In 1985, the South Dakota Investment Council, which is responsible for the investment of financial assets owned by the State of (you guessed it) South Dakota, made an unremarkable decision. It bought $5 million in shares approximately 1,400,000 shares of Eastman Kodak (on a split-adjusted basis), the blue-chip film manufacturer that had a fifty-year track record of delivering 12.1% annual returns. 

As we all know, despite the fact that Eastman Kodak was once one of the most dominant business entities in the entire history of the United States, it lost nearly all of its market share as the world embraced digital photography and sales of photographic film shriveled to nothing. The company’s failure to establish a meaningful position in the world of digital photography (or any alternative) ultimately resulted in Kodak filing Chapter 11 bankruptcy in a New York federal court on January 19, 2012. 

The South Dakota Investment Council … Read the rest of this article!

In a potential tie with the readers who contact me telling me how they are in the early stages of changing their financial life and already seeing the benefits, some of my favorite letters are from readers who have built substantial positions in great American enterprises, and write to me to tell me how much it works.

To the extent that I have been able to pick up on general conclusions, I have noticed this:

1. When people who are financially successful reflect upon their lives, there is often a small handful—sometimes even just one—of ownership interests held for a long time that end up being responsible for their success

2. The method of acquiring the stock does not fit our easy example types—it’s not a $10,000 investment held for thirty years, or $100 invested every months for two decades. Rather, it’s lumpy and comes in spurts, reflecting the ebbs … Read the rest of this article!