Charlie Munger (right) and Warren Buffett.SCOTT MORGAN/REUTERS
Charlie Munger receives $70,000 a year from a $1,000 purchase he made over 60 years ago.
Warren Buffett’s right-hand man has likely made over $1 million from oil royalties bought in 1962.
Buffett’s father also bought oil royalties, and the investor’s sister still receives monthly checks.
Charlie Munger rakes in $70,000 a year from a $1,000 investment he made six decades ago — and has likely collected over $1 million in total from the lucrative wager.
Warren Buffett’s business partner disclosed the initial cost of his oil royalties, and what they yield today, during Berkshire Hathaway‘s annual shareholder meeting on Saturday.
Munger placed his oil bet in 1962, after meeting a businessman named Al Marshall during a husband-and-wife golf tournament. At the third hole, Marshall outlined his plan to bid in a local oil-royalty auction. Munger responded, in characteristically blunt fashion, “You’re doing it all wrong.”
Marshall enlisted Munger to join his bid and sort out the legal and financial aspects of the purchases. Munger’s deal structure included an ABC trust, a type of tax shelter that has since been outlawed.
“I’m still getting $2,000 to $3,000 a month from that,” Marshall told author Janet Lowe for her book, “Damn Right!: Behind the Scenes with Berkshire Hathaway Billionaire Charlie Munger.”
“We only put up $1,000 each and we’ve each probably made a half a million out of it,” Marshall said ahead of the book’s release in 2000.
Munger, a billionaire investor and Berkshire’s 99-year-old vice chairman, relayed the story himself during Daily Journal’s shareholder meeting in 2016.
“I soon realized that under the peculiar rules of an idiot civilization, the only people who were going to bid for these oil royalties were oil royalty brokers, who were a scroungy, dishonorable, cheap bunch of bastards who realized that nobody would ever bid at their price,” he said.
“50 years later we were getting $100,000 a year on that investment,” Munger continued. “The trouble with that story is that it only happened once.”
Whether Munger is receiving $70,000, $100,000, or some other figure from the royalties each year, it’s safe to say he’s made a fortune from them over time.
This type of passive income helps explain why Munger has been happy to collect a modest $100,000 salary from Berkshire for several decades now. He also keeps the vast majority of his roughly $2 billion fortune in Berkshire stock, which doesn’t pay a dividend.
During Saturday’s meeting, Buffett revealed that Munger isn’t alone in benefiting from age-old oil royalties. The famed investor and Berkshire CEO noted his own father bought $1,000 to $1,500 worth of them before he died, and they’ve now been passed down to Buffett’s younger sister, who receives monthly checks to this day as a result.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
