DISCLAIMER: GoldInvestors.news is not a registered investment, legal or tax advisor or broker/dealer. All investment/financial opinions expressed by GoldInvestors.news are from the personal research and experience of the owner of the site and are intended as educational material. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors and misprints may occur.

For Charlie Munger, admiration never created an obligation to invest. The late longtime Berkshire Hathaway Vice Chair could respect Elon Musk’s achievements while placing the Tesla and SpaceX CEO firmly beyond the boundaries of his own portfolio.

Munger did not have to dislike a company before deciding to avoid it. Some opportunities simply belonged in what he called the “too hard” pile, particularly when their risks could not be assessed with sufficient confidence.

His history with Musk stretched back to Tesla’s early years. Musk wrote on X in 2022 that Munger attended a lunch in 2009 and told the table about the many ways Tesla could fail.

Musk said the assessment made him sad, but he agreed with Munger’s reasons. He believed Tesla would probably die, yet still considered the attempt worthwhile.

Tesla survived and became successful enough to win an extraordinary acknowledgment from Munger. At Berkshire Hathaway’s annual meeting in 2023, he noted that America had not produced a successful new automobile company in a long time and called Tesla’s achievement a “minor miracle.”

Munger also recognized that Musk had accomplished important things by pursuing problems that appeared nearly impossible to solve. That respect, however, did not persuade him to accept the financial risks surrounding Musk’s ventures.

The distinction became especially clear in Munger’s final CNBC interview, which was recorded two weeks before his death at 99. The interview had been intended to air around what would have been his 100th birthday, but Munger died on Nov. 28, 2023.

When host Becky Quick raised the subject of Musk, Munger questioned whether the entrepreneur’s apparent fortune was as secure as it looked. “I don't regard Elon Musk as truly that rich because I don't think it's sure that everything he's working on can work,” Munger said. “I think he can get his a** handed to him on autos. I would not invest in Elon Musk's autos myself.”

Quick observed that Munger nevertheless appeared impressed by what Musk had built. Munger responded by pointing to luck as one ingredient behind immense fortunes.

“Again, that's another lesson,” Munger said. “What is the lesson of Elon Musk? Somebody who has a perfectly ridiculous amount of money almost always has an element of luck in him.”

Munger then focused on Musk’s habit of repeatedly increasing the size of his biggest wagers. “He's been quite lucky in what he's picked to double down, double down, double down — and then he's used leverage so much that he has doubled down right to the edge of extinction maybe two or three times,” Munger said.

That willingness to approach financial ruin stood in sharp contrast to Munger’s own preference for avoiding risks that could prove fatal. He questioned how many people could repeatedly reach the edge of extinction without eventually crossing it.

“Well, he's done it three times. Maybe he's got six more in him — I don't know,” Munger said. His uncertainty captured why Musk never became a suitable investment for him, regardless of the scale of Musk’s accomplishments.

Munger stated his position without ambiguity. “I put Elon Musk in a too-hard pile,” he said. “I never bet against him, but I never bet with him.”

He then explained how completely he excluded Musk from his investment decisions. “As far as I'm concerned, he doesn't exist. My life works better if I treat the world as though he didn't exist,” he said.

Munger and Warren Buffett built Berkshire around patience, discipline, rational decision making and compounding. Instead of constantly pursuing the next spectacular opportunity, Munger emphasized buying good businesses, avoiding obvious errors and allowing time to do its work.

That approach did not require investors to identify the next Tesla. It required consistent investing and enough patience for compounding to become meaningful over time.

Munger also placed a high value on recognizing the limits of personal understanding. If an investment was too difficult to evaluate or carried risks that could not be comfortably measured, walking away remained a legitimate choice.

His remarks did not argue that every investor must avoid ambitious companies or duplicate his portfolio. They showed that recognizing a remarkable achievement is different from deciding that the opportunity belongs in one’s own portfolio.

Munger spent his life studying how wealth is built and preserved. His final comments on Musk reflected a central part of that philosophy: Investors must recognize what is impressive, identify what is dangerously uncertain and know when to leave an opportunity alone.

DISCLAIMER: GoldInvestors.news is not a registered investment, legal or tax advisor or broker/dealer. All investment/financial opinions expressed by GoldInvestors.news are from the personal research and experience of the owner of the site and are intended as educational material. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors and misprints may occur.