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 up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
TORONTO – Canada’s main stock index was little changed in late-morning trading as the financial sector fell, but energy and base metal stocks moved higher.
The S&P/TSX composite index was up 0.05 of a point at 24,224.95.
In New York, the Dow Jones industrial average was down 94.31 points at 42,417.69. The S&P 500 index was down 10.91 points at 5,781.13, while the Nasdaq composite was down 29.59 points at 18,262.03.
The Canadian dollar traded for 72.71 cents US compared with 73.05 cents US on Wednesday.
The November crude oil contract was up US$1.69 at US$74.93 per barrel and the November natural gas contract was up a penny at US$2.67 per mmBTU.
The December gold contract was up US$14.70 at US$2,640.70 an ounce and the December copper contract was up two cents at US$4.42 a pound.
This report by The Canadian Press was first published Oct. 10, 2024.
