Radio talk-show host and senior columnist for MarketWatch Chuck Jaffe answers 10 questions about his life with investing.

This is the second article in our newest Interviews section at Computerized Investing, and I have to say, I’m excited for you to read this one! Chuck Jaffe, who has interviewed me a couple times on his radio show—MoneyLife with Chuck Jaffe—let me flip the script and interview him regarding his life with investing.

Chuck is senior columnist for MarketWatch, writing once each week on mutual funds and once on general personal finance topics. Through syndication in newspapers, his ‘Your Funds’ column is the most widely read feature on mutual fund investing in America. He also is the host of his daily one-hour show/podcast. For information about Chuck Jaffe, check out his biography on CI’s Guest Author page.

For this interview, I used a mix of questions from the last 10 Questions interview with Hareesh Jayanthi and questions suggested by that interview’s comments as well as new questions.

If you have any suggestions for questions or people you would want me to interview, feel free to let me know!

Jackie: What are your favorite financial apps?

Chuck: Well, I’m not much of a user of apps. I’ve written columns about how I think apps can get folks to oversee or overreact and do too much. But my favorite—and I have to root for the home team—is the MarketWatch app. It gives me what I need. It keeps me apprised of the news and everything else.

And one thing I would tell you is that I hate reading my own columns on it.

The truth is I work from home. So I don’t need a lot of apps to keep me abreast, because I’m working from home, with my computer up and everything else. I don’t have a commute. That’s why I love MarketWatch, because when I go out, and I need an app, then it does a great job of making sure I’m on top of things.

Jackie: Would you say you have a favorite financial blog or website?

Chuck: Well, again, the home team is marketwatch.com. I would say that if it’s a blog, it’s probably Josh Brown’s thereformedbroker.com, but for writing about mutual funds, as I do once a week, I love mutualfundobserver.com, where David Snowball’s commentary every month is pretty brilliant and fun to watch. And I couldn’t do my job, probably, without Morningstar.com. So, it depends.

Jackie: Do you have a tool that you use to manage your finances?

Chuck: Define “tool.” I use a pencil sometimes.

Jackie: Financial software. I know some people are into Quicken, some people use Mint, some people just have Excel spreadsheets that they use. Is there anything that you use to manage your finances on a day-to-day, month-to-month basis?

Chuck: Yeah. I’m old-fashioned, and I’ve been doing this for a long time, and I’ve never really updated. I’m now on Excel with spreadsheets. But the truth is that I simply migrated over at some point, when I had a computer crash or whatever and simply said, “Oh, it will make more sense to update this way.”

I don’t spend a lot of time looking at my portfolio. I work under some very restrictive rules that govern how I invest. I have rules that are both affiliated with my day job at MarketWatch and my side job doing the show. And so, it’s a little bit different for me.

I would probably be a more active investor—and maybe I will be someday when I retire—but as long as I have this job, I need to be a less active investor.

We talk about the rules all the time on the show, and there’s a lot of stuff I can’t do. And it’s not SEC stuff. In our case, I can’t have conflicts of interest, and I don’t want to be writing about things that I own.

Jackie: AAII’s Charles Rotblut mentioned that you had your children investing at a young age. How did you get your daughters interested in investing in finance, and do you have any advice for parents or grandparents who want to do the same?

Chuck: Yeah. My kids had stock portfolios from the moment that they had a Social Security number. So, there are several things. The basics were we bought them stocks that they would be able to understand and appreciate. And while they were very young, and their grandparents were spoiling them, my feeling was that until they cared about what came out of the box more than the box itself, we sort of gave more to them for their stock accounts.

When they reached age 21, they took over their accounts, and I’m pleased to say, never putting in more than a couple hundred bucks a year, that both of my children, when they graduated college and got their accounts, were responsible for more than $25,000 each. So, it turned out pretty well for them.

Not perfectly, by any stretch of the imagination. And the way you do it is, you start by buying things that the kids will understand, and then you start having discussions with them. And at some point, they start to get involved, whether it’s my oldest daughter when she was about three or four asking at the Blockbuster video store—not the greatest investment we could have made, as it turned out, although it was pretty good for a while there—if a video was out for her, because, after all, she owns the place, to my kids understanding that, look, we own Coca-Cola (KO) shares, and we own McDonald’s (MCD) shares, and that’s one of the reasons why, if we’re going to make the rare trip for fast food, we’re going to go McDonald’s rather than Burger King.

