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Charlie Munger once said:

He exemplified what happens when immense wealth and age meet — an unfiltered person who spoke their mind.

While alive, Munger appeared as a measured, soft-spoken intellect with a sharp sense of humour, but he was tougher than a two-dollar steak.

Before rising to fame and fortune as one of the greatest investors of all time, Munger faced some of life’s harshest trials.

At 29, he went through a divorce during a time when it was socially frowned upon, leaving him broke. Just a year later, his 8-year-old son, Teddy, was diagnosed with incurable leukaemia.

Rick Guerin, Charlie and Warren Buffett’s lesser-known business partner, shared, “When Teddy was in bed and slowly dying, Charlie would hold him for a while, then go out walking the streets of Pasadena crying.”

Munger and his ex-wife spent hours in the leukaemia ward with other parents, watching their children slip away. It was devastating.

Reflecting on that time, Munger said, “I lost my first son to leukaemia, a miserable, slow death. At the end, he kinda knew it was coming, and I’d been lying to him all along. It was just pure agony.”

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Years later, at 52, Munger lost his left eye to cancer. As a voracious reader and lifelong learner, he took it in stride, remarking with dry humour, “It’s time for me to learn braille.”

Despite being worth $2.3 billion — far less than Warren Buffett’s $107 billion — Munger worried that his successful value investing strategy was becoming increasingly difficult to replicate.

“There is so much money now in the hands of so many smart people all trying to outsmart one another and out-promote one another at getting more money out of other people,” Munger observed.

He cautioned that this would likely lead to lower returns for value investors in the future.

Let’s dig deeper.

Where’s the Value in Value Investing?

I first came across value investing while watching one of Warren Buffett’s many videos, where he passionately recommended reading Benjamin Graham’s The Intelligent Investor.

The book’s core idea boils down to this: “Buy cheap and sell high”

Value investing is exactly what it sounds like — a strategy popularised by Buffett and Munger, where you hunt for undervalued stocks.

The idea is simple: buy something for less than it’s worth, based on the belief that the market will eventually realise its true value.

Here’s a quick excerpt from Graham’s book that captures the essence of the approach:

Benjamin Graham — Source

Munger, however, questioned whether this strategy would remain as effective in the future, thanks to the rising competition in the investing world.

Investing has almost become a cultural phenomenon. Today, anyone can call themselves an investor with a few taps on a keyboard or a phone.

The growth in wealth management reflects this shift. Over the last few decades, more individuals and professionals have sought to exploit stock market inefficiencies.

According to Statista, assets under management in the wealth management market are projected to hit US$83.19 trillion by 2027, with financial advisory leading the charge at US$80.87 trillion (up from today’s US$57.03 trillion).

It’s Dog-Eat-Dog When Smart People Compete.

Munger believed the rise of online trading and investing platforms has made the market more crowded than ever.

With more people accessing advanced tools and information, the pool of untapped investment opportunities has shrunk dramatically.

In his view, identifying and analysing stocks has become easier for everyone. But that accessibility has created more efficient markets, making undervalued stocks with significant price discrepancies much harder to find.

Charlie Munger — Source

But not everyone agrees.

Charlie Munger and Warren Buffett’s famous value investing strategy has struggled to keep up over the past decade, especially compared to growth investing — the approach of backing companies expected to grow faster than the market (think tech giants like Apple, Amazon, and Google).

One study suggests that the underperformance of value stocks can be tied to sluggish economic growth. During slow and uncertain times, companies find it harder to boost earnings.

As a result, “Investors prefer putting their money into faster-growing companies like Facebook, Apple, Amazon, Netflix, and Google (FAANG stocks) because they feel more confident in their ability to generate profits.”

The study also used the Fama-French Three-Factor Model, developed by renowned economists Eugene Fama and Kenneth French.

This model compares two groups of stocks monthly: those with low book-to-market ratios (value stocks, based on their assets vs market value) and those with high book-to-market ratios (growth stocks).

The results? Value stocks have consistently underperformed for nearly eight years, showing how the strategy is facing an uphill battle in today’s market.

The Oracle of Omaha Says — “People Never Change”

Since society started idolising entrepreneurship and investing, I’ve been hooked on Munger and Buffett’s advice and their legendary friendship.

What stands out to me is their knack for healthy disagreements, always delivered with good humour. It adds a touch of excitement to what can be a pretty dry topic for most people.

Buffett once shared in an interview, “We’ve never had an argument in the entire time we’ve known each other, which is almost 60 years. We knew we were sort of made for each other.”

He also pointed out something crucial: the key to market opportunities lies in “other people doing dumb things.”

No matter how smart or informed someone is, the stock market is still driven by human decisions. Humans, by nature, are irrational, creating constant opportunities for those paying attention.

Warren Buffett — Source

Final Thoughts

Investing will always involve human decisions, which means irrational behaviour is here to stay — and so are the opportunities it creates.

As Buffett put it, “Regarding money, we’ll always do dumb things.”

Value-based investing seems straightforward, but it’s not widely practised. Why? Likely because it demands patience and careful consideration of information sources.

With Millennials and Gen Z entering their prime earning years, investing has shifted from being purely “capitalistic” to something everyone participates in. This could lead to a cascade of market inefficiency.

Research shows where Gen Z investors are getting their financial advice:

• 60% of non-professional investors rely on YouTube.

• Other popular sources include Instagram, TikTok, Twitter, Reddit, and Facebook.

• Worryingly, 51% of Gen Z non-investors get their financial knowledge from friends or family.

If that doesn’t scream inefficiency, I don’t know what does.

Just 34 days shy of his 100th birthday, Charlie Munger passed away at 99.

Warren Buffett reflected: