A few weeks ago, a friend introduced me to a group of friends at dinner. He said, “This is Toby, he runs a stock picking company.”

I smiled politely. But inside I was like — broo, no ☹️. That is not what we do.

And here’s the weird thing. It wasn’t just that the label was wrong. The label changed how the person across the table treated me. The immediate question directed to me is:

“Bro jadi saham apa ni lagi bagus?” (”What’s a good stock to buy now?”)

asking for a hot tip. Under such a scenario, I smile and wave like the penguins in the Madagascar Movie.

Had my friend said, “This is Toby, he runs a company that acts as a Personal CIO for busy professionals,” the conversation would have gone completely different. The person would have asked me how I think about portfolio construction. How I assess risk. How I stay convicted during a downturn.

Same person. Same dinner. Same Toby. But a different label can produce a different conversation, which could produce a different relationship.

So I’ve been thinking about this quite a bit.

A programmer taught me this first

So I studied Computer Science back in university. One of the first things you learn — before data structures and algorithms, before anything fancy (that I have mostly forgotten) - is how to name things properly.

This sounds trivial. But I have come to realise that learning about naming things properly is not trivial at all.

A code base is like an essay, akin to the one you are reading now, that serves a purpose to instruct computers on what programmers want computers to do.

So even if you don’t code, you could:

• be confused by a codebase OR

• have somewhat of an understanding what the code is trying to do.

depending on how well names are written.

For example, a variable called

data

tells you nothing about the data that it is supposed to store. But a variable called

monthlyRecurringRevenue

tells you a very clear thing. It tells you that it should be storing monthly recurring revenue.

When a developer reads the second name, they would know what the line of code does. They know what the number should look like. The name itself becomes a thinking tool.

Let me say that one more time. The name itself becomes a thinking tool.

You could imagine:

Hmmm, if the company now gets an additional stream of monthly recurring revenue, how should I update the calculation of this monthlyRecurringRevenue ?

vs

Hmmm, if the company now gets an additional stream of monthly recurring revenue, how should I update the calculation of this data ?

Do enough rounds of the 2nd scenario and I probably will start losing hair.

In software, bad naming leads to bugs. Not because the code breaks. But because the developer misunderstands what the code is supposed to do. The logic was fine but label was misleading. And the misleading label led to the wrong assumption which led to incorrect modification or improvement of code.

The same thing happens in investing

When people label what they do as “trading,” they behave like traders. They check prices hourly. They panic when red candles show up. They celebrate green candles. In short, they become a servant to the price chart.

When people label what they do as “owning productive businesses for the long term,” they behave like owners. They study the annual report. They assess the management team. They ask: is this business generating more cash this year than last year? How’s the retained earnings of the business this year like? They hold through the noise because they have a mental model that can absorb the noise.

Warren Buffett is arguably the greatest investor of all time. And it seems to me that one of his biggest edges is not just spreadsheet. But it’s his vocabulary.

He doesn’t call himself a “stock picker.” He calls himself a “business picker.” That single reframe changes everything. A stock picker looks at a ticker and thinks about price movements, entry points, and when to sell. A business picker looks at a company and asks: does this business make high returns without putting up much capital? Will people still want this product in coming decades?

And here’s where it gets crazy. Buffett watched Coca-Cola for 52 years before buying it. Yes, he sold Cokes as a six-year-old from his grandfather’s grocery store. He saw the product dominate the world for half a century. But he didn’t buy a single share.

Why? Because for a lot of his career, he was using Ben Graham’s framework, which labelled a good investment as a “cheap stock.” Coca-Cola was never cheap enough by that definition. It was only when he reframed his approach — from finding “fair businesses at wonderful prices” to finding “wonderful businesses at fair prices” — that he could see what was right in front of him.

Same Buffett. Same Coca-Cola. Different name for what he was looking for. The old label caused him to overlook the opportunity for 52 years. The new label made it obvious. Shocking.

Your emotions work the same way

Here’s where things get even more interesting. I recently read a book about how emotions are constructed by Lisa Feldman Barrett. And her core argument really shook me.

She argues that emotions don’t have universal fingerprints. There’s no single pattern in your brain or body that maps neatly to “anger” or “sadness” or “fear.” Instead, your brain constructs the emotion based on what concepts you have available.

So if you only have the word “stressed,” then every uncomfortable feeling becomes stress. You’re stressed when you’re actually exhausted. You’re stressed when you’re actually lonely. You’re stressed when you’re actually hungry. But if you have richer labels — if you can distinguish between overwhelm, resentment, restlessness, grief — you can respond appropriately. You sleep when you’re exhausted. You call a friend when you’re lonely. You eat when you’re hungry.

Better labels, better responses. Worse labels, worse responses.

This is exactly what happens to investors who lump everything under “the market is scary.” Is the market correcting because of valuation compression? Or because of an earnings miss? Or because of foreigners pulling out? Each of those has a different implication and a different appropriate response. But if your only label is “scary,” your response is confined to panic.

Recompound: Your Personal CIO

We don’t really call ourselves a stock picks service. We don’t call ourselves a robo-advisor. We don’t call ourselves a wealth management platform.

We call ourselves your Personal CIO. Chief Investment Officer. And that is deliberate 🙂

Because a CIO doesn’t give you hot tips. A CIO thinks deeply about capital allocation on your behalf. A CIO has conviction rooted in analysis, not hype. A CIO stays when things get boring — and 99% of investing is boring. And a CIO is here to serve you, the CEO.

The label isn’t really a marketing gimmick. It is our own mental model on how we should behave and do our jobs day to day. And hopefully, the mental model could shape how our clients relate to their own wealth too.

When our clients understand that they have a Personal CIO, they stop asking “what stock should I buy today?” and start asking “how is my portfolio positioned for the next 5 years?” That shift, from stock tips to stewardship, is the name of the game.

So what’s in it for you?

Here’s the practical takeaway. You don’t need to read a neuroscience book or learn to code or become a Recompound customer to apply this.

Just pay attention to the names you give things.

If you call your investment portfolio a “trading account,” you probably will trade. If you call it “my family’s long-term wealth,” you probably will put more thoughts to safeguard it.

If you call your morning routine a “grind”, it can end up feeling like suffering. If you call it “prep”, it will feel like a lifestyle with purpose.

If you call a market downturn a “crash,” you can end up feeling panicky. If you call it “a sale,” you will start asking: “how to look for bargains?”

The names you give things are not just descriptions. They become more of instructions really. They tell your brain how to feel, how to think, and ultimately, how to act.

So choose your names carefully.

Cheers.

Yep, no kidding. I did go for a retreat for one week without looking at my phone in Forest Island, Bali (it was confiscated at the start of the retreat). And all participants were barred from talking to each other. We are not allowed to read books and not allowed to write. Anything that is too stimulating to the mind is not allowed.

To make matters worse, you could take a guess who’s my room mate (all not intended), who I am not allowed to talk to. Go on, take a guess.

Well if you guess Budi Ryan, then you are correct 🙂

Obviously as Recompound Co-Founders, our lives are very plugged in:

• to WhatsApp groups (each of our customer has their own private WhatsApp group with us)

• to the markets (we have to take a look at the market when we want to buy or sell stocks)

• to the internet and AI (need to read a lot, and write a bit of blogpost)

So why are Toby and Budi doing this to themselves?

The short honest answer is because we want to take a holiday (a break) from Recompound. And it is especially timely because during the Idul Fitri period in Indonesia, market is closed and it tends to be more quiet.

Another benefit that we’d like to get from this holiday is a stronger mind.

See, I believe that our mind loves to wonder around thinking about the future, and dwelling in the past. Not fully connected to what’s happening in the present moment. Especially because we are investors. We spend a lot of time thinking about what the companies we invest could become in the future. What’s the price going to be. We also unavoidably spend time dwelling about the past. We should have bought this later, sold this earlier. Hindsight bias tends to be a thing for investors. I don’t think there’s any investor who’s immune to hindsight bias, including ourselves.

So going for this retreat is an attempt to develop a stronger muscle of our mind. Exactly like going to the gym.

So why not just go to the gym to develop a stronger mind? Yes, going to the gym counts as a tool to develop a stronger mind. In the gym we have to focus on progressive overload and focus on feeling the muscle groups that we want to train (back, chest, shoulders, legs). Then a stronger mind that comes out of it is definitely a good bi-product. But I believe there’s an even more specialised tool to develop this stronger mind, which is the main focus of this retreat:

meditation

Yes, so for 7 days 6 nights, Budi and I did nothing but meditation. The retreat fortunately, is designed very nicely for us to learn about meditation step by step. Because I don’t really do meditation at all before the retreat. So it is very noob friendly.

Btw by no means is this an article to ask you to meditate every day. I think going to the gym is great for the body, but I don’t go around and force people to go to the gym. In the same spirit, I now think doing meditation is great for the mind but I will also not go around and force people to meditate ;)

If you are curious about what comes out from the retreat, you could read on. But in this article I will be talking about the core learnings of developing a stronger mind through meditation and how it is extremely related to value investing. It is so friggin related that I wonder if the Founder (Pak Merte Ada) of the meditation retreat secretly read up books on value investing and applied the learnings to the meditation course that he designed some 30 odd years ago.

Hopefully, this article would be helpful to pique your interest to get to know of a tool to actively train your mind to be stronger. Let’s get started.

Four core components of a strong mind

In the retreat, strong mind is communicated as a harmonious mind with four core components. Some people are weaker in one component and stronger in another. So you can choose which core components you would like to train. Really like going to the gym right?

Some people have weaker legs so they can do leg day and do those squats. Others want to train their back a bit more so that they can get that macho V shape look. You get the idea.

Now these 4 components that enable stronger harmonious mind to be developed, I argue, are also core ingredients to be a good long term investor.

First component

First component is focus, or concentration really. During our meditation, when we close our eyes, a key item that we have to do is focus on a single object. That object is usually our breathing. In and out, in and out. If we don’t have a strong focus, we tend to feel other things outside our breathing. For example, the itchiness on the neck. The numbness on the feet. Or the loud sound of birds chirping at the background. When we observe that our focus is scattered, we have to bring it back to our breathing. A single object that we have set our intentions on.

Now isn’t this exactly like value investing?

When we want to analyse a company A for example, we need to direct our attention and focus to one company. There will be temptations or noise from our neighbours about company B, company C and so on. Investment ideas nowadays seem to be quite scattered on social media. Influecer A will say that this stock is good. Influencer B will say another stock is good. As a good long term investor, we’d want to focus our analysis on one particular stock at a time. Because if we hop around (we are definitely guilty of this as we are never perfect investors), the quality of the analysis can get compromised.

So having focus, is ideal for us to understand a company better, filtering out plenty of noise that is circulating out there. With this ingredient developed, we can be a better long term investor.

Second component

Second component is being at the present. In the retreat, this is called being mindful. Because it is no surprise that when we close our eyes and meditate, we would think about what I look forward to eating after I come out from this jail. Or “ah darn it, have I done this or that before coming in for this retreat?”

When we feel that our mind wanders to the past or to the future, we invite it back to be in the present.

Well this is, again, exactly like value investing. We absolutely have no idea what the price of a company we invest is going to be tomorrow. But we tend to think about the future so much.

“Will the stock price plummet because of the war tomorrow?”

“Will IHSG benefit from increase of oil prices?”

“Will government policies like free meals affect foreign investors confidence in the future?”

And don’t get me started talking about thinking excessively about the past.

“Ah, I should have bought more of that stock. It should have 20% allocation instead of 10%!”

“Why did I not sell the stock when the margin of safety is already reduced?”

“I should have never diversified to foreign markets!”

You get the idea 🙂 We tend to think so so much about what will happen in the future and what we should have done in the past. So much so that we can sometimes forget that

“hey we are now invested in a good company, with good management, good product and great competitive edge. We bought it at a good price, but the price has not moved. So we wait.”

Or

“hey the companies that we invested is already priced at a premium by the market. So we can sell now. We don’t have to be greedy about the price going up further in the near future.”

That my reader, is what I learned about developing a more mindful mind which is anchored at present. By anchoring our decisions based on the present moment and the information we have today, we’d develop to be a better long term investor.

Third component

Third component is being gentle. The word that the retreat uses is developing love and kindness. This again makes so much sense because when our minds start to wander, we tend to be hard on ourselves.

“Toby, why are you so easily distracted?”

“Budi, why can’t you stay at present?”

Negative talk is real when we inadvertently fail to focus, and being gentle to ourselves is a potent antidote. Particularly for me, when I notice that my mind starts to wander, I now view it as a training opportunity to bring my mind back to the present and the area of focus.

Again I believe that being gentle to ourselves is vital to becoming a good long term investor. Because investments is never perfect. Things that happens outside of our control can happen both in good and in bad ways. In a good way, the company we invest in can suddenly be acquired by another company and the price could go up like crazy.

It is easy for us to be greedy and forget about our investment thesis when such a positive event happens to the stocks we invest. In a bad way, the company we invest can also underperform relative to our expectations and then the stock price could take a hit. Again, it is easy for us to fearful and forget about our investment thesis.

We can be harsh on ourselves and end up making impulsive decisions. But what I think is more helpful is if we could accept the things happening outside of our control as a given. Then we can treat uncontrollable events as an opportunity for us to respond in a calm and gentle way, instead of treating it as an evidence that we are foolish investors.

Do we buy more? Sell? Or do nothing. With gentleness on our minds, the answers will be a lot clearer than not. With more clarity, I believe this would help us to make better decisions and become better long term investors.

Fourth component

Fourth component is seeing the truth. A man who sees the truth as it is, without adding much salt or sugar on top, is said to be a wise man. In the retreat, there’s one universal truth that we are invited to experience. That truth is the truth of impermanence. Things are constantly changing and in flux. We could observe and experience our breath changes from inhalation to exhalation and then back to inhalation again. We could observe the heat on our chest cool off gently. We could experience the itchiness on our skin that gradually subsides. Everything on our mind and body changes.

When we see that our mind and body is in constant state of flux, we are seeing the truth as it is. We’d grow our hair, we’d grow more muscle, we’d become older and so on. That’s the truth. And when we see this truth as it is, we develop wisdom.

Relating this concept to investing for the long term, the companies we invest are also constantly changing. Their sales would grow or decline. Their assets would get sold. Their debt will get bigger or lower. Their management would change from time to time. Heck their business models can even change. Seeing that a company is like a breathing organism that is never permanent allows an investor to be wiser.

