How Losing An Eye Helped Charlie Munger See Success

The life story of Charlie Munger, who died last week at the age of 99, serves as a shining example of the persistence of the American dream, especially at a time when many people doubt that the promise of a better life is still intact. If anything, I believe Munger’s journey, coupled with data from the updated Forbes 400 list, reaffirms that the American dream still thrives.

Charlie Munger’s life began in a modest Midwestern town, far from the glamor of Wall Street. His early years were marked by difficulties, including a marriage that ended in divorce, a rarity at the time, which left him with few possessions.

But adversity was not yet done with him. Munger’s son, Teddy, fell victim to leukemia, and Charlie bore the financial burden of his son’s illness, paying for everything out of his own pocket. Tragically, Teddy died at the age of nine, devastating Charlie.

Faced with such overwhelming challenges – a failed marriage, financial ruin, the loss of his beloved son, and then the surgical removal of his left eye following botched cataract surgery – I suspect that Munger must have been tempted to give in to vices. to which many others have succumbed.

Fortunately for him, it was at this time that the future billionaire’s path crossed that of an offbeat investor from Omaha, Nebraska, named Warren Buffett. Together, the two value investors began buying struggling shares in a defunct textile company called Berkshire Hathaway. The rest, as they say, is history.

Between 1992 and 2022, Berkshire recorded a compound annual growth rate (CAGR) of 13%, outperforming the S&P about two-thirds of the time on an annual basis. If an investor had purchased $100 worth of Berkshire stock in 1978, when Munger joined the company, that investment would have been worth about $400,000 today. The chart below shows the annual returns of Berkshire A shares minus the annual returns of the S&P 500.

The American dream in crisis?

James Truslow Adams, the Pulitzer Prize-winning historian who coined the term “American Dream” defined it in 1931 as the “dream of a better, richer and happier life for all our citizens of all ranks.” Is the dream still true? Today, many Americans can’t help but have doubts.

According to a recent Wall Street Journal/NORC investigation, Only 36% of American adults still believe in the American Dream, a significant drop from 53% in 2012 and 48% in 2016. About two-thirds of those surveyed said the American Dream was once true, but is no longer true. was more or never. start with. What’s more, half of people think life in the United States has gotten worse over the past half-century.

There is no denying that the United States is currently facing historic economic challenges. Despite the rise in interest rates, inflation remains stable, increasing by 3.2% year-on-year in October. Homeownership is arguably the most important part of the American Dream, but due to sky-high mortgage rates, housing affordability is at an all-time high, as are ongoing home sales.

As dire as this may seem, I am hopeful that the worst is behind us. Pain is temporary and hope will prevail.

Self-made billionaires embody the dream

But don’t believe me. The update Forbes 400 list, published in October, reveals an encouraging trend. More than two-thirds of today’s billionaires are self-made, a remarkable increase from less than half in 1984. By 2023, an astonishing 70% of billionaires have built their fortunes from scratch.

Of these self-made billionaires, 29 scored a 10, indicating that they have ever lived below the poverty line or faced significant hardship during their journey to success. The list includes individuals like former Starbucks CEO Howard Schultz, who grew up in a Brooklyn housing project, and David Murdock, the former CEO of Dole Food Company and a veteran who briefly experienced the roaming.

This diversity of origins and histories within the ranks of the wealthiest Americans underscores the resilience of the American dream.

Munger’s legacy lives on

In these times of doubt and uncertainty, Charlie Munger’s story reminds us that the American dream is not a relic of the past. It is very alive, prosperous and within the reach of those who dare to dream, work hard and persevere in the face of adversity. Munger’s journey from the depths of despair to becoming a billionaire and revered figure in the world of finance speaks volumes about the opportunities that still exist in this great nation.

Let’s take inspiration from his legacy as well as the stories of self-made billionaires who continue to shape the landscape of American success.