Buffett, Dimon urge end to quarterly profit forecasts

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

"It can put a company in a position where management from the CEO down feels obligated to deliver earnings, and therefore may do things that they wouldn't otherwise have done", Dimon said.

This combo of file photos shows Warren Buffett attending the Forbes 100th Anniversary Gala in New York on September 19, 2017, left, and JP Morgan Chase Chairman and CEO Jamie Dimon on the floor of the New York Stock Exchange on July 12, 2013.

Two of Wall Street's harshest bitcoin critics are once again warning investors of the dangers of bitcoin.

Investor Warren Buffett gestures on stage during a conversation with CNBC's Becky Quick, at a national conference sponsored by the Purpose Built Communities group that Buffett supports, in Omaha, Neb., Tuesday, Oct. 3, 2017, Buffett discussed what philanthropy can do to help fight poverty. "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".

So they should stop the forecasting, the two men said. The analysts take the company guidance into consideration when making investment recommendations and setting price targets for stocks. An outsized emphasis on quarterly earnings per share projections undermines the importance of investments in infrastructure, workforce development and other crucial capital expenditures that drive sustained US economic growth.

However, companies that are in favor of issuing guidance say that it improves communications with Wall Street, lowers share price volatility and results in higher valuations. The only significant benefit it observed was an increase in trading volumes, which is good for day traders but not useful for most other people.

"I have seen managements. get tempted by the predictions that they've made", Buffett said.

Buffett and Dimon said they are not opposed to the current practice of quarterly and annual reporting that ensures transparency.

Business Roundtable President & CEO Joshua Bolten said, "An outsized emphasis on quarterly earnings per share projections undermines the importance of investments in infrastructure, workforce development and other crucial capital expenditures that drive sustained US economic growth".

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