As a result, we don’t have to pretend that we have to be a shareholder of a company forever. If we don’t like the new management or if we are not satisfied with their growth, we can always sell. Or if we think that the company becomes better, gaining more market share, while the price is still well below its intrinsic value, we can always increase our ownership and buy more.

This adaptability and non-attachment, I believe, is developed overtime with a wiser mind. Therefore I believe that seeing the truth (as it is) is also, an essential ingredient to be a good long term investor.

Closing Remarks

Thank you for reading this exposition thus far. I hope that you could see how a long term investor could be better overtime through the lens of a person who practices meditation. It all starts from having a strong harmonious mind.

Are our minds perfect and are we the best long term investors? No and no. Developing our minds to be stronger and our skills to be better long term investors are always a work in progress. There are always others with stronger minds and better investing skills. But we believe that the retreat carries genuine benefit in increasing our resolve to have stronger minds and be better long term investors.

We are definitely not paid to mention the meditation retreat. But if you’d like to challenge yourself to go on for a retreat like what Budi and I did, feel free to check out Bali Usada. If you end up trying them out, I hope that you will find it useful to develop a stronger mind and a healthier body. May all beings be happy!

Cheers.

A sequel to “I had lunch with a cinema owner.”

Since we are talking about the use of AI in my line of work, I would like to preface this write up by clearly communicating what this write up is not.

It is not an expert opinion about how the investment industry is going to take shape in the future

It is not an editorial whether AI will replace more knowledge workers in Jakarta

It is also not about financial advice as there will be a brief discussion about a stock research that was conducted using AI.

You can treat this writeup as a data point for how AI is currently used by Co-Founder of an early stage wealth tech startup in Indonesia.

With that, let’s get cracking.

There is a wise 80 year old man

Who likes to write memos documenting his thoughts embroided with his investing philosophy that he has accumulated for more than 5 decades. He manages close to $200 billion of funds and he generously publishes his thoughts to the public free of charge. One day, a fellow value investor shared with me his most recent memo. He writes a memo about his experience using Claude. I dropped everything and went on to read what he has to say.

In his latest memo, Howard Marks describes asking Claude to write him a tutorial about AI. What came back was 10,000-word essay that referenced his past memos, anticipated counterarguments and Claude even sprinkled humor here and there. I couldn’t imagine being in his shoes, witnessing the amount of technological progress in his life time. I mean he was born in an era where digital photography was not invented yet. Now he is dealing with a machine that writes a note as good as what a competent colleague would do.

But Marks being Marks, did not stop at awe. He pushes further. He questions deeply into what is the likely implication of AI to the field of investing. If AI is so good at gathering and synthesizing data, is there a place for mere mortals like Toby and Budi?

Note: Marks didn’t say Toby and Budi in the memo because we are really just mere mortals

Well the answer comes from a person who studies the spread of diseases, an epidemiologist Marc Lipsitch. He observed that humans make decision using three core components:

1. Facts,

2. Informed extrapolation from analogies to prior experience, and

3. Opinion or speculation

Marks is saying that AI is beyond this world for (1) and (2). Perhaps even better than any human alive. Just like Stockfish (the chess AI) is better than Magnus Carlsen. But he says that AI is genuinely weaker in novel situations. In other words, AI is probably not as good as humans who have lived experience with minimal data in the internet (information used to train AI models).

He further went on to say that humans (at least the best humans) still hold an edge in situations that are genuinely novel, where there is no historical pattern to rely on.

But here is what I kept thinking about after reading the memo.

If AI is this impossible to beat at facts and extrapolation, shouldn’t we trust its opinion too? It does not have anchoring bias. It does not have fear or greed. It does not hold onto a losing position because its ego cannot stomach the loss. It is not swayed by narratives — the very thing Shiller described to us in Part 1.

In the mean time, look at us. Look at the quality of judgment that human beings produce. You can think of the decisions made by leaders around the world. We are emotional, inconsistent, stubborn. We lie to ourselves. We hold onto beliefs long after data and evidence proves them wrong.

So how would humans, a being this flawed, stand a chance in having superior taste, judgement and opinion?

I didn’t fully understand what Marks said.

But above all, I was feeling very competitive. I grew up in a Singaporean kiasu (fear of losing) culture and I simply didn’t want to lose out to this 80 year old wise person. Prior to reading his memo, I never used Claude before.

So like any other kiasu person, I went on to buy the Claude max plan to give it a spin.

I want to have a better grasp of what does Marks mean. So I started where any kiasu person would start.

I wanted to test how far AI can actually go in my work. Not in theory. But in practice, on a real stock that I was actually studying. And I want to be honest — part of me was hoping AI would just be better. That would make my life a lot easier.

The company that I studied was Sarana Menara Nusantara (TOWR)

TOWR is Indonesia’s largest independent owner and operator of telecommunications infrastructure. A Djarum owned company, it owns about 30,000 towers across the country and leases space on them to telco operators like Telkomsel, Indosat, and XL. The tenants install their antennas and equipment on the tower, pay rent, and the contracts are locked in for 10 years. It is a beautifully predictable business.

The current factor that is driving TOWR’s profitability

Aside from average selling price of the lease agreements (which is not the focus in today’s discussion), is also TOWR’s colocation model. Being an independent telco tower operator, TOWR is able to host more than 1 tenants in its infrastructure (example tenants are Telkomsel, XL and Indosat).

Now the capital expenditure for having 1 tenant is large, as you have to either build a new one or acquire towers from existing industry players (TBIG is also in the same industry). But an additional tenant at the same tower involves minimal capital expenditure which has a direct contribution to its profitability. You can imagine getting additional revenue without most of its expense. It would go straight down to profits.

So to repeat, having an additional tenant or a high tenancy ratio (average number of tenants per tower) is highly desirable for the company as it is associated with higher profitability.

But of course, the market has largely been harsh.

You could see below that the price of the share has seen a 60% drop in the last 5 years as this post was written. Markets might be harsh because TOWR might be seen as having an obsolete business especially because telco companies will have lesser need of those towers.

But there’s another phenomenon that might cause immediate headwind to TOWR’s profitability that the market does not like.

Consolidation, consolidation

To give you more context, the telco industry in Indonesia has seen multiple consolidations in the past 5 years. Starting with Indosat and Hutchinson’s merger in 2022. And the most recent merger of XL and FREN back in April 2025.

Why events such as this is pertinent to TOWR’s profitability?

I suspect the answer is because consolidations would reduce tenancy ratio (discussed above). Usually we had 5 telco players prior to the consolidation. Now that we have 3, the merged telco companies no longer need to rent the same tower space.

So of course, tenancy ratio has dropped for the past few years from 1.88 in 2021 to 1.61 in 2025.

So the question: now that there was a recent merger of FREN and XL in 2025, how bad will tenancy ratio actually get, and for how long?

My plan is simple

I want to use AI to help me use Agent Based Modelling and Monte Carlo Simulation technique to model out the probable tenancy ratio outcomes.

For those unfamiliar,

Agent Based Modelling

is the idea that instead of modelling an entire system with a single math equation, you model the individual pieces and let the system emerge from their interactions.

In TOWR’s case, each tower is an “agent” with its own characteristics. Location (urban, suburban, rural), whether it has fibre connectivity, how many tenants it currently has, how much exposure it has to the merging operator.

You give each tower a set of probabilities (chance of gaining a tenant, chance of losing one, chance of getting 5G equipment) and then let all 30,000 of them play out over a period of time. The system-level result — the tenancy ratio — emerges from 30,000 individual stories, not from a top-down assumption.

Monte Carlo Simulation

is the idea that you run the same model hundreds of times, each time with slightly different random outcomes, to see the range of what could happen. Think of it like rolling dice 200 times and tracking the results. Any single roll tells you nothing. Two hundred rolls give you a distribution, what’s likely and what’s extreme.

Combine the two: 30,000 towers, each with their own probabilities, simulated 200 times per scenario. That gives you a probability distribution of where the tenancy ratio might land — not a point estimate, but a range of possible outcomes.

Now here’s where it gets interesting.

Building the model was the easy part. AI handled that quite nicely. The hard part was...

Claude was impressive

It built the entire agent-based model. It ran simulations and produced charts with confidence bands. If you saw the output, you would genuinely think a quant team produced it. Take a look.

So I started looking at the parameters. One of the key inputs was the organic colocation rate — how often a tower gains a new tenant through normal business activity.

Claude estimated this by looking at 2024 data: TOWR added 3,751 tenants across roughly 30,000 towers. That gives you about 2.5% per quarter, which makes sense.

But something about 2024 felt off. I remembered reading TOWR had acquired a competing tower company called IBST in 2024. So I went to NotebookLM — which had the actual company filings loaded — and asked it to separate the organic additions from the acquired ones.

Turns out, a significant chunk of those 3,751 tenants came from the IBST acquisition. They were bought, not won (organic). So Claude had used a contaminated year to set one of the most sensitive parameters in the entire model.

The corrected organic rate was closer to 1.0% per quarter (originally was 2.5%), which is a big shift. That single number meaningfully changed the five-year trajectory of the tenancy ratio.

But the assumptions underneath were wrong. And they were wrong in ways that sounded right.

Here’s another one. The model assumed that when the merged telco operator (XLSMART) decommissions a redundant tower, about 60% of the time they would relocate their equipment to an existing TOWR tower nearby. That sounds reasonable — why build a new tower if there’s already one available?

But it turns out TOWR has a strict no-discount policy. Whether you colocate onto an existing tower or order a brand new one, you pay the same rate. So the operator has zero financial incentive to compromise on location. They always choose the network-optimal spot, which usually means a new build. The actual number was closer to 25% colocating onto existing towers, not 60%.

Nobody would know this from the outside. It is buried in how TOWR structures its commercial relationships. NotebookLM surfaced it only because I asked the right question — and I only knew to ask because the economics felt off. Which I also don’t know how to describe myself.

This happened over and over. Non-MNO tenants that I assumed occupied tower space turned out to be purely fibre clients — the parameter should have been zero, not 0.5%. A bell-curve churn shape that I had assumed turned out to be wrong because tower contracts are irrevocable — churn is driven by contract expiry schedules, not operator discretion.

Each correction required me to ask a question that AI did not think to ask itself. And at the end… I got this results.

The results looked nearly identical to the naked eye, yes?

But the assumptions underneath the second picture have been far more closely scrutinised. I challenged every parameter and in many cases corrected them too. The organic colocation rate was halved. The swap ratio was cut by more than half. Non-MNO tenants were zeroed out. The merger intensity was redesigned entirely.

And yet, even after all that work, the interpretation of these results still differs. An AI would present the base case median as the most likely outcome. A cautious analyst might anchor to the bear case. An investor with experience in Indonesian telcos might look at these charts and see something else entirely based on relationships and context that never made it into the model. Which brings me back to the 80 year old man.

Where the human edge actually lives

Remember Marks and the Lipsitch framework? Facts, extrapolation, opinion. AI dominated the first two. The question was whether humans could still be relevant in the third.

After some time of working with Claude and NotebookLM on this analysis, I think I have a bit more understanding of what Marks was saying. It is not that humans have superior opinion. It is that humans have a bit more situated opinion.

We carry context from our own lives that no model has access to.

Every correction I made came from something I already knew or something that felt off based on lived experience or a prior reading that I came across, and so on. Perhaps from knowing what it feels like to lose money after making a wrong bet, that tends to sharpen our instincts all around and then asking the questions that turn out to be important.

So it is not uncommon to ask “are you being optimistic?” on other sub-areas of research.

It came purely from the gut, not analysis.

I don’t think any of this is genius. It is just being aware of context and applying lived experience to what we are studying.

So what helps in the age of AI

I think being hyper observant helps. We have so much lived experience, that is information we can glean right away from our senses. The internet is a huge source of information. But I don’t think it is right to underestimate the wealth of knowledge we get from walking to Indomaret, or travelling out of town from Jakarta to Manado. These experiences can often carry insights to our line of work in ways that is simply unimaginable to an AI.

I also think that willingness to try things is an important one. While researching and understanding a public company is still difficult work and reading convoluted responses of an AI could be tiring. But hey, I don’t have to write a single line of code in doing monte carlo simulations anymore. That’s bananas. AI is certainly helpful in saving huge precious time and allowing my inquiry to be more robust.

Lastly, intellectual honesty would be the most important ingredient. I don’t think there’s a point of being observant, trying new things and then lying to yourself about deriving a conclusion that I myself want to hear. The study should lead to a better understanding which hopefully would bring us to a better decision all around.

Closing remarks

That’s all folks, thanks for reading this far! If you fancy, give Claude or any other AI tools a spin. I am not just curious on how it is helpful in studying a company. But I am also curious how it applies to other lines of work, like healthcare, technology, consumer, anything. So if you are so kind to share your experience, do share them in the comments!

Cheers.

Those in the investment scene will need no introduction on who Chris is. For the benefits of those not very involved in the investment circles (no shame about this, because you are busy living life in your own niche circle), Chris is the founder of Bibit, which later got acquired by Stockbit. He also found the holding company Clapham, which owns a number of F&B companies.

Beyond the companies that he have founded, though, Chris is just an amazing human being. Speaking to him almost felt like meeting a soul brother. Some of the things he talked about were the things that I privately preached in my tiny circle, but often feel a bit shameful to share publicly. I thought I was just a weird person to have these beliefs and so I kept them to my closest circle. But hearing them coming from Chris just felt like a huge validation boost. There were countless moments when I thought in my head

Omg! I can’t believe you are thinking the same thing!

I genuinely had a great time speaking with Chris. Two hours passed which felt like 30 minutes. I hope this can be a useful companion for you to listen to when you are stuck in traffic, when you are on your long runs, or just want a better evening entertainment (to replace doom-scrolling and Netflix).

We did talk about both investment-related and non-investment related stuff. Here are some breakdowns just to help you decide if this is worth your time.

