Subject: Re: Owners Manual still relevant?
9. We feel noble intentions should be checked periodically against results. We test the wisdom of retaining earnings by assessing whether retention, over time, delivers shareholders at least $1 of market value for each $1 retained. To date, this test has been met. We will continue to apply it on a five-year rolling basis. As our net worth grows, it is more difficult to use retained earnings wisely.

This was revised in 2010, according to RationalWalk (article from 3 years ago, well worth reading):

https://newsletter.rationalwal...

The test was revised significantly after the 2009 annual meeting when a question regarding the original test made Warren Buffett realize that the wording did not reflect his intentions.

The revised earnings test reads as follows:

“I should have written the ‘five-year rolling basis’ sentence differently, an error I didn’t realize until I received a question about this subject at the 2009 annual meeting.

When the stock market has declined sharply over a five-year stretch, our market-price premium to book value has sometimes shrunk. And when that happens, we fail the test as I improperly formulated it. In fact, we fell far short as early as 1971-75, well before I wrote this principle in 1983.

The five-year test should be: (1) during the period did our book-value gain exceed the performance of the S&P; and (2) did our stock consistently sell at a premium to book, meaning that every $1 of retained earnings was always worth more than $1? If these tests are met, retaining earnings has made sense.”

According to my calculations, this test was met in 5-year periods ending in 2018 and 2019.
Berkshire failed in 5-year periods ending 2013-2017 and 2020-2025.
Buybacks over book value would skew the results a bit towards failure.