My youngest daughter Whitney went on a shopping trip with my mother to a toy store called Noodle Kidoodle. And my mom asked what I thought about the stock, and Whitney said, “Wow, I could buy that place? ’Cause that was my favorite toy store ever.” So the next time when we were buying stock for her, we bought some Noodle Kidoodle stock with the leftover money, because she had said, “I love that store; I can’t imagine who wouldn’t love that store,” etcetera. Noodle Kidoodle wound up going up. It merged into a company called Zany Brainy. Her $1.00 shares or $2.00 shares were worth $6.00 or what have you, and we should have sold. We didn’t, and it went to $0.00. They went bankrupt.

That was a stock purchase made when Whitney was five. The flipside of that is that around the time Whitney was 9, 10, or 11, she hears me talking about one of my lacrosse friends who was taking a pretty significant job at Under Armour (UA), which is run by lacrosse players, guys who all have ties to the lacrosse world and people I know. And Whitney said, “Well, all anybody cares about, like all of the kids I play lacrosse with, all they care about is Under Armour right now.”

So, Whitney and I did the same thing that we had done with Noodle Kidoodle: With $130 left after making her primary purchase, we bought 10 shares of Under Armour. And then the next time we were buying something, we bought 10 more shares of Under Armour. And then, at some point, bought more when Under Armour had gone to $19 a share. It was $13 a share the first two times she bought it. So for three years it became, like, “Here’s your annual purchase on Under Armour.”

And basically, Under Armour, these days, after splits is now trading at $100.00 a share. So, it actually has become almost too much of her portfolio. But the good news is, yeah, here’s how $13 and $130 grows to $15,000 kind of thing.

Jackie: What was the first investment that you ever made?

Chuck: Fidelity Magellan (FMAGX). I had some money that had been invested, with my mom picking it, in a money market fund back in the ’70s, when money market funds were giving double-digit returns. But my first stock market investment on my own was Fidelity Magellan in 1981.

Jackie: What was your worst investment?

Chuck: My worst investment was a company called American Film Technologies; AFTI was the ticker symbol. It was a company that was involved in the colorization of films.

One of the things I’ve been privileged to do, in my lifetime, is talk to lots of folks who run investments. I know all my mutual fund managers personally. And I’ve come away from a number of interviews over time thinking, “I really want to buy that company,” and, at times, have done it after whatever prohibitions are lifted. So, at some point I had done something with the folks at AFTI, and I hadn’t really dug into the numbers. And then I dug into the numbers, and I was like, “This looks pretty good.” And it was.

It was like two bucks a share. I threw some fun money in it, and it got to like $12 a share. And then I threw some non-fun money in it, and it went to nothing.

Jackie: Oh, man. You can’t predict the future.

Chuck: No, no. The answer is that I didn’t exactly follow all my own disciplines on that one. And so, it was a good lesson.

Jackie: You just mentioned your disciplines. How do you go about picking your stocks, and what style do you tend to follow? Do you consider yourself more of a growth investor or value investor?

Chuck: I’m a value investor. I’m a bargain shopper to some extent. And I’m looking for things that make a tremendous amount of sense to me. I am somebody who’s very disciplined in terms of when you start with an investment, you want to write a sheet of, “Here’s why you wanted to buy it.” Because you want to know, someday later, if you would buy it again today and also use that as part of your sell discipline. I am somebody who wants high-quality companies that I can believe in. So, I tend to be a value-oriented investor. I tend to buy things with really good balance sheets. I’m not a whole lot more complicated than that.

Jackie: Do you have absolute sell rules that you follow? Any specifics?

Chuck: Well, I’m very much a big believer that we hold ourselves to a higher standard when we buy an investment than when we hold an investment. In other words, it’s tougher to get into my portfolio than it is to stay in my portfolio. That’s the way it is, I think, for everyone. But to try to guard against that, I do take a look.

And like I said, every single investment I have, there’s a sheet that says, “Why did I buy this?” And I try to come up with as many ideas as possible there. And if I wouldn’t buy it again today, then the question is, “Is it worth holding today?” Because you can get to something where you say, “Wait, I bought this because it was a value stock, and it was a great value. No, I wouldn’t buy it today, because guess what? It’s gone way up.”

But that doesn’t necessarily make it a sell. You have to take a look at everything else that was in place. Did I buy it because it was a value stock with a great yield? Is that yield still in place? Even if the stock price has gone up, and it looks like the yield has come down, well, that’s not true for me. If I bought a stock at 10 bucks a share, and it was yielding 5%, and if the stock goes to 50, but now it’s now yielding 1%, well, it’s still actually yielding the 5% on my money.

So, I tend to look hard at that. And then my sell discipline—I agree with Warren Buffett, my ideal holding period would be forever. But I don’t lead an ideal life. When you have kids who are going to college, or whatever, there are investments that are going to need to be sold. So, sometimes your sell discipline is, “I need some money, and have to decide what I’m willing to get rid of.” And other times it might be, “How can I minimize my taxes?”

