leukemia. His partnership Wheeler, Munger and Company returned 19.8 percent a year from 1962 to 1975, against about 5 percent for the Dow.

Losses of more than 32 percent in 1973 and 31 percent in 1974 led him to close the firm in 1976, and he turned to studying human misjudgment, building a latticework of mental models and coining the Lollapalooza effect, in which several biases push in the same direction at once. He called Bitcoin a noxious poison, criticized commission-free trading apps such as Robinhood, and as a registered Republican backed single-payer health care. His university gifts came with his own dorm designs, and UC Santa Barbara abandoned the largely windowless Munger Hall in 2023. He died in Santa Barbara on November 28, 2023, at 99, and Buffett credited him as the true architect of Berkshire Hathaway.

• During the 1970s slump he took a brokerage firm private at about $3 a share and later liquidated it at $180.
• He used a Tupperware party to show how reciprocation, commitment and social proof combine to drive purchases.
• He advised never attending open outcry auctions because of what he called deprivation super-reaction syndrome.
• A consulting architect resigned from UC Santa Barbara's design committee, calling Munger Hall a psychological experiment.
• A failed cataract surgery cost him his left eye, and facing possible blindness in the other, he began learning Braille.