— This is the script of CNBC's news report for China's CCTV on June 8, 2018, Friday.
Buffet and Dimon expressed many valuable opinions in CNBC's exclusive interview; some of the opinions were not mentioned before, indicating the worries and thoughts from these 2 heavyweights. Among them, we know that in the market, many traders and investors pay close attention to "Quarterly earnings forecast". Sometimes, even though the company releases strong earnings, its stock price will definitely dive once this company downgrades its future profit outlook. We have seen a lot of examples from the earnings in the 1st quarter. Dimon and Buffet called that when the companies released the quarterly earnings, they should stop publishing "Quarterly earnings forecast". Dimon believes that "Quarterly earnings forecast" causes the some CEOs often sacrifice long-term strategies, growth and sustainability, making the market pay a misleading attention on short-term profit.
[JAMIE DIMON] "And it can often put a company in a position where management, you know, from the CEO down, feels obligated to deliver earnings and therefore, may do things that they wouldn't otherwise have done."
In the exclusive interview, Buffet agreed with that and thought the companies often curb the spending on technology, recruiting, and research to reach the profit forecasts that they made before.
However, in general, quarterly forecasts may be affected by factors that are beyond the control of the companies and if the companies pay too much attention on the short-term fluctuation in stock price, this will send wrong message to the market. The number of listed companies has declined because of the pressure from achieving the short-term forecasts.
[WARREN BUFFETT] "I've never seen a company-- whose performance has been improved by having some forecast out there by the CEO that we're gonna earn X because th-- it's sending-- it's not only sending the wrong message and delivering the wrong results to the-- to the company and to the country. I t-- I tell our managers, "Just pretend you're gonna own-- this is the only business you and your family are gonna own for 50 years and you can't sell it, and you'll make the right decisions."
In addition, another highlight in the interview was their position and forecast to US economy. Dimon said that the current data indicates US has a strong economic fundamentals. In future, US will introduce tax reform and economic stimulus such kind of favorable policy, and these will further boost the economy.
[JAMIE DIMON] "Business sentiment is almost the highest level it's ever been. Consumer sentiment's at the highest levels. Markets are wide open. Housing's in short supply. And my guess is mortgage credit will expand a little bit, not going back to subprime. So it looks pretty good."
Buffett uses the rules of baseball to describe the U.S. economy. He said that if the current economy is in the 6th round recovery after financial crisis, then it's the turn for the heavyweight player who can win the competition. The meaning behind this message is that Buffet thinks US economy can maintain strong for years.
[WARREN BUFFETT] "I'm-- I'm no good at predicting out, you know, two or three or five years from now, although I will say this, that there's no question in my mind that America's gonna be far ahead of where we are now ten, 20 and 30 years from now. But right now, business is good. There's no question about it."
We know that, baseball plays an important role in Buffet's investment philosophy and Buffet always said that investment is like a baseball game, while the investors are like players; the market should constantly adjust its position, waiting for a good shot and strike it out. From Buffet's position, the current economic fundamentals of the United States determine the current winning ratio of this game is quite high.