When Berkshire Hathaway Inc (NYSE: BRK-A) (NYSE: BRK-B) bought See’s Candies in 1972, it taught the firm's late vice chairman, Charlie Munger, a valuable lesson that would guide his investing career.
The company raised prices without hurting sales, and Munger learned that you can get a bargain paying full price for a beloved brand.
Following that deal, Munger and Berkshire chairman and CEO Warren Buffett began looking for companies selling for fair prices that had loyal customer bases. In their early days, Amazon.com Inc AMZN and Tesla Inc TSLA didn't fit the bill.
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According to the Wall Street Journal, Munger admired Amazon founder Jeff Bezos, but the stock was too risky to bet on.
When Tesla came around, it was much of the same story.
Munger believed Tesla CEO Elon Musk was "an extreme talent," but he took on too many risks.
"I would go crazy if I took the risks he did," Munger said of Musk.
Amazon turned out to be one of the best-performing stocks of all time; Tesla has soared in value since its IPO in 2010, offering one of the highest average annual returns in the market.
Munger and Buffett eventually bought Apple Inc AAPL stock, which turned out to be one of the firm's best decisions ever.
The duo had to overcome their long-held caution about tech stocks to jump in. Apple currently represents about 50% of Berkshire's entire portfolio, but Munger still wished the firm had bought more.
"You have to let ideas die," Munger said.
Munger died last week at the age of 99.
Read Next: Charlie Munger's Final Advice For Investors Is About Embracing Value In Unlikely Places
Photo: Nick Webb from Flickr.
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