Investment-related topics:

• Changes in the Indonesian capital market 10 years ago vs now

• Whether value investing is dead

• Whether it is possible to make money in the stock market

• Managing the emotional roller-coaster when investing

• The impact of MSCI downgrading Indonesia

• The future of banking stocks in Indonesia

• How to evaluate banking stocks

• Specific stocks mentioned (not a recommendation): Astra, Gudang Garam, Prodia

Non-investment-related topics:

• Chris’ experience building Bibit

• How work and life would change with AI

• How we should view our relationship with money

• How to make yourself smarter by managing your information diet (hint: Substack)

• What you should know when deciding to invest in global stock market

Thank you , , , , , and many others for tuning into our live video with and ! Join us for my next live video in the app.

Also, drop us a comment on who you want us to talk to next time and the topics/questions you want us to cover.

Until next time, folks!

Get more from Toby Limanto in the Substack app

Available for iOS and Android

Get the app

We were supposed to catch up with him after Budi’s wedding in March 2025. We caught up almost a year later. I am ridiculously horrendous at these things, I know.

It was a weekday afternoon in a dimly lit restaurant. Budi and I sat next to each other across a cinema owner whose family runs theaters across Java. He has an air of calmness that he exudes all around him. So calm that I myself get nervous. But then I told myself “get yourself together, Toby. You got this”.

And I was genuinely eager to learn about his experience in the rapidly changing entertainment industry. I have been seeing more and more people (including myself) consuming AI-produced entertainment, and I figured someone running cinemas across Java — competing against the biggest player in the market — would have a sharp perspective on what’s happening.

Until he said something absolutely shocking.

His eyes lit up, almost like wanting to share a big announcement of the birth of a first son.

Guys! I am using the terminal in my computer for the first time to build an application for my business.

You can imagine this being said in the most calm yet energetic manner.

I know for a fact that this person is not technical. Furthermore, he does not at all have to concern himself with how to use AI to build applications. Yet here he was, showing us a web application he had built, hosted on Github. He built an interface that allows his company to ahem, trade secret ;)

He demo-ed it to us with the kind of pride you see in someone who has discovered something genuinely new about what they’re capable of.

He even recommended me and Budi a podcast: Naval Ravikant’s Motorcycle of the Mind. His message was simple. Use these tools. Use them aggressively. Don’t wait.

So his enthusiasm naturally left me wondering. He was someone with every reason to be defensive about what AI means for his industry. But he’s excited. This cinema owner sees AI as a revolution, while many others see them as the mother of job/industry destroyers.

Why is this? Two intelligent people can see the same tech and arrive at completely opposite emotional responses.

So I reflected deeper and remembered something I had been reading.

The narratives that we’ve been consuming

But before making sense of the optimism with AI, let’s have a sense of the fear first. The book that’s highly useful is Robert Shiller’s Narrative Economics.

Shiller needs no introduction, the Yale man is a Nobel Prize winner in economics. Let me flex a bit because I cannot help it, I also went to Yale. For a semester exchange. But hey stop judging. Pauli Murray College woop woop. Ok I am done.

The fascinating thing about the book is that it doesn’t sound like the economics we used to learn in high school. Scarcity, unlimited wants. Demand supply. GDP, Inflation. It doesn’t even look like the economics we observe on social media lately which is Game Theory.

The book looks like the spread of diseases. Yes, epidemiology.

The central argument that Shiller makes is that

economic narratives - the stories people tell each other about money, jobs, markets, the future - spread exactly like diseases.

They have contagion/recovery rates, they mutate, they go dormant for decades and they flare up again when conditions are ripe for flaring. Most importantly, they influence economic behaviour that household data struggle to explain.

The part that is most striking to me is what Shiller describes as “perennial narratives”. Stories that keep coming back across centuries. Every time they come back, the stories told from the narrative are different. But they are the same narrative. That narrative is: Machines will replace human labor.

Shiller traces it all the way back to the 1800s. The Luddites smashing power looms in 1811, the Swing Riots against threshing machines in 1830s. The depression of the 1870s where labor-saving inventions was the top of mind as a cause of mass unemployment. The 1930s, when “technological unemployment” started becoming a household term. Want to guess what was the terrifying new machine back then? Dial telephone.

What I have noticed is that the narrative has the same structure. Every time.

1. A new technology appears,

2. people fear it will destroy livelihoods on a massive scale.

The story spreads not necessarily because it is true, but because it taps into the very core of our emotions: anxiety. Every time, it would mutate just ever so slightly so that we can say this time is completely brand new. This time is different. This time humans are going extinct for real.

Well I believe AI is the latest mutation.

But what makes this particular mutation unusual, and this I believe will get relevant to how we are all feeling about AI, is something Shiller calls “constellation” effects. Narratives don’t operate alone, instead they cluster. Right now “AI will take your job” narrative is running alongside the AI bubble narrative and the AGI narrative. They stack on top of each other as one narrative makes the others more contagious.

If you want to see what a narrative constellation looks like in practice, look at what happened with Citrini Research a few weeks ago. They published a thought experiment on Substack imagining what the economy might look like in 2028 if AI displacement accelerates. I feel that what made it so contagious was not any single claim.

It was a brilliant piece that wove together:

• the labor replacement narrative,

• the bubble narrative,

• the financial contagion narrative,

• and the knowledge worker being automated narrative

into one vivid, emotionally coherent story.

As a result, markets moved quite wildly. Software stocks had a free fall. Bloomberg even linked the selloffs to the report. Let me repeat this one more time, a thought experiment on Substack shook Wall Street. Not because it contained new data. But because it bundled fears that were already circulating into a single story that hit harder than any of them could have alone.

Well folks, I suppose that is the constellation effect at work.

So if you are feeling anxious about AI without knowing clearly why, this might be it. It is not one story that affects us. It is a cluster of narratives hitting you from every direction. Social media, Dinner table, Cocktail party, Family gathering.

Now what’s the point of all this? Well it does not mean that the fear is wrong. The fear inside us is very real. But rather, the point is seeing the structure of fear more closely. Once we see the structure, we are no longer just inside the narrative, we are observing it.

Like a person watching a movie at the cinema, noticing not just the story in front of them but seeing how beautifully the actors act out a scene. How well setup the lighting is. How crafty is the script writer in playing with our emotions.

Note that I am not at all sharing this to trivialise the gravity of what is currently happening. I believe that disruption is very real and is underway. I see it in my own work every day and I imagine you see it in yours. But there is a difference between experiencing disruption and being swept up in a narrative about disruption.

Shiller helped me see that difference. And I hope you do too. Because it has now been easier for me to ask a more useful question. Instead of asking

“should I be scared or excited”

we can nudge ourselves to ask

“what’s in front of me now, and what can I do with it?”

Just like how the cinema owner has been doing just that, genuinely curious how he can use new technology to his advantage. He probably does not need to read Shiller. He seems to be asking the right questions already.

I have been learning a lot about what happens after you ask that question too. About what it actually looks like to work with AI in my line of work.

But first, that would involve Claude and an 80 year old man (almost).

To be continued

Last Thursday, Budi and I had an incredibly insightful conversation with Chris Angkasa. For those who missed it, I am very sorry. We are trying to push Substack to resolve a technical difficulty and get the live recording (for some reason it does not get saved in my draft). So if that gets recovered, we will publish it. But one key lesson that stood out, amongst many gems that were mentioned, was the emphasis to write down things that we do not know instead of things we know.

Let me repeat. One of the key lessons was to write down the things that we do not know (surrounding our investments) instead of the things we know.

This resonates deeply with Nassim Taleb’s concept of epistemocracy. In his book the Black Swan, Taleb discusses about an epistemocrat, a person who is well aware of the limitations of their knowledge. Instead of being overly confident towards exclaiming their knowledge prowess, they continue to question the truthfulness of their understanding. As a result, they will not be rushed to commit to a brash decision, they will make claims with adequate qualification and they will not be overzealous in their predictions of the uncertain future.

Taleb loves epistemocrats. He even goes to say that a utopia is a world that is ruled by epistemocrats. A society that gives their constant questioning of knowledge legitimacy. He calls that world an epistemocracy.

Well, it needs no convincing that such a world obviously does not exist today. A politician who claims that they don’t have a full picture about how the country would progress amidst global uncertainty will not gain votes. As the overconfident counterpart will make better promises and fare better in elections.

An entity who’s in the investment space (for e.g. Recompound) who does not know the 2nd order impact of a middle eastern conflict to an earnest public company selling ceramics to a domestic market in Indonesia will not gain as many followers as an investment guru who can “reverse engineer” and time when a market crash would occur.

But what’s the value of a person who admits the things they don’t know?

Understandably, you might be thinking:

“what’s so special about being an epistemocrat? All I am seeing is a timid mostly ignorant overthinker who is reluctant in making decisions with respect to their knowledge that they aren’t 100% sure about. How do they gain followers, influence, power and ultimately, money?”

Let me help you clear the confusion.

The value of an epistemocrat is not in the predictions they make. It’s in the predictions they refuse to make. They catalog their ignorance, writing down the things that is uncertain and unknowable. When they are tempted to want to know the unknowable, they avoid doing so.

Let me make this concrete. Picture a pool table.

It is a Friday night and you are playing billiard with your group of friends, a boys night out at a Jazz bar in Canggu. Now it is your turn to hit that 8 ball with the cue ball. Given the initial position of the cue ball, how hard you hit the 8 ball, you could mathematically compute the positions of the two balls after.

Guess what’s the endpoint? Well if you guess that the 8 ball will be in the top right corner as the cue ball remains in the same quadrant, then you are correct.

But, your friend, Bob, are given the position below as the end point after your turn.

Do you think Bob could guess where the 8 ball and the cue ball came from initially? I don’t think so. It is quite impossible because the cue ball and the 8 ball could start initially from anywhere! I hope you’d agree with me on this.

Therefore, it is borderline crazy to say with relative confidence where the ball come from, except Bob starts yapping:

Actually, look at the spin on the 8 ball — see how it’s slightly off-center? That tells you the cue ball struck it at roughly a 35-degree angle with a left English. The only position that produces that angle while leaving the cue ball where it is? Lower-left quadrant, two diamonds from the corner pocket. And your friend is right-handed, tends to favor an elevated bridge, which biases his break angle. Factor that in and honestly, there’s only one plausible starting configuration. Cue ball bottom-left, 8 ball dead center. I’d bet money on it.

Bob is so confident 😂

Well, here are more explanations that you might hear from time to time. They don’t confine themselves to you playing pool with your friends. The overconfidence extends to cover economy, politics, markets and so on.

Either in WhatsApp groups, family conversations or straight up “experts” fire chats. Below quotes might ring a bell. Although I have to give you fair warning that identifying causal errors in the made up sentences can feel unnatural*.*

On COVID-19: “If you were paying attention to the epidemiological data out of Wuhan in late December, the R0 alone told you everything. A novel respiratory virus with asymptomatic transmission in a hyper-connected global economy with daily international flights? There was only one outcome. I flagged this to my team on January 3rd and said — this goes global by March, lockdowns by April. The writing was on the wall. People just chose not to read it.”

On AI replacing jobs: “This was completely predictable. The job was 80% pattern recognition and template-based output — exactly the task profile that transformer models excel at. Once GPT-4 hit the market, anyone doing that kind of work had maybe 18 months. The companies that didn’t restructure were just in denial. I’ve been saying since 2022 — if your job can be described in a two-page SOP, it’s already gone.”

On climate change: “The science has been there since the 1800s — Arrhenius literally calculated CO2 warming in 1896. You had ice core data showing the correlation, satellite measurements confirming it since the 70s, and every single climate model trending in the same direction. When you combine that with post-industrial emission rates doubling every 40 years, there was only one trajectory. I’ve been saying since 2005 — we hit 1.5 degrees by 2030, extreme weather events triple by 2025. This wasn’t a prediction, it was arithmetic.”

You have got to love AI for saving me time digging through my WhatsApp and making me these texts. If needed, you can also use it as your thinking buddy by asking “where’s the causal error in the sentences that I am reading, what other range of possibilities that can occur”.

Value of not knowing things

Great, now that we have established the logical fallacies people are tempted to make in cocktail parties (and their corresponding mispredictions), we can move on to the central argument of this article:

which is being an epistemocrat maximises the chance of long term compounding.

Exponential Growth Bias

Now you have 5 seconds to think and guess. Promise? 5 seconds only. What is the answer to the below multiplication question?

Ok proceed once you have submitted your answer.

This is a math question that was asked in Kahneman and Tversky’s experiment. The median estimate of the group’s response was 512. When the question is flipped, starting from 8 times 7 and so on, the median estimate rises to 2,250. The correct mathematical answer is 40,320. If you guessed incorrectly, how surprised are you? Well certainly my guess was wrong when I first attempted the question.

This experiment tells us that we like to massively underestimate exponentially growing numerical series. We tend to fail to grasp the non-linear acceleration of growth, towards the end.

It is reported that the size of this underestimation is considerable: it is common for two-thirds of subjects to produce estimates that are at or below 10% of the actual (normative) value. For example in another test, many subjects expected a population growth target that would naturally be hit in 1979 to not be reached until the year 2000.

What else does research say about exponential growth bias? A number of things. But one thing that strikes the most to me is

people’s immunity to experience, education, and instruction when it comes to having this bias.

• This bias occurs even if you have a strong mathematical background: A subject’s number of college credits in mathematics had no significant correlation with their ability to accurately predict the growth.

• This bias occurs even if you have an extensive professional experience: An experiment testing professional decision-makers (members of a government Joint Conservation Committee) whose jobs require understanding growth processes showed they performed no better than naive undergraduate subjects. Daily experience with growing processes does not reduce the underestimation.

• This bias even occurs after a direct instruction: When subjects were given a 75-minute lecture on exponential misperception, shown numerical examples, and given immediate feedback before being tested, their core perception of the mathematical exponent only improved slightly. Instead of truly understanding the non-linear curve, these “sophisticated” subjects simply attempted to evade the error by universally inflating all their guesses linearly across the board.

Wow, so compounding, being the 8th wonder of this world also happens to be something that is:

• grossly underestimated

• incomprehensible to our human brain

Now that we know that wrapping our mind into compounding is somewhat of a loss cause, let’s take another look at another property of compounding.

It cannot compound if it gets disrupted

Remember your overconfident friend, Bob, from a moment ago? Yes he’s the one who plays pool but he also likes to say things from time to time about the market.

“Look, it was obvious. The yield curve inverted in August, manufacturing PMI was contracting for three straight months, and the Fed was hiking into a slowing economy. Layer on the fact that insider selling hit a two-year high in Q3 and you had every textbook signal flashing red. Anyone who didn’t see this coming simply wasn’t reading the data. I told my subscribers in September — we’re six weeks from a correction. Sell everything.”

