Charlie Munger, the long-time vice chairman of Berkshire Hathaway, passed away at the age of 99. He was renowned as an investing legend with a net worth estimated at $2.6 billion by Forbes, and a source of worldly advice. While Munger's impact on the world of investing and business is undeniable, a closer look at his lifestyle and investment strategies reveals a more complex legacy, one that includes an unintended influence on global health.
Munger's Approach to Life and Diet
Despite his longevity, Munger wasn't particularly focused on optimizing his health. He wasn't one for strict diets or grueling fitness regimes. He enjoyed donuts in moderation, peanut brittle, and Diet Coke, and avoided exercise whenever possible. In his later years, he used a wheelchair but remained mentally sharp.
Munger himself joked about his diet. "I'm eating this good peanut brittle," he told CNBC in February 2023. "That's what you want to do if you want to live to be 99." He acknowledged that donuts weren't healthy but believed they could be enjoyed occasionally with discipline.
The "SuperAger" Question
Munger's lifestyle raises the question of whether he was a "SuperAger," a term for people over 80 who retain cognitive abilities similar to those in their 50s. While factors like strong relationships, not smoking, and staying active are associated with SuperAging, some researchers note that SuperAgers don't always follow conventionally healthy lifestyles.
Melody Brue, VP and principal tech analyst at Moor Insights & Strategy, noted that Munger stayed connected with people through Zoom when he couldn't travel. He also believed in cutting toxic people out of his life.
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Dawn Skelton, a professor of aging and health at Glasgow Caledonian University in Scotland, suggested that Munger's genetics likely played a significant role in his longevity.
Munger's Influence on Coca-Cola and the Rise of Sugar Consumption
Munger's influence extends beyond his personal habits. His "simple" notions, outlined in a July 20, 1996 speech titled “Practical Thought About Practical Thought,” significantly impacted Coca-Cola's trajectory. In this speech, he detailed a trajectory for the soft drink product using the simplest and most fundamental of academic models. He advocated for making the beverage resemble wine rather than sugared water, artificially coloring it, and carbonating it to mimic champagne. He also emphasized creating a unique flavor to maximize difficulties for competitors.
Munger explained one aspect of his approach by stating, “it will be wise to have our beverage look pretty much like wine instead of sugared water. And so, we will artificially color our beverage if it comes out clear. And we will carbonate our water, making our product seem like champagne, or some other expensive beverage, while also making its flavor better and imitation harder to arrange for competing products. And, because we are going to attach so many expensive psychological effects to our flavor, that flavor should be different from any other standard flavor so that we maximize difficulties for competitors and give no accidental same-flavor benefit to any existing product.”
Today, Berkshire Hathaway is the single largest holder of 400 million shares of Coca-Cola stock valued at $22 billion and close to 10% of the company. The Coca-Cola Company, which started in Atlanta, strategically spread worldwide and now boasts of offering over 500 brands and 3,500 beverages in over 200 countries. Munger's strategies helped transform Coca-Cola into a company with a market cap of $250.36 billion.
The Health Consequences of Munger's Strategies
However, Munger's influence on Coca-Cola and other consumer products has had unintended consequences for global health. Convincing people to switch from drinking water to colored, carbonated, high-sugar drinks has come at a cost. Thirty-eight million Americans (1 in 10) have diabetes, and an additional 97.6 million adults (38% of the US population) are prediabetic.
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While increased sugar consumption doesn't directly cause diabetes, it contributes to obesity, a primary cause of Type 2 diabetes (T2D). Obesity has become a nationwide epidemic. The CDC estimates that 54.9 million Americans will have diabetes (13.4% of the population) in 2014 to 60.6 million (17.9%) in 2060. Those affected will include half of the population over the age of 65. The obesity problem even affects national security; 31% of young applicants are disqualified from military service because of obesity. The global estimate of people with diabetes is 462 million or 6.28% of the world population.
Diabetes develops due to two main conditions: the pancreas not producing enough insulin, or cells becoming insulin resistant. Consuming sugary drinks regularly increases the risk of developing T2D by 26%. Counterintuitively, drinking diet soda does not eliminate the increased risk.
The demand for weight loss solutions, from specialized diets to drugs, is growing rapidly. Weight loss is associated with remission of diabetes and improvement of other conditions like hypertension.
Munger's Investment in DaVita
Munger's Berkshire-Hathaway also owns more than half of Kraft-Heinz (makers of Kraft Macaroni and Cheese, Heinz Mayonnaise, Cool Whip, and Kool-Aid). One of Munger’s simple notions was the need for both operant and conditional conditioning of consumers. He argued for the practice of the operant reward system associated with buying these brand products and which simultaneously discouraged the consideration of buying from a proprietor marketing a competing product. As for conditional (Pavlovian) conditioning, Munger believed that the “effects of mere association” would dictate product development.
Comfort foods provide temporary relief from life's problems but can also lead to obesity, which is associated with diabetes and high blood pressure, the two most common causes of Chronic Kidney Disease (CKD). Progressive CKD can lead to end-stage renal disease (ESRD), or kidney failure. Approximately 808,000 people in the United States are living with kidney failure, and 69% of them require dialysis.
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Interestingly, Munger's portfolio includes DaVita, a dialysis company, (more than 40% of the company) worth $3.4 billion. DaVita stock is one of his best performing stocks of 2023 with share performance increasing by 36.63% as of November 26. Of all the trillion dollars in assets Munger managed, DaVita is the only healthcare concern in the current portfolio.