I've figured out the secret of Buffett's success. As is well known, he chose to house his insurance operation in a textile stock. This had a number of advantages, chiefly that it depressed the price of the stock for a number of years while Buffett was acquiring shares. But he wasn't buying the shares and retiring them. The shares were bought by the insurance company within Berkshire. This created a reflexivity within Berkshire, which owned Berkshire: as Berkshire appreciated, the insurance float appreciated, leading to more float and capital, more earnings and higher stock price, and so on. Likewise, when the stock declined and sold below intrinsic value, the insurance company bought more shares, essentially shrinking the float and increasing the book value. Of course none of this self-dealing was reported and no shares were retired because the insurance company is not Berkshire, it is a separate entity, but the effect is the same. Buffett did the same with Blue Chip Stamps. He owned shares of BLue Chip Stamps, which was also buying shares of Berkshire and other companies with the stamp float. As Berkshire appreciated, Buffett bought more shares of Blue Chip Stamps, essentially buying more of his own stock via BCS. It is similar to a closed end fund owning its own shares. As the fund buys in its own shares at a discount, the NAV increases, and this is magnified by the self-ownership. As the fund appreciates, it can also increase NAV by selling shares above NAV, but this does not show up as an increase in shares outstanding as the shares were already issued, just owned by the fund itself. So essentially Buffett is trading in and out of Berkshire's own stock, buying below and selling above NAV via the insurance company, which are guaranteed positive return trades. Buffett's biographer describes this as the "homeostatic" effect of the insurance float within Berkshire, without laying out exactly how it worked.