You listened to him as his prediction was correct. So a few months down the line, he muttered the exact same line of argument, this time about the geopolitical tension that is causing investors to be jittery. He decides to again, sell everything and you decide to follow suit.

Only to find out weeks later that geopolitical tension actually causes a steep rally to commodities and commodity producing stocks that you used to own. Because of Bob’s overconfident assertions, you missed 10 best days of your stock portfolio. Well not so much of a big deal right?

Wrong.

According to JP Morgan’s research, $10,000 invested in the S&P 500 from January 2005 to December 2024 would have grown to $71,750 if you stayed fully invested. Miss just the 10 best days — ten days out of roughly 5,000 trading days — and you’re left with $32,871. That’s more than half your wealth. Not because the market crashed. But because you weren’t there when it recovered.

And here’s what makes Bob especially dangerous: those 10 best days occurred within two weeks of the 10 worst days. The biggest rallies can happen right after the sharpest drops — exactly the moments when Bob has already convinced you to sell everything.

But being wrong is not the issue here, it is the act

I make wrong predictions all the time. I predicted that Manchester United would win the Premier League after Sir Alex Ferguson retired under David Moyes (you guys are probably thinking that I was hallucinating, I was not). When Cristiano signed for Man Utd again, I also thought that year was going to be the year. But nope. And you could probably see clearly that my wrong prediction of Man Utd’s glory is not a problem. Why? Because it costs me nothing except some dignity amongst my Liverpool “friends”.

Bob’s prediction cost you $38,879.

Bob’s overconfidence didn’t just make him wrong. It made him act. And the action — not the necessarily wrongness — is what killed the compounding.

So what would an Epistemocrat probably do?

They draw a sharp line between predictions they can enjoy (football, cocktail parties, WhatsApp group debates) and predictions they refuse to act on (portfolio decisions). I suppose like normal people, they still have opinions. But they stop letting opinions that fall on the “unknowable” list touch their money.

Overconfidence attacks compounding from the outside, through unnecessary action. Exponential growth bias attacks it from the inside, by making you feel like nothing is happening so why bother staying invested. The long-term investor is fighting on two fronts at the same time. The epistemocrat’s toolkit — writing down what you don’t know, resisting the urge to act on noise, accepting that years will feel flat — is a defense system against both attacks at once.

That is why being an epistemocrat can maximise your chance of long term compounding. Not because you know more than Bob. But because you know what not to act on.

All of this starts with one shameless/ful admission: we don’t know some things about macro and about our own investments. And yet we invest anyway.

Simple in theory. Counter intuitive to wrap our head around. Very hard to practice over and over again.

I sure hope Substack can find the Live recording with Chris Angkasa last Thursday. There were more gems covered in the talks. Or we can do another one 🙂

References

In case you’re interested in reading the materials consulted in writing this article, below are the entry points:

1. Taleb, N. N. (2007). The Black Swan: The Impact of the Highly Improbable. Random House. Chapter 12: “Epistemocracy, a Dream.”

2. Tversky, A. & Kahneman, D. (1974). “Judgment under Uncertainty: Heuristics and Biases.” Science, Vol. 185, No. 4157, pp. 1124–1131. [The 1 × 2 × 3 × ... × 8 anchoring experiment.]

3. Wagenaar, W. A. & Sagaria, S. D. (1975). “Misperception of Exponential Growth.” Perception & Psychophysics, 18, pp. 416–422. [The foundational paper on exponential growth bias: two-thirds of subjects estimating below 10% of the actual value, immunity to instruction and professional experience.]

4. Stango, V. & Zinman, J. (2009). “Exponential Growth Bias and Household Finance.” The Journal of Finance, 64(6), pp. 2807–2849. [More-biased households borrow more, save less, and favor shorter maturities.]

5. JP Morgan Asset Management (2025). Analysis of S&P 500 Total Return Index, January 2005 – December 2024. Cited in: Megan, L. “Selling Out During the Market’s Worst Days Can Hurt You, Research Shows.” CNBC, April 7, 2025. https://www.cnbc.com/2025/04/07/selling-out-during-the-markets-worst-days-can-hurt-you-research.html

6. Recompound Live with Chris Angkasa. [Recording pending recovery from Substack.]

• Is Indonesia really at risk of being downgraded by MSCI

• What does it mean for your portfolio?

What we discuss include:

• Breaking down the fear vs the facts

• Explain how global index decisions work

• Why short-term headlines shouldn’t drive long-term investment choices

• The importance of entry price, valuation discipline, and staying focused on fundamentals rather than market noise

If you’ve been tracking market swings and wondering how structural decisions like MSCI classifications affect your long-term wealth building, this episode gives a clear, grounded perspective — complete with real-world examples and client questions answered in real time.

Even if you chance upon this long after the MSCI fiasco, the lessons learned are timeless. Adhering to these principles may help you weather through future storms in the equity market, and maybe even in life.

As always, this is not an investment advice on the mentioned ticker. This is for educational purposes only. Always do you own research or consult your investment advisor before making your own investment decisions.

Let’s get into this.

Part of my 2026 new year’s resolution was to get better at running. What better way for me to get better at running by forcing myself to join big running events, so that I could get my coveted 10K or HM Personal Best. One competition for me that stood out was JAKIM 2026. It looked legit as I recalled in the previous years where the competition was organised, there were plenty of road closures in Jakarta area, around the running event.

So when I saw in a running calendar event that JAKIM 2026 was open for registration, I speedily rushed to my phone and attempted to register. The registration process was awful. The instructions was vague and the website load was slow. The worst part? I have to download yet another banking app to register. So I downloaded Bale from BBTN, opened an account and… failed to register because tickets were sold out. I thought to myself, “wow running has been super popular nowadays in Jakarta” but again I thought to myself “wow this Bale app by BBTN must have gotten a lot of users from this running event” so let’s take a look at BBTN.

The app itself must be properly built because it handled large amounts of traffic quite smoothly. As people are forced to make a bank account and settle ticket payments there, I wonder how’s their Current Account / Savings Account ratio (CASA ratio). Banks love low cost funds because they are in the lending business. You’d want the cost of your funds to be low (giving people less interest) so that you can have higher spread when you lend the money out to people, giving you higher net interest margins. So if you hold super established running events and make participants bank with you as a pre-requisite to purchasing those tickets, you’d get access to cheap funds.

Quick note: CASA Ratio measures the proportion of current and savings accounts in a bank’s total deposits. Current accounts are low-cost funds (little to no interest paid), while time deposits are more expensive for banks. The higher the CASA Ratio, the cheaper the bank’s funding base — and generally, the better.

In marketing words, Running is top of funnel (TOFU) and as people get acquainted with the bank’s app and its usability, they get pushed down the funnel as they use the app more extensively for other banking services (like getting a mortgage).

So I went to look at the CASA ratio numbers since 2022 (the first time they held a JAKIM marathon was in 2023).

• Desember 2022: 48.5%

• Desember 2023: 53.7%

• Desember 2024: 54.1%

• December 2025: 48.7%

I’d say the CASA ratio growth is not too shabby, although I have seen better numbers in other banks. But given BBTN’s price to earning’s ratio about ~5 and BBTN’s price to book value which is about ~0.5, it might be interesting for me to go deeper because the bank is showing signs that it wants to stay relevant, but the market is rating it as if it is filled with super bad assets in a sunset industry. So it makes me curious as to what is BBTN’s main business. Why market seems to be quite harsh on BBTN. I don’t think there will be a right or wrong answer to this, but it is fun to explore.

Investors are forward looking

We invest today not to get the returns immediately. There is usually an underlying thesis why the company we invest today will be more valuable tomorrow. We’d be more inclined to invest if the company is poised to grow. So what are the growth drivers for BBTN?

Well, BBTN is a specialised bank that is focused on mortgages. So it really is more of like a property business but with a much faster sales cycle (you don’t have to wait for developers to build and handover to their customer for you to acknowledge sales in your books), the moment a customer takes in a mortgage, the bank gets revenue (remember, you pay the bank an interest if you take mortgages!!). For BBTN’s case, the moment a real estate developer develops their houses, they also get revenue. So they get revenue from both property buyer and real estate developer. But it also has its downside where property developer would get their money as soon as there is a buyer, BBTN has to deal with the uncertainty of home buyers defaulting on their mortgages. Then they are left with illiquid real estate assets.

But what type of property is BBTN focusing on? Affordable housing.

The core portfolio is split between subsidized (FLPP) and non-subsidized mortgages, with the former representing approximately 64% of the total loan book as of 9M25.

Who’s buying the houses? Well we have seen that millennials represent ~79% of the subsidized customer base. This demographic focus typically results in higher Loan-to-Value (LTV) stability and long-term customer retention. But because this is subsidized housing, it follows that not everyone (especially the bourgeoisies) can participate. Your monthly income cannot exceed a certain threshold, otherwise you will have to pay non-subsidised interest on your mortages. But if you do qualify, interest is super attractive and your likelihood to default is also minimised. More encouragingly, the income cap to qualify for FLPP has been raised.

FLPP Income Eligibility Criteria (Updated April 2025)

This tells us that the number of people who can qualify for this loans would also increase. Which translates to better quality loan books for the bank.

Cool, now that the bank potentially will have access to more quality borrowers qualifying for FLPP program, does the bank has enough liquidity to make the loan? Well yes, we can see that the deposit growth is outpacing loan growth. You might think is it because the Finance Minister Purbaya who placed Rp 25 Trillion into the bank? You are correct, but even if we exclude the massive government fund placement, the core deposit growth still stood at a very healthy 9.2% year on year (up to 10.0% in specific institutional/retail metrics).

So it looks like it is going to be very good for shareholders isn’t it? On the cost side we are seeing that macroeconomic factors are giving that extra “ooomph” for the bank to grow. For example, Bank Indonesia lowered its policy rate to 4.75% in Q3 2025.

On the revenue side, we are also seeing the FLPP program growing from the government’s 3 million housing program for millennials who by the way makes up a growing chunk of the population (Indonesia is experiencing a bonus demography).

Since 2015 (back then it was still one million house), BBTN is the dominant contributor to these national figures, consistently contributing ~60% of the national housing realization annually through both demand-side financing (Subsidized Mortgages/KPR) and supply-side financing (Construction Loans for developers)

According to BBTN’s sustainability data, the national achievement of the program per year is as follows:

• 2015: 699,770 units

• 2016: 805,169 units

• 2017: 904,758 units

• 2018: 1,132,621 units

• 2019: 1,257,852 units

• 2020: 965,217 units

• 2021: 632,373 units

• 2022: 875,832 units

• 2023: 878,727 units

Rest assured, BBTN is highly specialised in supporting government programs like this and supporting FLPP would require expertise in cashflow management. Which means it is likely that it will be more and more favoured vehicle to realise the government’s program into the future (2026 and so on). Now we could see that the narrative is there and the case for increase of profitability from higher net interest margin is also there.

But what’s with the market valuing the company as if the company is in a sunset industry? Are investors in IDX crypto bros who believe that blockchain and DeFi will make banks a dinosaur? Jokes aside, let’s try to find out more about potential setbacks that BBTN is facing.

So what are the setbacks

Well COVID. If you noticed during COVID years the number of units that got constructed above took a dip. But more important than that, it is reasonable to believe that COVID would affect the quality of mortgages because many people lost their jobs during that time of lock downs and ceasing of business operations.

During COVID, Bank Indonesia allowed banks to "restructure" loans. This meant a loan could be "non-paying" but still classified as "performing" on the balance sheet. This allows a company to keep booking "accrued interest" as profit even if the customer hasn't paid a single Rupiah in cash.

We see this clearly when we compared accounting profits and actual cash generation. Accounting profits was relatively stable at Rp 1.6 Trillion (ignoring the anomaly in 2019). But Cash receipts dropped from Rp 3.4 Trillion in 2019 to 1.8 Trillion in 2020. So this is already telling me that the bank was hit by a double-whammy: a collapse in new loans (seen in the construction dip) and a deterioration of the existing loan book because of COVID.

If I were in the CEO’s seat, my first priority would be to clean up the balance sheet. Bad assets should be dealt with decisively so they don’t become a structural drag on profitability for years. When Pahala N. Mansury handed over to Nixon L. P. Napitupulu, who assumed the role of Acting CEO in February 2021, the signals suggest that this is precisely what management began to focus on.

One area that reflects this effort is the Loan at Risk (LAR) coverage ratio.

A loan categorized as “at risk” (LAR) has elevated probability of becoming a Non-Performing Loan (NPL), so prudent management would increase provisions to cushion against that possibility.

Historically, throughout the 2010s, LAR coverage hovered around ~15%. Since Mr. Nixon’s appointment, it has been raised to the 19–21% range. Directionally, this is the right move — it signals greater conservatism.

However, as outside investors, we do not know whether this level of coverage is sufficient. Asset quality risk is dynamic, not static. If underlying borrower stress resurfaces, or if post-restructuring performance deteriorates, LAR coverage may need to be increased again. That would come with consequences: higher provisioning, lower near-term earnings, and potentially weaker returns on equity.

In other words, while management appears to be acting prudently, there remains uncertainty around whether current reserves are adequate for the true embedded risk in the loan book. Until that uncertainty clears, the market is unlikely to assign a premium valuation — and as investors, we must acknowledge that limitation.

For now, there seems to be quite a number of puzzle pieces that remain unresolved:

• Is the management going to be able to continue executing the program 3 juta rumah well? Is the management going to steer clear from the non-subsidized mortgages (which is known to be taking a hit nowadays due to recent layoffs)?

• Has the COVID asset quality deterioration been handled well?

• Is the management going to be able to be less reliant on time deposits as source of funds? It is heading towards that direction with the running events, Bale, and corporate initiatives but we need to see a stronger signal while there are other banks are already showing more sexy CASA numbers.

If you are an investor, how would you value this kind of company? Do you think it has enough margin of safety? Multiples wise its cheap but it feels less firm because a number of things could go wrong although the tailwind is right in front of our eyes. Especially given the fact that we are seeing signs that management has been doing the right thing. Do they deserve to be appreciated better? Or no? But regardless, we haven’t made ourselves comfortable in building a position.

Sunday is a family day.

