Buffett, Dimon urge end to quarterly profit forecasts | AP business

Maricruz Casares
Junio 9, 2018

J.P. Morgan chief executive Jamie Dimon appeared on CNBC on Thursday to discuss why he doesn't think tariffs are the way to go.

"In our experience, quarterly earnings guidance often leads to an unhealthy focus on short-term profits at the expense of long-term strategy, growth and sustainability", they wrote.

In the latest appeal, they said companies often hesitate to spend on technology, hiring, and research and development to meet quarterly earnings forecasts that can be affected by seasonal factors beyond their control. The two business gurus said quarterly financial guidance encourages short-term thinking that stifles growth and limits innovation in the economy.

Dimon, chairman of the Business Roundtable, noted that the group of CEOs also support companies moving away from the practice and instead, focus on long-term value creation.

"I've never seen a company whose performance has improved by having some forecast out there by the CEO that we're going to earn X", Buffett said.

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Meanwhile, billionaire investor Warren Buffett and Berkshire Hathaway Vice Chairman Charlie Munger told FOX Business' Liz Claman last month that bitcoin was "more expensive rat poison", after previously comparing it to the deadly chemical five years ago.

Buffett and Dimon said they are not opposed to the current practice of quarterly and annual reporting that ensures transparency. At JPMorgan's investor day in February, he called on companies to stop providing the guidance, saying earnings are hard to predict and companies have an incentive to fudge numbers.

On Thursday morning, the Business Roundtable which includes CEOs of USA companies with more than 16 million employees and more than $7 trillion in annual revenues, weighed in supporting the proposal.

Dimon, Buffett and BlackRock Inc.'s Laurence D. Fink urged companies in 2016 to refrain from short-term earnings forecasts in a letter and report with other financial industry executives. Without company guidance, analysts' estimates are likely to vary more, making share prices more volatile at the same time that estimates become less valuable to investors and, horror, not worth paying for.

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