Charlie Munger passed away in November 2023 just weeks before his 100th birthday, but one of his final longform conversations gave fans a parting gift: more of his unfiltered wisdom, and yes, another sermon on Costco (NASDAQ:COST).
Recorded at his Los Angeles home for the "Acquired" podcast in October 2023, the dinner-table interview stretched across nearly every corner of Munger's career — from early mistakes in retail to his partnership with Warren Buffett — but it was Costco that brought out some of his sharpest, most memorable lines.
Buffett had long teased him about it. At one Berkshire Hathaway (NYSE:BRK, BRK.B))
meeting, Buffett joked that if hijackers offered Munger one last request, he'd ask to deliver his speech on the virtues of Costco — prompting Buffett to quip, "Shoot me first." Munger didn't deny it. "Warren was kidding me for being so repetitive on the subject," he admitted.
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But for him, Costco wasn't just another retailer. It was one of those rare moments in investing when conviction met clarity. "There aren't many times in a lifetime when you know you're right and you know you have one that's really going to work wonderfully," Munger said.
Asked what made Costco so special, he was ready with an answer. "They really did sell cheaper than anybody else in America and they did it in big, efficient stores," Munger explained. "The parking spaces were 10 feet wide instead of eight or nine feet or whatever they normally are. They did it all right and they had a lot of parking spaces."
That little detail about parking spaces summed up how Munger thought about business: small touches mattered, especially when they reflected a bigger philosophy of efficiency and customer focus. He admired how Costco turned those efficiencies into loyalty. "They gave special benefits to the people who did come to the stores in the way of reward points," he said, nodding to the company's executive membership program. "Yeah. It all worked."
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He also respected Costco's financial discipline. The company ran what he described as a capital-light model, stretching payment terms with suppliers and avoiding bloated balance sheets. With more than 900 warehouses worldwide, Costco had achieved scale without losing sight of fundamentals.
And Munger wasn't just an armchair fan. He joined Costco's board in 1997 and served for more than 25 years, shaping key decisions. He reportedly urged management to favor prime store locations over cheap land, reminding them that paying more up front could yield long-term dominance. He also backed Costco's unusual dividend policy — modest quarterly payouts sprinkled with occasional big one-time bonuses — a quirky approach that kept investors happy and loyal.
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It was a conviction that ran deep. "I love everything about Costco," Munger said in 2022. "I'm a total addict. Never going to sell a share."
That self-proclaimed addiction turned into one of his most defining beliefs: when you know you're right, don't hold back. "When you know you have an edge, you should bet heavily," he told the Acquired hosts. "Most people don't teach that in business school. It's insane. Of course you got to bet heavily on your best bets."
For Munger, Costco was one of those best bets — a business that "did it all right," right down to the size of the parking spaces.
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