My parents are 60 years old and getting older by the day. My dad suffered a mini illness recently, which has made Sunday an even more sacred day to dedicate time for my family. We’d go “hunting” for new coffeeshops or Kopitiam that just opened in Jakarta and my Mom always has a new place in mind (Instagram victim) that inevitably offers a more attractive place to hangout and drink coffee on a Sunday. And let’s not forget that peanut butter toast with butter (extra emphasis with the butter). Please don’t tell me you have not tried that one yet, although make sure you get your exercise down too.

But obviously with every Chindo (Chinese Indonesian) family, lunch is never just a family lunch for us to chitchat happily about life and spend quality time. It is also a war zone.

The children (in other words me and my siblings) need to fight a psychological battle with my Dad in two crucial battle fields:

• Number one, who made better progress in their business (i.e. making money). How much is your revenue this month? Why does it sound low?

• Number two, who sounds more intelligent in their knowledge about geopolitics or macroeconomics. Hey, I bet that the invasion of country X to country Y is going to cause the oil prices to rally. I managed to sell put options and make a profit from the premiums!

• [Optional - sometimes discussed] Who lives a healthier lifestyle, day to day.

Boy, it is a brutal battle. And usually a losing one.

Especially for me because I run Recompound. You might be thinking, hey isn’t Recompound a good business? Well yes, but not a good one to brag to your Chindo Dad. Let me explain.

The fee structure with customers we handle is on a monthly basis. So if there’s no fee that we charge, because our customers’ portfolio don’t surpass previous all time high, there’s literally nothing to brag about. Not that I brag about our performance to people, which you will find out why later.

Furthermore, we don’t look at macro. If you are a potential customer who are hoping to get macro analysis to predict movements of the market, we will surely disappoint. So don’t come to us if you are looking for macro analysis cause-effect → prediction. Find someone else.

The last banger is that the way we do investing is hyper boring. No promises, no hype, no multibagger rallies. Just investing in earnest businesses with good quality management and healthy cashflow. Helping people hold for the long term. We lost against the index in 2025 as our performance was about 18%.

I mean, who in the right mind would brag about 18% returns to their friends over coffee? 😂 The brags I hear on coffee shops nowadays is 50% profits, minimum.

So during these psychological wars vs my Dad, I’d often stay silent. I’ll be vague about how the business is going. I will also just nod my head about money flows from US to Japan to Gold to Bitcoin and to my pocket. Not because I am an obedient son, but really because I have no idea about the development of geopolitics and international macroeconomics, unless it is a key business variables for the companies we look into. I do not want to pretend to know. Let alone make predictions out of it.

So what’s the emotion that usually come about during these conversation to me?

Well, to be frank, I’d feel that “I am not good enough”.

Now you might be thinking, but you have achieved this and that and yes I am very proud of the achievements that we have managed to earn thus far.

But feelings of being “not good enough” is as real as it gets. Feelings of fear when markets crash after the recent foreign selloffs or after seeing a long post about how the future of the country is bleak is real. Feelings of greed when everything seems up, like there’s no way that your investments are going to suffer from drawdown or there’s no way that target price is not going to get hit, such that you want to topup with more funds — is also very real.

These feelings from my experience almost cannot be controlled or suppressed. They surface whenever they want to. They never ask for permission to appear because we are only human from the way our brain is structured.

But the odd thing is that I keep doing what I do. Even when I feel that “I am not good enough” every weekend during this psychological war. Why?

Because it turns out, by investing in stocks in a conservative way, we get two things in return:

One, our customers’ and my ability to focus on our craft. Our customers are as sharp as a knife when it comes to looking our investment thesis document. They question fair payback period, industry assumptions and diligence that is done on the companies. But, once those are done, they get to focus on their work and career accordingly.

Two, we get to experience lucky breaks, during which we always practise gratitude. From day 1, we’d want our customers to have as low of an expectation as possible. Our team expects very minimal returns from capital appreciation. We carefully assess the quality of company earnings and likelihood of dividend yield. The buying opportunities become a conservative bet to get good earnings via higher dividend yields.

So when companies get appreciated through things that we don’t expect — buybacks, tender offer, or we don’t know, other people noticing how good and cheap the companies really are — we get to practice gratitude.

So yeah, not everything is about returns although returns is a very important component. But the manner in which the returns are produced turns out to be very important for these high achieving individuals.

But I suppose my experience running this thing called Recompound has made me realise that I am most proud of doing what I do because our customers can continue focus on building their career, giving value to other people through their businesses and developing their craft. I realise that feeling of being a “not good enough” son is a potent fuel to push me into action. Even though I may never be good enough of a son, I think my actions and intention allow me to say that “I am good enough” of a person 🙂

Now get your grenades ready.

I used to think Howard Marks was being a bit too simple, maybe even a little naive.

In his famous memos and talks, he often hammers home points like:

• “Macro-forecasting is not critical to good investing”

• “Disavowal of market timing”.

I thought:

Really? In a market as volatile as Indonesia, you’re just going to ignore the macro and not try to time the entry / exits?

Then, the last week of January 2026 happened.

The 2026 MSCI Fiasco: A Reality Check

The recent IHSG crash was a brutal wake-up call for many.

After the election of Thomas Djiwandono as Deputy Governor of BI, the market didn’t just stumble—it went into a full-blown “trading halt” as over-inflated “Konglo” narrative stocks melted down. The fear was real: rumors swirled that Indonesia could be downgraded to a Frontier Market, a move that would have a catastrophic domino effect on our fixed-income & currency markets as well.

Many social media influencers were still shouting “Bull Cycle!” just days before the crash.

Their logic? Indonesia’s weighting in the MSCI is only about 1.25%, so global institutions wouldn’t bother being dumped by us.

They were dead wrong. The institutions did care. The bubble didn’t just leak; it popped. Overnight, reforms were swept in, and leadership at the OJK and BEI were replaced as the government scrambled to fix the coordinated trading activities and “gorengan” actions that led to this mess.

The Report That Saw the “Pucuk”

Just six days before the crash, on January 22, we released our Recompound Monthly Report to our clients:

Excerpt of our January 2026 report to clients

Within the report, we said that we didn’t have a crystal ball.

We didn’t know the MSCI fiasco would happen exactly on January 28.

But we did see the “late-cycle” signals that Howard Marks warns about:

• Retail Participation: Share of Average Daily Trading Value (ADTV) was back at the “mania” levels of 2021.

• Narrative Chasing: Money was crowding into “Konglo” stocks where price action was driven by stories and momentum rather than actual earnings power.

• Public Euphoria: Google search interest for “saham” was printing fresh highs—a classic sign that we were super close to the “Pucuk” (peak).

  

Risk Control, Not Market Timing

When the crash hit, the IHSG dropped over 9% in a matter of days. But our portfolio’s drawdown is minimum:

This wasn’t because we “timed the market” and moved to cash at the perfect second.

It’s because we followed the Oaktree philosophy: The primacy of risk control.

We didn’t just buy “good assets” (read: stocks); we bought them well.

1. Earnings-Backed Stocks: Our holdings are positioned as cash-producing assets with high dividend yields (~9% p.a.). Dividends reduce your reliance on price momentum. When the “narrative” dies, the cash flow keeps you afloat.

2. Margin of Safety: We stayed disciplined. Even when names looked attractive, we stayed on the watchlist if the “margin of safety” was too thin.

3. Avoiding the Crowd: While retail was rushing into the trendy tickers (I won’t name names here, but it should be obvious to you), we were researching companies with stabilizing earnings quality in the real economy.

Buying Well is Your Only Protection

Who could have timed this pop beforehand?

Honestly, no idea. But you don’t need to time the pop if you aren’t holding the balloon.

As we wrote in our report: “Be a student of history, not the victim of history”.

If you buy assets with a wide Margin of Safety and strong cash flows, a broad market correction becomes an opportunity, not a thesis break.

Success in investing isn’t about being the smartest person in the room who predicts the crash. It’s about being the most disciplined person in the room who buys well enough that the crash doesn’t matter.

Note from Toby: this week’s post is a guest post by a hyper intelligent human from University of Cambridge, Shania Mustika. If you find it interesting, do leave a comment!

My friend and I are co-authoring a paper on the spread and death of conventions.

Our question is as such:

What determines the fate of the conventions of a minority group — whether they are abandoned, persist in isolation, or spread to the wider population?

Putting it into concrete life context, here are some examples.

My partner used to like eating out and not like exercising. But because we got into a relationship, he has to spend a lot of time with me. We once went on a vacation with my two other siblings. So there were 3 people from my family — all of whom like to eat home-cooked food and think of going to the gym as part of vacation activity. By the time the vacation ended, the first thing my partner did was to sign up for gym membership and drew up a meal-prep plan.

Here is another example. My older brother is an avid diver. When he started diving 7 years ago, he liked to show off pictures of sea creatures he took, which at the time meant little to me. Who cares about tiny little worms among seafans which you have to squint and spend a good 5 minutes to spot while keeping yourself still and careful not to destroy the corals (the little worms are called nudibranch, if you are curious). But he kept going on and on about his diving trips, kept spamming our family groups with pictures, kept talking about the glorious sharks and mantas and barracudas… Until I felt envious. I decided to give this diving thing a try and now we have an annual diving crew made up of a clan leader (my brother) and 5 followers (me being one of them).

The two examples show how minority culture dies and spreads. The first shows how my partner is a minority among our group and his convention gets abandoned. The second shows how my brother is a minority and his convention gets adopted into the mainstream.

Some math and economics

So my friend and I decided to write this example into mathematical language (maybe because we don’t have anything better to do).

We model this interaction into a game played by individuals. The game is described as follows:

• A person can belong to either a majority or a minority group.

• Each group has their own preferred action. For example, majority prefers action A (going to the gym) and minority prefers action B (not going to the gym).

• Individuals from each group will only be able to interact with each other and get positive payoff if they choose the same action. So if there are two people Alice and Bob, they will only get positive payoff if they both choose A or they both choose B.

• If a majority/minority individual compromises and chooses his non-preferred action, but is able to interact with another individual, he will also get positive payoff, but smaller than what he would get should he choose his preferred action.

• If you have a hard time understanding the set up, here is a concrete example. My partner belongs to the minority group and prefers not going to the gym. I belong to the majority group and want to go to the gym. If we choose our own preferred action, we are both unhappy as we cannot spend time with one another. If my partner compromises and joins us at the gym, I am very happy; he is also happy, but slightly less because he needs to expend energy. Conversely, if I compromise and skip the gym, my partner is happy (because we are likely to go get food at some cafe); I am less happy because I don’t get my brain-derived neurotrophic factor (BDNF, or the feel-good chemical one gets after exercising). Now back to math.

Now the payoff matrices below illustrate this interaction.

So now there is a trade-off. Suppose you are a minority individual. You can stick to doing B (not going to the gym), but that means you cannot interact with the rest of the people. If my partner chooses not to exercise, he might be happy because he doesn’t have to expend energy, but he will be left alone while all of us are at the gym (I promise going to the gym together with your friends has a high payoff. I.e. quite fun).

There are 3 possible outcomes of such interaction.

1. Everyone adopts the same action A (going to the gym). Call this All-A society.

2. Everyone adopts the same action B (not going to the gym). Call this All-B society.

3. Majority keeps its action A while minority keeps its action B, and they don’t interact with each other. Call this a segregation (S) society.

What is the outcome of such game? After some calculations on Nash equilibrium and selecting an equilibrium that is stochastically stable (I will not bore you with this), the result of this model is as such.

In human words: when the share of minority is small, the minority will choose to abandon its convention and adopt the majority convention. When the size of minority is intermediate, both outcomes are possible and we are not sure who will win. When the size of minority is large enough, there is enough people from the minority group to sustain its own conventions.

But minority cultures do spread

Yes, the results above almost mean that minority culture will never spread. But we do observe this in real life.

My brother was the only diver among my family, but managed to get everyone to spend our hard-earned money on diving gears.

You are in a WhatsApp group where 1 person started running and playing padel, but soon that becomes your go-to Sunday activities.

Sometimes bad practises can spread too. For instance you have a colleague who starts coming in slightly later to work. Slowly other people find it okay to come late too and soon people only start arriving at the office at 10/11am.

We think that this can be explained in two ways. First is minority premium. This means that the action of the minority is seen as superior, either because the action itself is superior, or because the minority group is seen as more elite that the rest of the people want to emulate.

The second way this can happen is if there is strong minority attachment. This happens when the minority is more attached to their own action and is more reluctant to change their action.

The result is a payoff matrix that looks slightly different.

Payoff matrices for minority premium case.

Payoff matrices for minority attachment case.

This leads to some changes to the resulting equilibrium. The results become:

When the size of a minority group is small, the minority will choose to abandon its convention and adopt the majority convention. When the size of minority is intermediate, segregation is the outcome (previously it could be A or B). When the size of minority is large enough, the majority will adopt the minority action (previously it was segregation).

The result seems to be in line with common sense. When the minority is very small, they may choose to adopt the majority action so that they can interact with more people. When the minority is mid-sized, each group is happy enough interacting within their own bubble. When the minority is large enough, the majority may want to emulate the minority because it elevates their own status, and this status elevation outweighs their discomfort in changing their behavior (in the case of minority premium). In the case of strong minority attachment, the majority may choose to compromise for the minority, since the latter is not willing to do so.

Below is a pictorial representation of the result.

The takeaway for you

We are always surrounded by people.

Sometimes we unknowingly get influenced by the people around us. If we are influenced positively, then that’s good for us. But if we get influenced negatively, then we want to be cognisant of that and think of how to change our environment to avoid being pulled down.

This also gets me thinking. Maybe the reason why influencers can be so powerful is because they are able to create a minority premium persona. We tend to admire those people because they have the physique that we want, they can go on business class flights, etc etc. We think of these attributes as enviable and therefore we adopt their behavior in hopes of becoming like them.

At the same time, this model may give you strategy to influence the people around you, in positive ways I hope. If you want to get your family to exercise, maybe show them examples of people they admire who also exercise. If you want your kids to sleep early, be headstrong enough to also sleep early (so that they don’t have anything fun to do in the evening) and do fun activities in the morning.

I hope you have fun reading this and do share with me your own experience navigating majority-minority conventions in the comment section!

