Warren Buffett was unequivocal in his criticism of the Fiscal Accounting Specifications Board’s ASU 2016-01 — the new accounting for fairness securities passed in 2016 and applied in 2018. In his 2017 letter to shareholders, Buffet famous:
“The new rule suggests that the web modify in unrealized investment gains and losses in shares we hold have to be bundled in all web revenue figures we report to you. That necessity will deliver some actually wild and capricious swings in our GAAP base-line. For analytical functions, Berkshire’s ‘bottom line’ will be worthless.”
The crux of Buffett’s argument was that his intent is to hold securities without end, and consequently shorter-term fluctuations were being irrelevant mainly because he sights them as partnerships and periodic sector quotations never change long-term value prospects.
Donald Graham, chairman of Graham Holdings, arrived to Buffett’s protection in a November 2018 viewpoint piece in The Wall Road Journal.