Elliott's Singer agrees with Buffett, Dimon on profit guidance

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

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". As a result, corporations "frequently hold back on technology spending, hiring, and research and development" that would improve businesses' future growth, Buffett and Dimon say.

Short-term-oriented capital markets have discouraged companies with a longer-term view from going public at all, depriving the economy of innovation and opportunity, the said.

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

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Dimon, in a joint interview with Buffett to CNBC, claimed that executives are often under pressure to make quarterly predictions, but the practice "can often 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", report said. The analysts take the company guidance into consideration when making investment recommendations and setting price targets for stocks.

Although we've seen no immediate opposition to the proposed elimination of quarterly EPS guidance, it's not hard to imagine what at least one argument might be: just because companies don't publish the number does not mean they won't calculate such a number.

In an interview earlier today on CNBC, Warren Buffett and Jamie Dimon told viewers to "beware" of bitcoin. Public companies owe it to all of them to get this right, they said. 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. While the companies didn't give much detail at the time, the announcement prompted broad speculation and unease among investors, sending shares lower for health-system companies including insurers and pharmacy-benefit managers.

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