P.S. If you are interested in reading the paper, with all the mathematical proofs, do leave a comment and I can share it with you when it is ready to be circulated :)

Everyone who wants to pick up a new skill will start out as a novice. I have yet to see a person picking up chess for the first time and be at the levels of Magnus or Hikaru. I also have yet to see a person who picks up football for a couple of months and suddenly be as good as Cristiano Ronaldo or Lionel Messi. It seems obvious enough for us to know that developing a skill takes time and effort in the world of chess and football. In other words, we don’t have to be good at football and chess to know that we suck at those sports (yes chess is a mental sport 😉).

But I am not sure if the same can be said about investing.

It seems to me that overwhelmingly many people are eager to declare that they are a great investor, especially during bullish times. Or at the very least, it seems that many people believe that achieving 25% is an easy thing after they buy a really expensive “investment course” that promises them 1,000% returns. The best justification for what I have heard for buying these investment courses is the following.

So if I pay Rp 10 juta for the course, I just need to make back Rp 10 juta from ONE successful trade.

Then, the rest of the trades’ profits are essentially 100% mine.

P.s. If you commit to this logical fallacy, that’s okay. Virtually everybody who buys expensive courses have a justification of that nature. Otherwise they won’t pay an absurdly expensive course.

In case you do not see the fallacy, you are assuming that carrying out ONE successful trade that covers your tuition fee ensures that you would have successful subsequent trades. But the subsequent successful trades are NOT guaranteed to be successful at all. Heck, you might lose the initial Rp 10 juta you received from the first trade and your entire investing capital if you are not careful.

Let’s use an analogy. If Magnus were to sell you a chess course for a suuuper expensive price and he says that “you will play like me”, you probably would be enticed and buy it. When you take the $10,000 chess masterclass course, he will share with you his secrets in understanding the chess game better. But after you learn his secrets, you realise that your chess did get better. You probably would learn how to play good openings principles. But still, when you go against better players, your lack of experience will cause you to make unforced errors (blunders) and cause you to lose your subsequent games.

To me, it is a no brainer that after you take a Magnus Carlsen course, you are likely to still be way worse than him at chess. Only when you put in the effort and time to be like him, then your ability would get closer to him.

Well this explanation, very much applies to investing… At this age of open information and technology, I think it is common knowledge that investing is also a skill, that needs to be honed and developed. You can buy the course to learn the skill, but you unfortunately cannot buy the skill. You have to practice it.

Setting up a premise: Let’s get back to investing. What does it mean to underperform?

But what then is being bad at investing? I mean in chess, you are bad if you keep blundering and losing your games. In investing, you are bad if you keep underperforming. But what is underperforming? Especially if many do not count floating loss as a loss and count realised profits as profits. If that’s the case, then everybody is good at investing. Which then means that no one really is.

Furthermore, much of investing unfortunately is not transparent. You cannot demand a person’s investments track record and measure it down to the T. Especially when the quest of this article is to figure out your friends’ investment performance. Such financial data is often private and sensitive.

Therefore, let’s get to the basics and define underperformance. You underperform if:

You hold on to your losers too long. You sell your winners too early.

Why do we set this definition as baseline?

We set it based on established knowledge known as The Disposition Effect that is well documented in academia. The Disposition Effect states that individuals become risk-seeking in the domain of losses. And the become risk-averse in the domain of gains.

It is important to note that this behaviour feels most natural to people.

For example, when you start playing chess, what feels natural is to blunder (forget that a piece is not protected when you make a move). In investing, the most natural tendency is to hold on to your unrealised losses and to trim your profits too early. As a matter of fact, a skill refers to your ability to overcome this natural tendency. The better you get in the said field, the better you are in overcoming this natural tendency.

What happens to a person during a floating profit

Research says Risk Aversion in Gains: In the domain of gains, the utility function is concave which causes investors to have the disposition to lock in profits early (selling winners) to secure the gain.

You can see from the figure above that the marginal utility for every $ gained, becomes smaller and smaller.

Imagine when you first bought a stock and that stock rallied 100%. That’s an awesome feeling. What Prospect Theory is saying is that:

• From 0 → 100%, the gains feel hyper amazing.

• From 100% → 200% feels amazing too, but less so compared to the initial 100% gain.

In other words, the 1st bagger might end up giving the same happy feeling as the next 200% leg up to your investments. Which is why, people tend to be more risk averse and tend to feel the urgency of taking of their profits early.

And what is the feeling that a person gets after realising their profits? Pride.

What happens to a person during a floating loss

Research says in the domain of losses, the function becomes convex. This convexity implies that individuals become risk-seeking when faced with losses. Rather than accepting a “paper loss” by selling a declining asset, an investor prefers to hold the stock—effectively engaging in a gamble with 50-50 odds of breaking even or losing an additional amount

You can see from the figure above that the marginal sensitivity for loss of every $, becomes smaller and smaller.

So let’s say that you bought a stock and it goes down by 10%. It feels super terrible.

• From 0 → -10% the loss is acute

• But from -10% → -20% the loss is less acute and more numbing.

• From -20% → -30% maybe it doesn’t feel anything anymore.

But that is why people have the natural tendency to ride their losses. Because the function is convex, if you are given the option:

• 100% chance you realise the -10% loss OR

• 50% chance you realise -20% loss and 50% chance you realise 0 loss

You will take the second option. Because 10% loss for certain feels more painful than the 50-50 chance of 20% loss and no loss. Although, the expected value is the same: -10%.

Intuitively speaking, people operate in wanting to minimize this very feeling of regret. Which is the negative counterpart of pride.

So What

So the natural tendency of an inexperienced investor is as follows:

• In the case of profits, they want to seek pride as quickly as possible

• In the case of losses, they want to proooloooongg regret as much as possible.

The more you conform to this natural tendency, the worse your investment performance. Also interestingly enough, when you conform to this natural tendency, your behaviour is often observable:

• In coffee shops with your friends

• In your office

• In family reunions

Conjecture:

The way people converse about their investments reveal information about this behaviour and therefore, allows inference about their investment performance.

Note this is Toby theory. I have not seen an academic paper discussing this because I am not an academic. But I will be very happy to see if there’s a paper that discusses this more formally.

Hopefully this makes sense.

Again, the logic is simple:

Well-documented cognitive biases shape how investors react to gains and losses.

Those reactions lead to systematic underperformance.

And the same reactions show up in how people talk about their investments.

Which means:

by observing how someone talks about investing, you can often infer how well—or how poorly—they’re likely performing.

Without further ado, let’s go to the behaviours that allows you to infer your friends’ investment performance :)

Behaviour Symptom of Investment Underperformance #1: Boasting that one successful trade during family dinners or friends gathering

Pay attention to the way they boast it.

Do they simply quote a percentage gain?

Do they mention the size of the position relative to their total portfolio?

For example, if my dentist friend says:

“Hi Toby — I got 50% profit from stock A!”

I’d say congratulations. But I’d also form a reasonable belief that this investor is likely underperforming, for two reasons.

Number one, the are likely selling winners too early to secure pride. Boasting about gains is often less about returns and more about locking in pride.

As demonstrated in the previous section people’s natural tendency is to be more risk-averse in the domain of gains. Once a gain exists, the dominant impulse is not to maximize expected value, but to protect the emotional payoff of being right.

Essentially, selling early turns paper pride into realized pride.

This behaviour is observable because the investor highlights the gain before discussing its role in a long-term plan. The excitement isn’t really about compounding — it’s about getting validation from people around you. Which unfortunately in practice, this might mean:

• Premature profit-taking

• Truncated upside on the best ideas

• A portfolio where winners never get the chance to meaningfully drive returns

Over time, this can systematically drag performance.

Number two, talking about stocks individually signals mental accounting. Notice what’s missing in the statement “my stock A is up 50%”:

• There is no mention of position size, hence

• there is also no mention of impact of stock gain to overall portfolio performance

The stock is being evaluated in isolation, not as part of a portfolio, which is consistent with mental accounting.

Hersh Shefrin and Meir Statman describe mental accounting as the tendency for decision-makers to segregate gambles into separate mental accounts, rather than evaluating outcomes at the portfolio or total-wealth level.

When a stock is purchased, a new mental account is implicitly opened. Gains and losses are then tracked relative to the purchase price, creating a “scorecard” for that individual position.

So when an investor discusses stocks one-by-one — instead of contribution to total portfolio returns — they are verbally revealing this segmentation.

The problem is that:

• Portfolios outperform, not individual stocks

• If the size of the outperforming stocks is negligible to the overall size of the portfolio, then an investor should not be happy with merely a 50% increase. They should be demanding a 1,000% or a 10,000% increase for their investment bet. Hello Venture Capital.

Mental accounting breaks this integration, leading to sizing based on feelings, suboptimal profit taking times, and therefore poorer long-term outcomes.

Behaviour Symptom of Investment Underperformance #2: Getevenitis

Let’s say you are aware that your friend was super fired up about stock B and held it. Then you know that stock B plummets in value -50% since you last spoke with them. So you ask them with the intention to pique their take about the prospects of stock B

How’s your investments?

Then your friend would say:

Investment is fine. I’ll keep stock B for the time being. I believe it will go back up to my original buying price.

So essentially your friend is betting that stock B is going to double from this current price point. But hold on a sec, you can then ask your friend again:

What makes you think stock B is going to 2x from its current price?

If the answer is somewhere along the lines of:

• I am not sure

• My friend told me so

• My broker told me to just keep it

Then we are seeing a behaviour that is often referred to as “get-even-itis” — a condition that has brought more destruction on investment portfolios than almost anything else. Logic as follows:

• The original purchase price becomes a psychological anchor

• Returning to that price feels like “undoing the mistake”

• Selling below it feels like locking in failure

So instead of asking, “Is this the best use of my capital today?”, the investor asks, “Can I just get back to even in the unknown future?”

The tragedy is that positions don’t have to recover. They drift sideways, or worse, decline further — all while capital remains trapped. Although this sounds grim as it is not an ideal condition, we have written a systematic step by step to recover an investment portfolio.

But again, this psychological anchor and the reducing marginal pain of losing one more unit of investment, causes a risk seeking behavior. Essentially, you are willing to make an aggressive bet with your capital that stock B is going to double from today. Therefore, if you notice getevenitis, then you are likely having a conversation with an investor who’s underperforming.

Behaviour Symptom of Investment Underperformance #3: If only I knew this or that (Taugitumology)

Everyone can make predictions about the future. But everyone also doesn’t know what the future will be. Being an investor does not make you a soothsayer.

Being a good investor means that you can make calculated bets based on the information you have today about what the future is going to be. But it is impossible to be correct all the time. So if a conversation with your friend goes something like:

If only I knew Trump would strike Venezuela

If only I knew MSCI would reassess Indonesia’s free float visibility

If only I knew that silver price would go to $100

Well, what you’re hearing is not analysis. You’re hearing regret.

These are events that, by definition, could not have been known in advance without privileged access. And even if you somehow had an insider to Trump, you certainly wouldn’t have one to Xi Jinping — or every central bank, regulator, and commodity cartel in the world.

That’s simply how information works. Markets move not just on public data, but on decisions made behind closed doors.

What “if only I knew” actually signals

The phrase “if only I knew” is the verbal expression of regret aversion. Hersh Shefrin and Meir Statman define regret as the emotional pain that comes from realizing, after the fact, that a different decision would have led to a better outcome.

The problem is not that regret exists — everyone feels it. Yes, including me and Budi. I happen to sell my silver stack at a $38. Does regret come about? Yes, very much so. Buut the problem is over-attachment to it.

When an investor constantly evaluates outcomes in hindsight, two things usually follow:

1. Decisions become ex post, not ex ante

   Instead of asking, “Was this a good bet given the information at the time?”, they ask, “Why didn’t I predict the outcome?”

2. Process gets replaced by storytelling

   The portfolio is no longer governed by allocation rules, probabilities, or expected returns — but by emotionally charged narratives about missed events.

This is why “if only I knew” is often a sign that the investor does not have a clear investment process.

Which repeated overtime, would most likely cause underperformance. I have yet to see the very few lucky individuals who don’t have an investment process and can generate a stellar long term investment performance.

Ultimately, 99.9% of people are playing status games

Being seen as good at a skill that is associated with intelligence feels incredibly satisfying.

We admire people who are good at chess because chess is perceived as a proxy for intelligence. The admiration is immediate. Think about the legends of chess like Gary Kasparov, Magnus, Hikaru. You won’t think that they are not intelligent.

Well investing sits in the same category.

If you are perceived as “good at investing,” the reward is instant:

Admiration and validation of your intelligence.

And if you happen to guess correctly, the feedback is fast. People notice. They listen. They ask questions. Which becomes a quiet boost to your social status. You are seen as the intelligent one in the dinner table with plenty of opinion.

The irony

I believe that the behaviours that maximize short-term validation seem to be the same behaviours that has the potential to destroy long-term performance.

As a society, we are trained to reward displays of intelligence. So investors naturally gravitate toward:

• boasting about a single winning stock,

• highlighting recent gains,

• referencing dramatic events they “almost predicted.”

These make for good stories, but not a good sign for portfolio performance. Ironically, the investors who talk the most about being right are often signaling:

• pride-seeking over compounding,

• hindsight over process,

• emotion over discipline.

In other words, the conversation itself becomes a diagnostic tool of some sort.

Closing Remarks

All this, I am definitely not saying that the person who exhibits this behaviour is stupid. It means they are human. I exhibit these behaviours too. I myself have my own ego. I have made investing mistakes in the past and I am quite sure I will make them again in the future.

But all this while, at least I have learned that in investing, playing the status game can be expensive.

The skills that lead to admiration in conversations are not the same skills that lead to wealth accumulation over decades in the market.

So instead of focusing on the fleeting admiration I get on my dinner table, I’d like to remind myself to focus on the actual improvements to processes that would contribute to long term profitability.

Cheers.

Ooops

Before you go off for real. I want to hear from you. What do you think are the behaviours you commonly see at your dinner table, friend gathering, etc that potentially displays a person’s investment underperformance or superb performance?

I have a couple of ideas for the superb performance ones. People who are really really good at investing also exhibit a certain behavioural pattern that you could identify. Let me know your thoughts in the comments.

Leave a comment

Toby just released a blogpost talking about Recompound’s performance in 2025.

A tiny minority of our clients are concerned, we didn’t beat the index (IHSG) in a calendar year. We did 18% (roughly 14% after fees), while the index did 22%.

