Buffett & Dimon Joint Interview - End Quarterly Earnings Guidance

Historic joint announcement from Business Roundtable chairman Jamie Dimon and Warren Buffett to support companies dropping quarterly earnings guidance. Jamie credits learning about quarterly guidance problems from Warren. Key issue: management feels obligated to hit numbers, leading to bad decisions (cutting marketing, delaying investments). Good boards like Berkshire's say make great investments even if hurts quarterly earnings. BRT providing 'umbrella' for companies to drop practice.

Buffett's 53 years of experience: never seen company improved by issuing forecasts. Sat on 20 public company boards, witnessed good people (would trust them with daughter, as executor) get corrupted by pressure to make numbers. Ego gets involved, can't hit target, sometimes fabricate numbers. Tells Berkshire managers: pretend this is only business you/family can own for 50 years, can't sell - you'll make right decisions. Views Berkshire as 'unfinished painting' with infinite horizon.

Jamie explains how quarterly guidance pressure cascades down organization to divisional and sales levels. Easy levers CEOs can pull to manipulate short-term numbers: cut marketing (easiest), delay branch openings, sell product cheaper to hit revenue targets. Creates perverse incentives throughout company. Feeds on itself once pattern starts. Of Business Roundtable's 200 members: ~60% give annual guidance (Jamie would eliminate that too eventually), ~20% give quarterly. This is first step toward long-term focus.

Dimon candidly explains exactly how he could manipulate JPMorgan's quarterly numbers if pressure existed: make phone call to change interest rate swaps ($100M revenue swing), cut marketing (easiest), reduce compensation, delay data centers/technology investments. Compares to 'airplane maintenance' - you can defer it but it's dangerous. Should explain long-term investments to shareholders and board instead. Points out Warren (world's best shareholder) sitting right there saying he prefers no guidance.

Warren's vision for proper communication: talk to shareholders like they're your sole business partner. You're the operating partner, they're passive partner with significant net worth invested. Tell them what's truly important, upside/downside possibilities, where you're investing ahead for future payoff. Run it like 50-year partnership where neither can sell. 'What's magic about a quarter?' - we're in businesses for very long periods. Insurance example: can report any number you want for a while if pressured.

Jamie's economic outlook: only 'sixth inning' of recovery with years of growth ahead. Consumers strong (balance sheets, rising wages, low debt). All credit since Great Recession pristine (mortgages, small business, corporate) except government student loans. Business/consumer sentiment at record highs. Key insight: nine-year recovery produced only 20% growth vs typical 40% in 7-8 years - suggests long, delayed cycle with slack still being pulled up. Growth strengthening not weakening, plus tax reform stimulus coming.

Buffett's long-term perspective: business currently good (sluggers 3-4-5 coming up). Absolute certainty America will be far ahead in 10-20-30 years. But don't buy stocks because business is good - buy when getting lot for your money. Over 25,000+ investing days since 1942, majority of headlines were bad/pessimistic. Started investing 1942 when US losing war, Dow at 101; now Dow 25,000. Bought stocks under 7 Republican and 7 Democrat presidents. America works despite headlines.

Unemployment at 3.8%, lowest in 40-50 years, will hit all-time low soon. Global unemployment also heading to record lows. Job postings exceed workers available. BRT companies seeing wage pressure - Jamie frames as positive: sharing wealth, bringing people back to work. Work provides dignity, household formation, upward mobility. Both support Earned Income Tax Credit (form of negative income tax) to supplement low wages. Berkshire experiencing shortages: home builders, carpet installers, truck drivers nationwide.

BRT special survey: 80-90% of CEOs worried about trade war impacts (higher prices, reduced investment). Jamie acknowledges Trump raised legitimate issues (China state-owned enterprises, IP theft, market access, ownership restrictions). But BRT clear: tariffs wrong approach - unpredictable outcomes, hurt allies more than adversaries, invite retaliation, incite nationalism. Disagrees with NAFTA sunset provision and shift to bilateral deals. Would have stayed in TPP. Strategy should be: work with allies to set global standards that eventually force China to comply through reciprocity/investment treaties.

Major update on Berkshire-Amazon-JPMorgan healthcare venture: reached agreement with new CEO, announcement expected within 2 weeks (as of interview). Todd Combs led executive search. New CEO described as outstanding - character, culture, capability, heart, mind. Long-term mission, not expecting quick wins. Interviewed many candidates for CEO role - universally agreed significant improvement both possible and important. Warren notes it's 'very tough nut to crack' requiring significant time, but they have right person.