Bitcoin sceptic Jamie Dimon tells buyers to 'beware'

Posted June 09, 2018

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.

Despite the short-term hit to results from the tax bill, chief executive Jamie Dimon hailed the measure as a boon for the USA economy."US companies will be more competitive globally, which will ultimately benefit all Americans", Dimon said in a news release.

Buffett and Dimon announced they are partnering with Business Roundtable, a group of roughly 200 CEOs of major US companies, to call on companies to consider eliminating quarterly guidance.

In their op-ed piece, Buffett and Dimon argue that "effective long-term strategy drives economic growth and job creation" and that quarterly EPS guidance "often leads to an unhealthy focus on short-term profits at the expense of long-term strategy, growth and sustainability".

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

Instead, McKinsey found, the practice of giving quarterly guidance took up valuable time from management and made them focus too much on the short term.

Dimon said CEOs can influence their quarterly results by not opening branch offices, cutting research and development spending, reducing their marketing and other decisions that could hurt future earnings. "We are encouraging all public companies to consider moving away from providing quarterly earnings-per-share guidance". About 31 percent gave annual earnings-per-share guidance. CEO Jamie Dimon appealed for radical changes to the way public companies disclose financial information.

Buffett and Dimon started down this path in 2016 with a document called Commonsense Corporate Governance Principles that included recommendations for "truly" independent corporate boards of directors and "constructive engagement" between corporate management and shareholders, as well as eliminating quarterly EPS guidance. The two business gurus said quarterly financial guidance encourages short-term thinking that stifles growth and limits innovation in the economy. Companies including Unilever NV, Facebook Inc., GlaxoSmithKline Plc and BP Plc have scrapped the practice in favor of multi-year outlooks, according to the report.