But honestly? I’m not concerned.

If you zoom out and look at the performance since we started in August 2022, the picture looks very different. Here is the track record of our very first client — who happens to be Toby’s own Aunt (shoutout to Tante!):

(Note: Performance varies depending on when a client joins, but this is the “OG” benchmark).

We are sitting at a 97% cumulative return vs the index’s 19%.

We are doing just fine.

The Parallel Multiverse

To explain why I’m not losing sleep over 2025, let’s look at a “Parallel Multiverse” version of Recompound.

In this universe, there’s a second version of us. Let’s look at their numbers:

Look at that 2025! They didn’t just beat the index; they basically 1.5x-ed their customers’ money in twelve months. Their cumulative return is also 97%—exactly the same as ours.

Most people would see that 146% and scream, “Sign me up!”

But here’s the reality: That second version of Recompound would have gone bankrupt in 2024. No client is going to stick around after watching their portfolio drop 13% one year and another 20% the next while the market is relatively flat. They would have fired us long before that “miracle” 2025 happened.

This goes back to our core philosophy:

Our objective is not to have the highest returns in a single year.

Our objective is consistency and, ultimately, peace of mind.

The Power of Being “Above Average”

There’s a famous memo by Howard Marks called Fewer Losers or More Winners.

In it, he tells a story about David Van Benschoten, who ran the General Mills pension fund.

For 14 years, the fund’s returns were never “top tier”—they usually ranked in the 2nd quartile (better than average, but not the best). But because they were consistently in that 2nd quartile and never had a “blow-up” year, where did they rank for the full 14-year period?

The top 4th percentile !!

As Marks says:

”Most investors aiming for top-decile performance eventually shoot themselves in the foot.

Why? Because when people blow up, they really blow up… but David never did.”

That’s why I’m not concerned.

By avoiding huge drawdowns and staying consistent, we provide something much rarer than a “hot year”:

We provide a portfolio you can actually sleep with (not in the way you’re thinking of).

The “McLaren” Trap

We know right from the start Recompound isn’t for the mass market.

Most people are easily distracted by short-term “outperformance.” They see social media influencers “flexing” sport cars and luxury lifestyles, claiming they made 500% in a week.

What these influencers don’t show you is their consistency (or lack thereof) and how many times their portfolio went to zero before they got that one lucky screenshot.

And more importantly, they don’t show you the “bracketed” reality.

In reality, the formula is more like:

1. Pay some exorbitant amount of tuition fee

2. [Do a crazy amount of work and spend years acquiring the taught skill]

3. Buy McLaren

Most of our clients have full-time jobs or run successful businesses.

They don’t have the time (or the desire) to do the “crazy amount of work” in those brackets. They want their money to grow steadily while they focus on their own lives.

Transparency is a Feature

The final reason our clients stay with us—some for three years now—is transparency.

We don’t hide when the market is tough. We stay in the trenches with them.

Every single client has their own dedicated WhatsApp group with us.

If they’re feeling nervous or need some “penguatan iman” during a market crash, we are right there to explain our conviction.

That trust isn’t built on flashy marketing; it’s built on 1-on-1 communication and being easily accessible just 1 WhatsApp away.

Let’s Conquer 2026

If you’re looking for a “get rich quick” scheme, we are not the right fit.

Our approach is built for a different kind of investor.

We are for those who value Consistency, Transparency, and Peace of Mind on their path to retirement.

This strategy is less about market noise and more about a foundational investing mindset. If you share this perspective, you might find value in an article we wrote on this exact topic: “The Right Mindset to Equity Investing.”

2025 was a solid year of building. We stayed the course and kept our clients’ portfolios healthy.

Now, let’s go and conquer 2026 together.

Get more from Toby Limanto in the Substack app

Available for iOS and Android

Get the app

Disclaimer

The performance figures presented in this article are provided for informational and educational purposes only. Past performance does not guarantee future results.

While we strive to ensure accuracy, the data shown may contain minor inaccuracies due to rounding differences, timing differences, or variations arising from trade confirmation documents.

This content does not constitute financial advice, investment recommendations, or an offer or solicitation to buy or sell any securities. Investment decisions should be made based on your own financial circumstances, objectives, and risk tolerance, and—where appropriate—in consultation with a licensed financial advisor.

It’s that time of the year again, although we are a bit late this year due to some travelling and time off from work. The close 2nd order of priority is to shave down excess weight accumulated during the holiday period. But 1st order of priority is, you’ve guessed it, review our own performance. Mostly for our own evaluation so that we can do better, but also to satisfy the curiosity of some (kaypoh) clients.

In the last 2025 meeting with our investors in December 2025, our investor made a remark that truthfully made me slightly sad.

Seems that the growth in 2025 is a bit slow ya

Even after the call ended, that remark kept ringing in my head. I had mixed feelings about all this, which I don’t really know exactly how to describe. On one hand, our books were in the green. But it still fell short of the 10x expectation that a freshly injected start-up has to bear.

Rather than wallowing in sadness or trying to comfort myself by telling myself that “at least we grow”, I think what is most helpful is to evaluate objectively what happened, what went well, and what fell short of our own expectations.

So here comes the juicy part.

Soft New Customer Acquisition

The number of new clients in 2025 was rather muted, especially in the first half of 2025. If you look at the chart on the right, we get 50% of our clients within the first year of our operations in 2023. In 2024, we acquire about 30% of all our existing clients. In 2025, we only acquired 20%.

The first half of 2025 was rather brutal for us. If you recall in your not so distant memory (although perhaps it’s better that you don’t keep in your memory anymore), it was the period where Trump announces trade wars with China, the times where Indonesia’s youths saw the country as dark and hopeless, and the era where companies with real business and solid financials were deemed repulsive. Capital market participants way prefer companies with narrative plays.

We would actually count ourselves as extremely lucky to still be able to acquire that 20% of customers. So thank you to all those who still chose to join us despite all the signals to do otherwise.

What about churned clients?

So far, out of all clients who signed up, 26% ended up leaving us.

Among those who churned, the median length they stay with us is 319 days or about 10 months. The average length is 351 days or close to 12 months.

There are some common reasons people leave us. One of the main ones is needing extra cash for their life circumstances, such as capital expenditure for their new business ventures, house renovation, wedding expenses, big ticket items, etc etc. When clients leave us for these reasons, usually we are extremely happy for them because most of the time, they leave with positive growth in their portfolio. This makes us happy because we feel that have done them right, playing a small role in giving them additional funds for their life milestones. We are altruistic in some sense, but I suppose we are ultimately self-interested, because we feel good when others feel good.

The second biggest reason is usually feeling dissatisfied with the slow and boring growth of their portfolio. And we cannot blame them for feeling so. Usually, our clients’ portfolio will take some time to show significant price movement. For 80% of the time, their portfolio will look like a straight horizontal line. Meanwhile, if these people are active on social media or on trading groups, they will see their friends bragging multibagger returns of 100, 500, or even 1000%. Some will inevitably boil with the envy of those who flex their rolexes and lambos. And so they leave us in the pursuit of these rolexes and lambos, both of which Toby and Budi have yet to have.

Committed fund growth

Despite the slow client growth, 2025 has taught us an important lesson. When market is pessimistic and fearful, there lies opportunity. We are very fortunate that our existing clients know not to be fearful when the market seems gloom and doom. Rather, they inject more capital. Kudos to them really for having a steel and contrarian mentality. We are even more honoured to serve those who stick around and had the courage to believe in us in difficult times.

The first half of 2025 saw our clients topping up the most. This is a good practise that we hope to keep.

Be fearful when others are greedy. Be greedy when others are fearful.

Special Client Shoutout

I have to give a special shout out to our scariest client CS (or ChaoS, if you remember from our previous blogpost) also known as the VVIP Client (yes, the title belongs to you sir). On top of being awarded the most chatty and demanding client, he also won the award of the largest number of topups, at 91 top ups over the course of his 959 days with us. This means that he topups almost every 10 days. I know this guy is crazy, but I did not know that he is this crazy.

Performance

Since our inception in January 2023 until December 2025, 91% of our clients’ portfolio are in the green, while 9% are still in the red.

Although fast forward to today (as this blogpost is posted), I am happy to say that 100% of our customers are in the green, including those who just joined most recently. Yep, thanks to unexpectedly large interim dividends from companies that we invest in 🙂 We keep boxplots like below to keep track of our customers’ performance by cohort since their join date. Oh and it is updated live too at our landing page. We think that this type of performance chart is superior to the simple line chart that most funds use.

Why? Because our income largely relies on each and every one of our customer’s performance. So we are not interested in “aggregated returns” if on average, our customers are not making money. Also, 1 customer not performing to us is 1 customer too many. We want all of our customers to profitable for as long as possible, not because we are saints, but because we are self-interested. We want our customers to be grow their portfolio again and again so that we can be earn again and again.

Our profits come from yours.

Furthermore, the chart above tells us a really important information. It manages expectation of our prospect customers because it most likely would be sucky if a customer only has been active for a month. But on the flip side, the longer the customer wait, by and large would give larger and larger returns. Again, we are self-interested: we want our customers to recompound their wealth so that we can recompound our profits (very much pun intended).

Did we beat the index?

Actually in 2025, we did not beat the index. Boohoo.

Despite the crazy saga that happened to Indonesia in early 2025, IHSG grew by a whopping 22.1% in 2025! Even more difficult was the driver of growth happens to be stocks with narrative plays, having large market caps that are beyond our risk appetite. I.e. fundamentals do not match the prices that these companies were trading at. So we sat the narrative stocks rally out.

But does it matter though? Nope, because our performance was about 17.5% in 2025. Not stellar, but pretty decent. To us, all that matter is consistent performance rather than beating the index. If one year the index is -10%, we won’t be happy beating the index with a -9% performance. We’d be a happy with a +10% performance. Although that probably would be a super hard year.

Closing Remarks

What’s up on 2026? Well, we have written about that. In a nutshell, it contains our thoughts on Artificial Intelligence and how our investments are uniquely positioned to capture its growth. If you are curious, you can always read it here. I promise you it is interesting 🙂

If you’ve been watching the IHSG lately, you’ve probably felt the FOMO.

You’ve seen the charts of certain IDX conglomerate stocks defying gravity, moving in vertical lines that make physics blush.

The common chatter in Jakarta coffee shops goes something like this: “Ah, this is just the Indonesian market being shallow. It’s a ‘bandar’ game. This doesn’t happen in sophisticated markets like the US”

To that, we say: Hell no.

If you want to describe the phenomenon into a single flowchart, this is what is essentially happening.

From the flowchart above, it is quite clear that “Konglo stocks” can be replaced with any other stocks such as digital bank stocks, sub-prime mortgages, etc.

Money flow guru can also be replaced by other gurus that pertains to the assets that are pumping. Retail can be replaced by anything that is essentially “dumb money”. People who buy stocks without a rational investment thesis.

So clearly this is not an “Indonesia problem”. It’s a human nature problem. We have seen it again and again in multiple different context that it really gets quite boring. And if you are reading this blogpost, hopefully you would “get” it and take the necessary caution.

As one investor Tiho Brkan noted, successful long term investing is the intersection of three disciplines: Philosophy, History, and Psychology.

If you want to understand why Recompound is sitting this one out, we have to look at all three.

1. HISTORY: The “Base Rates” of the 1960s

Read more

When I introduce myself to strangers at a dinner party in Jakarta and mention that I work as an investment advisor, I usually get a very specific reaction.

They nod knowingly and assume my life is a high-octane montage of staring at flickering stock tickers, obsessing over price charts, and frantically watching red and green candles form on six different monitors, 24/7.

But here is the boring (or perhaps, exciting) truth: contrary to popular belief, we rarely look at candle charts during market hours. In fact, we sometimes barely look at the stock price at all.

As a matter of fact, Toby sometimes get confused as to when are the holidays and the opening hours of the market. Because to be completely frank, he could not be bothered looking at the intraday movement of the stock price.

We Buy Businesses, Not Tickers

At Recompound, when we invest in stocks—even the public ones listed on the IDX—we view it as buying a piece of a business. Naturally, this means the current stock price is less interesting to us than the value behind it. We care about the price only relative to the company’s ability to produce future earnings.

Instead of asking “where will the chart go next?”, we spend our days asking:

• How does this business actually make money?

• What new developments are shifting the tectonic plates of their sector?

• Is the management prudent with their capital allocation?

We recently deep-dived into this philosophy in our Investing Manifesto (go take a look if you haven’t yet!).

So, if I’m not staring at charts, what does a “day in the life” actually look like?

The Closed-Door Meeting

Recently, it looked like sitting in a meeting room with the management of GMF AeroAsia (GMFI)—kudos to our friends at Stockbit for the opportunity.

For context, GMFI is currently navigating a significant turnaround. Due to the pandemic, the company has been operating with a capital deficiency (negative equity).

To fix this, they are executing a Rights Issue (PMHMETD II) where Injourney Airports (PT Angkasa Pura Indonesia) will inject capital via an “inbreng” of land assets worth roughly IDR 5.66 trillion.

The goal on paper is simple: turn the equity positive so the company can improve its financial standing and eventually distribute dividends again. But during the discussion, we uncovered a much deeper insight that you won’t find on a candlestick chart.

We learned about the shifting landscape of State-Owned Enterprises (BUMN) under the new Danantara agency.

The Engine Under the Hood: DAM vs. DIM

We know that Danantara is divided into two distinct arms with very specific mandates to drive national growth:

• DAM (Danantara Asset Management): Its job is to manage the existing portfolio of BUMNs. The mandate here is ruthless efficiency—streamlining the structure (e.g., consolidating 1,000 entities into 200) and optimizing assets to maximize dividend payments.

• DIM (Danantara Investment Management): Its job is to take those cash flows and reinvest them into new, strategic national projects for future growth.

This creates a powerful, self-reinforcing incentive loop.

DAM has every incentive to force its BUMNs to be profitable to fuel DIM’s investments.

Not Just “Omon-Omon”

You might be thinking, “This sounds good on paper, but is it just omon-omon (empty talk)?”

According to Andi Fahrurrozi, the Director of GMFI, this shift is real and proven firsthand.

He shared a candid story that highlights the difference: This Rights Issue scheme involving the asset inbreng wasn’t a new idea; GMFI had actually been trying to execute this since 2023.

