Does Charlie Munger encourage 'buying the dip,' or does he advocate for 'waiting for a better opportunity'?

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Charlie Munger: More "Waiting for the Right Pitch" Than "Bottom Fishing"

If forced to choose between the two, Munger is unequivocally a staunch advocate of "waiting for the right pitch". While these phrases might sound similar, for an investment master like Munger, the underlying logic and starting point are fundamentally different.

We can understand this with a vivid analogy.

A Vivid Analogy: Batting, Not Fishing

Munger himself loved using baseball to describe investing.

"Bottom fishing" is like a fisherman who sees ripples on the water and immediately casts his net, hoping to catch a big fish. He's focused on "is this the absolute bottom?" His eyes are glued to price fluctuations, trying to predict that fleeting lowest point. This is an act of predicting the market.
Munger's "waiting for the right pitch" is more like a top-tier baseball batter. He stands there, motionless, facing pitch after pitch from the pitcher, and he might choose not to swing at any of them. Because he's waiting for that perfect pitch – the "fat pitch" – that comes right into his sweet spot, with ideal speed and location. Only when this perfect pitch appears does he swing with all his might, hitting a magnificent home run.

For Munger, that "perfect pitch" is: a great company with strong competitive advantages that he deeply understands, whose price has become very cheap due to some reason (like market panic or temporary bad news in the industry).

Why is this not "bottom fishing"? The core differences lie here:

1. Focus: Great Company vs. Lowest Price

The bottom fisher's primary focus is price. They might buy a terrible company simply because it "has fallen a lot" and seems "very cheap." They are betting on a price rebound, not the company's intrinsic value.
Munger's primary focus is the company. He spends immense time researching, building a "wish list" of great companies he dreams of owning. Then he patiently waits for the market to make a mistake, giving him the opportunity to buy a "great company" at the price of an "average company."

In simple terms, Munger wants to buy a Rolls-Royce at half price, while the bottom fisher might buy a beat-up used car at a tenth of the price, thinking they got an incredible bargain.

2. Definition of "Timing": Moment of Panic vs. Price Low

The bottom fisher defines "timing" as a price low on a technical chart. This timing is extremely difficult to pinpoint, akin to catching a falling knife.
Munger defines "timing" as when the market experiences irrational panic. For example, during the 2008 financial crisis, both good and bad companies were sold off indiscriminately. At such times, he knows the intrinsic value of the great companies on his wish list hasn't changed, but their prices have been beaten down. This is the "golden opportunity" in his eyes. His confidence to buy comes from a deep understanding of the company's value, not from predicting the market bottom.

3. Action: Concentrated Bets vs. Tentative Buying

Uncertain if they've hit the bottom, bottom fishers often "buy more as it falls," making tentative, incremental purchases, resulting in passive position management.
Munger's philosophy is: "The big money is not in the buying or the selling, but in the waiting." He might go years without making a major trade, lying in wait like a crocodile. But once his recognized "golden opportunity" appears, he will not hesitate to make a concentrated, significant bet. Because he's waiting not for a price, but for a "high-conviction" opportunity.

To Summarize

Therefore, don't simplistically interpret Munger's wisdom as "be greedy when others are fearful" and then go "bottom fishing."

His complete logic is:

Do your homework first: Identify and deeply understand those companies you believe are truly great.
Then wait patiently: Wait for Mr. Market to become irrational, offering these great companies at an absurdly low price due to panic or short-sightedness.
Finally, strike decisively: When this opportunity arrives, have the courage to bet big.

Thus, Munger isn't "bottom fishing"; he is "hunting." His arsenal doesn't contain a crystal ball for predicting prices, but rather deep insights into the business world, extraordinary patience, and the courage to make significant bets at critical moments. This is far more sophisticated and reliable than mere "bottom fishing."