But yeah, I’m very disciplined in selling. I don’t sell based on anything that the market is doing right now. I sell based on the fact that somehow this is not doing what I expected it to do, and that’s about much more than just performance.

Jackie: If you had a million dollars right now, how would you spend it?

Chuck: Boringly. It’s a great question from the standpoint that it forces people to play “what if” games. And although I never buy lottery tickets—I’ve never bought one—I’m a huge believer in trying to come up with your financial priorities. And, “What would you do if you had a million dollars?” is a good way to set your priorities.

I don’t have a whole lot of debt, but the very first thing I would do is get rid of that burden. I would make sure that there was absolutely no debt remaining for me that I didn’t find some positive reason to keep. And after I was done with that, I would be looking to make sure that I’ve secured my retirement.

And after that, I’d be trying to figure out, “Where do I want to live out my retirement? And can I go buy a place there right now?”

And then lastly, with whatever is left over, I currently am the co-owner of the Boston Box Lacrosse League, which is the best adult men’s box lacrosse league in the country. I would look at expanding my business possibilities in the lacrosse world.

Jackie: What’s the best advice that you could give someone who’s just starting out with investing?

Chuck: The best advice is that perfect is the enemy of the good, and be satisfied with good when it comes to your investments. Worry less about mistakes and more about moving forward.

I think too many people look for what’s the ideal. And you have financial advisers talking about optimal portfolios and what have you. Yeah, if you’re reaching your goals, you’ve had an optimal outcome. If it wasn’t achieved in the perfect textbook, “What did the computer say? Oh, the app told you this was the optimum outcome” —screw that. You didn’t have to satisfy them. You had to satisfy you.

I always use the example of my father. My dad wanted to know what was in his portfolio and he could never get a small-cap fund that would pass his sniff test. He just was never going to be comfortable with it. So, every time somebody would do a portfolio analysis, they’d say, “You have a hole in your small caps.” And he’d say, “I know.”

It’s not a competition, and people need to remember that. And optimal is ‘Did you reach your goals, and were you comfortable?’ If you did, then you were just fine, and whatever somebody else considers optimal, that’s their judgment; let them have it. You have your money, and you reached your goals.

Jackie: What makes you mad?

Chuck: People who believe that there is only one right way. What makes me angry is people who believe that the only way to invest, or the only way to see things, is their way.

Society in general… we have a distinct lack of civility at this point. And it is arguably our biggest problem. Because people are so anxious to shout the other side down, that they don’t acknowledge instead what might be right.

You know, we say on my show every day, “Disagreement makes a market.” Every time somebody is buying, somebody else is selling it to them. If they saw things the same way, they wouldn’t agree on a price. They would never agree on a price.

So, you have accommodations like, “Oh, wait, we have to move to reach the price.” But the truth is there’s a buyer for every seller; there’s a seller for every buyer. And that means disagreement makes a market. And somewhere, everybody has to find their place in that disagreement. And it’s okay. I don’t mind that, oh, you were growth to my value. Good. That’s awesome. I don’t have to invest your way; you don’t have to invest mine. And it’s not a competition.

If you are in a situation that’s not working for you, that’s one thing. But the fact that something is working great for you, that’s good. That means, hopefully, you have the temperament to live that way, etcetera. But everybody needs to find what works for them.

Jackie: This question comes from Hareesh Jayanthi, who did the last interview session, and his question was, “What movie, no matter how many times you’ve seen it, will you still watch if it’s on TV?”

Chuck: Well, my favorite movie is “Citizen Kane,” because I am a journalist, and I’m an old-fashioned guy. But the problem is that “Citizen Kane” pretty much never comes on television anymore. You can occasionally be flipping through the channels, and maybe once a year, if you’re lucky, you will find it.

So, that leaves me with the logical second choice that is probably everyone’s answer to this question, which is “Shawshank Redemption,” although the interesting thing is that I’m finding that the new movie for me is actually “The Help.” And I am always going to stop what I am doing for “The Usual Suspects.” And then the South Park movie; it’s not a secret, if you listen to my show, that I’m a South Park fan, and whenever the South Park movie is on, yeah, I’d probably watch that, too.

Jackie: And then, if you could pick a question to ask the next interviewee, what would you choose?

Chuck: I’m not going to be as kind as your last guest. I’m going to go the other way. Of course, I just talked about the lack of civility in society. So, I’m asking a very uncivil question. If you could get away scot-free with punching somebody in the face, without either jail time or a broken hand, who are you hitting? That’s the question. And I’m so glad I don’t have to answer it.