Warren Buffett has long cautioned against the unrealistic expectation that businesses should report ever-increasing earnings every quarter. At the 2005 Berkshire Hathaway Annual Meeting, he highlighted how this pressure can incentivize unethical behavior among executives.
“Businesses do not meet expectations quarter after quarter and year after year. It just isn’t in the nature of running businesses,” Buffett said. He warned that those who claim to predict financial performance with precision are often misleading either investors, themselves, or both.
Buffett also pointed to the dangers of a company culture driven by the CEO’s ego and the relentless pursuit of earnings targets. When leadership becomes too fixated on meeting short-term forecasts, it can create an environment where employees feel pressured to take questionable actions to avoid disappointing results.
“You get enough bad things anyway,” Buffett said. “But setting up a system that exerts financial or psychological pressure on people to do things they don’t want to do is a terrible mistake.”
His message serves as a reminder that sustainable business success is built on long-term thinking, not artificial consistency.
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©2026 David Mazor
Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.