Bitcoin sceptic Jamie Dimon tells buyers to 'beware'

Faith Castro
June 10, 2018

"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.

Dimon, chairman of the Business Roundtable, noted that the group of CEOs also support companies moving away from the practice and instead, focus on long-term value creation.

Dimon, who appeared in a joint CNBC interview with Berkshire Hathaway chief executive and billionaire business magnate Warren Buffett, has in the past been very sceptical of the crypto, labelling it a "fraud" in September a year ago.

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

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When the actual earnings results are officially reported, so-called beats - or profit results that top expectations - are often rewarded with a rise in the stock price.

Berkshire Hathaway is one of those firms that does not follow the practice as its leader Warren Buffett believes it sends a "wrong message" and tempt executives to manipulate numbers, according to report.

It's "sending the wrong message", Buffett told CNBC's Becky Quick in the interview. Without company guidance, analysts' estimates are likely to vary more, making share prices more volatile at the same time that estimates become less valuable to investors and, horror, not worth paying for. 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 USA economic growth. 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. They have said the practice of telling Wall Street what to expect from earnings can distort management's priorities.

Both men said they still want companies to release detailed quarterly and annual financial data, so investors can evaluate them. "Let's not forget how we got here: Reg FD was meant to end selective disclosure, the private guidance on future results", Santoli said.

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