Economic Principles and Retained Earnings Test

In the Berkshire annual report, the speaker discusses the economic principles written in 1984 and revised in 2009. He highlights the importance of retained earnings proving their worth over time, indicating that every dollar left in the business has generated over $1.30 of market value. The speaker acknowledges that the initial phrasing of the economic principles did not consider market fluctuations and emphasizes the necessity to assess the retained earnings test by evaluating the present value generated. He points out that the performance could have looked bad during stock market declines due to carrying assets at historical prices, and vice versa. The speaker encourages readers to refer to the 2009 annual report for a detailed understanding of the economic principles.