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Put Your Money Where Your Heart Is by Natalie Pace

Put Your Money Where Your Heart Is by Natalie Pace [3] is a two hundred and fifty page book on, among other topics, the framework she follows when she picks stocks. If you recognize her name, it’s because she’s is the founder and CEO of her own financial news organization and it has partnered with Forbes.com. She’s also appeared on numerous television news programs like Fox News, Good Morning America, Time Magazine, More Magazine, USA Today, NPR and Kiplinger’s Personal Finance. However, she didn’t get her start as a financial guru, she’s only ten or fifteen years removed from a time when her primary concerns were credit card bills and the mortgage payment.

In the mid-90’s, Natalie Pace was your average struggling American. She was recently divorced, supporting her son on a teacher’s salary, underwater on her home, behind on her credit card payments, and in a bad spot. However, rather than just complain, she managed to land a trial executive-level position at a nationwide phone company through a friend and she excelled at her job. She managed to ride the real estate boom of the 90’s until 2000, when she sold her two bedroom condominium for a nice profit and needed a place to put it. That’s when she ran into a broker she called sharply dressed, fast talking Steven Snappy (she forgot his name). He promised her 12-15% returns (not unheard of in the dot-com boom of the 2000s), showed her all these fancy charts and graphs, but she balked. It didn’t seem right. She knew nothing about the stock market but her instincts told her to walk away from this guy and she did. She invested in 5% CDs that year as the market imploded. Since then, she’s educated herself and made some good picks based on a mantra she picked up along the way – put your money where your heart is. Translated – invest in the things you believe in.

The best part about this book is that she doesn’t come off like an expert, even though she’s had a really good track record and has leveraged it to something much much larger.

Three Ingredient Recipe

The three ingredient investment recipe for cooking profits is Pace’s own way of selecting stock winners:

  1. Start with what you know and love.
  2. Pick the leader in the sector (in real estate, it’s location, location, location).
  3. Buy low; sell high (easy to say; hard to do).

The three ingredients sound like a little silly, I agree. It’s because they’re not directly applicable and actionable steps. Fortunately she goes into detail, detail that you can’t distill into a one sentence blurb like that, and the details explain how you translate those philosophical ideas into actionable steps. I won’t go into them all but for ingredient one, the idea is that you shouldn’t try to chase profits in an arena you don’t understand. Don’t buy stock in a company just because you think its hot when you have no idea what it does. The prime example was of Warren Buffett missing the dot com boom. He said he didn’t invest in it because he didn’t understand it. For a few years after the boom and bust, he was vilified for being “out of touch.” Now he looks like a genius. It sounds silly but it’s true, how many people bought stocks in the dot com boom and had no idea what they did? I know I did, it was stupid and now I’ve learned better.

Final Thoughts

When I reviewed The Shortest Investment Book Ever [4], I said it was “perfect for someone who knows absolutely nothing about retirement and investing and wants to learn but is easily discouraged by an avalanche of data, charts, graphs, etc.” I think this book is the same way but on the topic of stock picking. It’s a little meatier, since the topic requires it, but its approach is just as easy-going as O’Donnell’s book. Until I did some research into who Natalie Pace was, I had no idea she ran her own financial news organization. She came off as a regular person, very easy going and informative, but never intimidating. I think her past plays a huge role in this and it makes the book much better.

If you’re a fan of index funds, as I am, I think you should head to your library, pull it from the shelf, and read Chapter 17, The Top Eleven Investing Mistakes. I thought that was a good chapter everyone should read. The rest of the book probably won’t be as interesting for you because an index fund is an index fund, it’s designed to be diversified and hands off.

If you want to check out a few pages in the book, it’s on Google Books, and you can read some of it here [5].