Warren Buffett, Jamie Dimon: Quarterly profit forecasts hurt economy

Jamie Dimon, Warren Buffett urge CEOs to end quarterly earnings forecasts

"Reducing or even eliminating quarterly earnings guidance won't, by itself, eliminate all short-term performance pressures that US public companies now face, but it would be a step in the right direction", Dimon and Buffett wrote. "When companies get where they're sort of living by so-called making the numbers, they do a lot of things that really are counter to the long-term interests of the business".

Neither Buffett, chairman and CEO of Berkshire Hathaway Inc.in Omaha, or Dimon, chairman and CEO of JPMorgan Chase, predict their profits every three months.

Dimon is the chairman of the Business Roundtable, an association of CEOs of America's leading companies working to promote a thriving USA economy.

So they should stop the forecasting, the two men said.

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But Buffett says the practice of CEOs providing a heads-up on how earnings-per-share results are shaping up often causes them to make poor decisions to ensure that the company beats or meets the results they've communicated to Wall Street.

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.

Dimon said companies might forego investments they should make in their business, such as marketing, hiring or research, in order to hit short-term goals.

Dimon , the chairman of the Business Roundtable, said the group of CEOs has thrown its support behind companies backing away from the practice.

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"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.

"Quarterly earnings guidance often leads to an unhealthy focus on short-term profits at the expense of long-term strategy, growth and sustainability", they said.

JPMorgan CEO Jamie Dimon, who has made negative comments about the cryptocurrency in the past, said during an interview Thursday with CNBC that while he doesn't want to be a "bitcoin spokesperson", buyers should "beware". About 31 percent gave annual earnings-per-share guidance. "Public guidance was the fix for many companies".

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