Munger's mental models #8: The fat pitch strategy

Mental models

In this short series of blogs and videos, in honour of the late Charles Munger, I take a look at some of his most powerful mental models.

In the zone

I was at Fenway Park in Boston, Massachusetts this week, the oldest ball park in the Major League, where the legendary Ted Williams once hit a record home run of some 502 feet, wind-assisted.

A red seat way back in the bleachers marks the spot where it landed, way back in 1946.

Williams was known for hitting more than 500 home runs, and for achieving the famous landmark of a .400 batting average in a season.

It's said that his batting strategy was to imagine the strike zone divided up into 77 different sections or cells, each representing the size of a baseball, and only to swing when the ball was right in his favoured hitting zone. 

Waiting for the fat pitch

In baseball, you'll be called out after three strikes, so you don't always have the luxury of waiting for such a fat pitch to smash into the stands.

But in the world of business and investing, there will be always be future opportunities, so you don't have to rush to invest in the first idea that comes along, or the second, or the third.

It's what Buffett called a "no strikes called game".

In fact, the fat pitch strategy holds that you should look to wait for great, no-brainer opportunities, with a wide margin of safety, and then to move quickly when they do come around. 

Even if this means having some money sitting in cash, by ensuring you have just a few great investments and by not trading too often, the long-term results will be plenty good enough.

As they say, the deal of a lifetime comes around surprisingly often, so there's no need to feel pressured or panicked if an investment doesn't feel comfortable or straightforward to you,

I discussed this a little further in the short video below:

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