Back then, however, they hit a brick wall. For those newer to stock investing, Rights Issue is a corporate action, that is inorganic, partially as a solution to add equity to the company (note that the company’s operating with a negative equity). Now because it is a state owned enterprise, management of the company would face a number of blockers that are usually not faced by a normal non-state owned company.

Number one is bureaucracy.

You might think that if you have a state-owned enterprise wanting to do a corporate action like rights issue, you would require the approval from the ministry of State Owned Enterprise. Well, it turns out, back in 2023, they also had to get the approval from DPR (House of Representative) due to the complex ownership structures. Which ultimately failed.

Fast forward to today: under the Danantara framework, what was once an impossible bureaucratic climb became a super-quick execution. Because both entities now sit under the same “parent,” the transaction didn’t need to jump through the old political hoops. It became a streamlined process of moving assets from the left pocket to the right pocket to unlock value.

This proved to us that the “Danantara Effect” is not just a slogan—it is already actively de-bottlenecking the state’s most sluggish assets.

Your Edge vs. “The Sudirman Boys”

This brings me back to you.

At Recompound, we serve hundreds of clients who are high-performing professionals across various industries. Believe it or not, your edge is often much sharper than that of the professional fund managers sitting in high-rises on Sudirman Street.

Why? Because the big institutional firms often cannot—or will not—invest in smaller-cap companies that haven’t yet hit their radar.

Furthermore, the “Sudirman boys” often flex their expensive Bloomberg Terminals, assuming that a $24,000-a-year subscription gives them an insurmountable advantage.

But here is the funny story: no amount of satellite data or premium news feeds can beat info lapangan (first-hand, on-the-ground intel).

While they are looking at spreadsheets and terminal screens, you are looking at the reality of your industry.

You know the supply chain bottlenecks before they show up in a quarterly report. You know which competitors are cutting corners and which are truly innovating. You understand your sector’s business process end-to-end.

That is a proprietary advantage that no machine can replicate.

So, if you have a unique business insight based on your professional experience—whether it’s a shift in consumer behavior or a new regulation impacting your field—don’t be shy. Please share it with us in your WhatsApp group!

We are always happy to learn from you, because at the end of the day, the best investment insights don’t come from a terminal; they come from the people building the businesses.

⚠️ Important Disclaimer: We Are NOT Telling You to Buy GMFI

Before you rush to your broker app, please pause. While the turnaround story is fascinating, we are not insinuating that you should buy GMFI stock right now. There are still significant uncertainties and risks that need to be resolved before the company becomes an investment-grade dividend payer:

1. Retained Earnings are Still Negative: Even after the Rights Issue improves the equity, the company still holds a massive deficit in retained earnings. By our calculations, it would take approximately 15 years of organic earnings just to clear this deficit and turn it positive.

2. Dividends are Far Away: By law, a company cannot pay dividends while its retained earnings are negative. Unless there are further inorganic corporate actions (like a Quasi Reorganization) to wipe this slate clean faster, shareholders will be waiting a very long time for cash returns.

3. Execution Risk: The “Quasi Reorganization” path is complex and requires further regulatory and shareholder approvals. Until those are concrete, the timeline remains speculative.

Based on the risks that we have identified earlier, you might be questioning “Why are we playing it safe?” It might be the case that there will be significant upward price movements tomorrow, no?

Well, we believe that playing it safe, at least in the stock market, is the single most important attribute that allows compounding to do the heavy lifting over time.

We wrote a separate piece explaining what “playing it safe” actually means in practice—and why most investors misunderstand it entirely.

If you’re curious, you may find it worth reading.

{Read why we play it safe}

P.S. There is another BUMN with much less execution risk compared to GMFI, is still largely unnoticed by the market, its existing business valuation is already cheap and we are currently actively studying it. It has the potential to benefit even more from this Danantara restructuring wave, with much lower risk compared to GMFI.

Visit core.recompound.id to learn more.

2025 is a crazy year filled with turmoil and sagas. Not only the events that you and I would hear on the news, but it is a year full of transition. Amongst many, is my older brother. He’s one of the few inspiring figures for me growing up. Primarily with his stellar academic achievements, obtaining full ride scholarships to Singapore and then to the US for university.

But now, he is going through the trenches of his entrepreneurship journey and starting his own business. For the first time since forever, I would see a car at the porch of the office when I arrive in the mornings.

No, not because Budi comes earlier to the office than me :) but because my brother is already there, getting to the office earlier than me.

I have also seen him setting up social media, website, kitchen, inventory, and many more that reminded me of the suuper beginning early days of Recompound (although Recompound is still early as this post was built). It is hard. Not hard because the tasks are inherently hard, but mainly because of the number of decisions, the uncertainty, and the persistence needed to go through failures when setting up a business.

I am grateful that I am in a unique position who’s actively building a business for people like my brother (yes he’s a client). Budi and I also happen to look at businesses actively, how they are run, how they operate, how they grow and develop moat as part as the core product we offer.

So I’d like to take this opportunity to share 25 lessons that I have learned in 2025. More of like a pep talk for my brother, which you could also access. I genuinely hope that you could use it as an opportunity to reflect on your 2025 (the data that you have) to allow you to be a better version of yourself in 2026.

Oh and I recorded myself on YouTube, explaining the points. So this post only contains the points. If any of those interest you, go on to the video to learn more.

Go to the video

To my brother, here are some lessons that I learned in 2025. I genuinely hope that you will find some (at least one) of them valuable:

1. Levels to this game

2. Intellectual honesty is hard

3. Value is action

4. Social media is not a popularity contest

5. Investments is a lot more broad than you think

6. Logic is limited

7. Language is also limited

8. Quality is more important than quantity

9. But quantity is more important than quality

10. Financial freedom might be the wrong goal

11. Macroeconomics is BS (mostly)

12. Nothing is truly 0 risk

13. Possibility sells, probability confuses

14. In the 21st century, being smart is equals to being stupid

15. It is never about the achievement, it is about progress

16. Comparison with others is inevitable

17. Luck is a requirement

18. Proper system beats motivation

19. Knowledge is a commodity

20. Being a specialised generalist is important

21. People will not quit smoking because smoking kills

22. People quit smoking on their own accord

23. Being a non-conformist is tough

24. Work is invisible

25. It’s okay to set an absurdly crazy goal

Also to you our dearest reader, happy holidays, may you have an enjoyable time with your loved ones.

Most investment content focuses on what to buy.

At Recompound, we focus on how to think.

This manifesto sets out the core principles that shape our investment philosophy—especially for busy professionals who want long-term, rational outcomes without constant market involvement.

If you understand these ideas, you’ll understand how we invest.

1. Investing vs Speculating

Core idea

Investing is about owning productive businesses for long-term value creation.

Speculating is about predicting short-term price movements.

Most people believe they are investing. In reality, they are speculating—often without realising it.

Why it matters

Speculation amplifies emotional mistakes. Investing reduces decision frequency and behavioural risk.

2. Margin of Safety

Core idea

Margin of safety is the gap between what something is worth and the price you pay—designed to protect you from uncertainty, mistakes, and bad luck.

It is not about pessimism.

It is about survival.

Why it matters

The biggest risk in investing is not volatility.

It is permanent loss of capital.

3. Asymmetric Bets to the Upside

Core idea

An asymmetric bet is a decision where the downside is limited, but the upside compounds over time.

You do not need to be right often.

You need to avoid being wrong in a way that ends the game.

Why it matters

Most investors chase upside without understanding downside risk.

Asymmetry flips that logic.

4. Decision-Making Under Uncertainty

Core idea

In investing, being wrong is inevitable.

The goal is not perfect prediction, but decisions that remain acceptable across many possible futures.

Good decisions prioritise process over outcomes.

Why it matters

Greedy bad decisions often come from overconfidence, not lack of intelligence.

Fearful bad decisions often come from past trauma, not willing to explore asset classes that pays a handsome risk to reward ratio and willingly choose to park funds in instruments that guarantee loss through inflation.

5. Behavioural Risk

Core idea

The biggest determinant of long-term returns is not intelligence or access to information.

It is behaviour.

Fear, greed, impatience, and over-activity quietly destroy compounding.

Why it matters

Most investors do not fail because they pick bad assets.

They fail because they abandon good decisions at the wrong time.

6. Financial Freedom as a By-product

Core idea

Financial freedom is not the absence of work.

It is the freedom to do meaningful, value-creating work without financial anxiety.

When pursued directly, it often disappoints.

When it emerges as a by-product, it tends to last.

Why it matters

Chasing early retirement often leads to loss of purpose—and poor investment decisions.

7. The Indonesian Context

Core idea

Long-term investing in Indonesia comes with specific realities:

• Currency depreciation

• Market structure constraints

• A low-trust financial environment

• A strong culture of short-term speculation

Ignoring these realities leads to frustration and sub-optimal outcomes.

Why it matters

A strategy that works in theory but ignores local context often fails in practice.

8. Global Thinking, Aligned Values

Core idea

Good investing principles are universal.

Markets, instruments, and geographies change—but decision-making values do not.

While we operate with deep awareness of the Indonesian context, we are open to ideas, partners, and investments globally—as long as values are aligned.

What aligned values mean

• Long-term orientation over short-term performance

• Risk management before return maximisation

• Transparency over storytelling

• Incentive alignment over asset gathering

• Process discipline over prediction

Why it matters

Limiting thinking to a single market or asset class limits opportunity.

Expanding without shared principles increases risk.

We prefer global collaboration with local understanding—not blind diversification.

How to Read This Manifesto

This is not a list of tips or predictions.

It is a set of beliefs about how compounding actually works.

Use it as an extra filter:

• For decisions

• For partnerships

• For whether values align

Good investing is less about doing more. It is about avoiding the mistakes that break compounding.

Further Reading

If you want to see how these principles are applied in practice, the articles below expand on each idea in more detail:

• Investing vs Speculating

  Everybody Is Doing Short Term Stuff

• Margin of Safety & Risk Management

  Why We Play It Safe

• Decision-Making Under Uncertainty

  10 Days to Optimise your Decision making

  How to Turn Around Your Investment Portfolio

• Behavioural Risk & Investor Mistakes

  Rookie Mistakes

• Financial Freedom as a By-product

  Financial Freedom Might Be the Wrong Goal

• Investing in the Indonesian Context

  Navigating Indonesia’s Investment Terrain

• Global Thinking, Aligned Values

  Introduction to Recompound Global

AI, Commodities, and Why We’re (Still) Betting on Indonesia

2025 rewarded narrative stocks. We think 2026 and beyond will reward real earnings, real assets, and investors who are okay looking wrong for a while in order to be right for a decade.

Before we get into that, hi there! We help busy working adults with their long term investments in IDX with time tested value investing strategy. If you are curious, click here to find out more.

Disclaimer: This is not investment advice. It’s a reflection of how we at Recompound currently think about the world. We can be wrong. Please do your own research or consult your advisor before making decisions.

2025: the year of narratives

If you only look at index levels, 2025 looks simple: “markets are at all-time highs.”

On the ground, it didn’t feel simple at all.

• Early 2025 was full of pessimism, currency worries, and gloomy headlines.

• By the second half of the year, the mood had flipped. Social media was full of green screenshots and questions from potential clients: “Should we be more aggressive? If not now, when?”

Under the surface, one type of stock dominated: narrative stocks.

By “narrative stocks” we mean businesses where:

• the story and share price have already taken off,

• but earnings (actual net profit) are still far behind.

We saw a similar movie in 2021 with digital banks. Prices went up 10–100x, the story was everywhere, earnings did not follow at the same pace, and eventually prices had to come back down.

2025 was generous to people who timed these waves perfectly.

We don’t think 2026 will be the same game.

We think the next phase will be kinder to something less glamorous but far more durable:

Earnings-based stocks – businesses where price still mostly follows profits, not just a narrative.

Especially in markets where the real economy is slowly recovering underneath the noise.

The AI revolution is real (and uneven)

Before we go deeper into AI, a quick bit of context on where we’re coming from.

• Toby used to work as a software engineer at Goldman Sachs in Singapore, developing and maintaining mission-critical trading systems for the bank’s markets business. When your code breaks there, real money is at risk.

• Budi used to work as a data scientist at GoTo Financial, building credit scoring models for their “Paylater” product. Machine learning models were literally his day job long before the current AI hype cycle.

So when we talk about AI, we’re coming at it as people who have actually shipped and maintained production systems—not just as AI tourists reading news headlines & watching podcasts.

And the simple reality is: the AI boom is no longer just a buzzword phase. You can already see it in the data.

In the chart above:

• The red line is the S&P 500, steadily grinding to new highs.

• The white line is total US job openings, which have rolled over and trended down since the launch of ChatGPT.

We’re not saying AI is the only driver of this divergence, but the pattern fits the story: corporate profits and index levels keep rising, while the demand for additional workers is flattening or falling.

That’s exactly what you’d expect if AI lets companies:

• do more with the same number of people, or

• do the same amount of work with fewer people.

In other words, AI is already showing up as a productivity boost for capital, not as a jobs boom for knowledge workers.

Who feels that pressure most? White collars !

• Consultants and other professional services

• Junior lawyers and paralegals

• Auditors, analysts, and back-office knowledge workers

• Software engineers whose work is mostly maintenance rather than system design

A lot of what used to require 100 knowledge workers can now be done by 10 very good people plus AI.

Who is less threatened in the next few years? Blue collars !

• Construction workers

• Miners

• Technicians, field engineers and operators

• Logistics, warehouse, and field staff

AI (LLMs) today mostly live in laptops, phones, and data centers — not in excavators and brick-laying robots.

And here is the twist that matters for us as investors:

AI is a great leveller for emerging markets.

A capable analyst or operator in Jakarta with access to AI tools can process information like a small team in New York and produce “global-tier” output—without Silicon Valley payroll.

So while AI is a direct threat to some white-collar jobs in rich countries, it is a productivity amplifier for capable people and companies in emerging markets.

Why we are cautious on application-layer AI, AI SaaS, and (most of) the Magnificent 7

Before we get into that, hi there! We help busy working adults with their long term investments in IDX with time tested value investing strategy. If you are curious, click here to find out more.

If AI is so powerful, why aren’t we simply putting all our money into AI software, LLM platforms, and the Magnificent 7?

Because where you stand in the value chain matters.

Read more

It is 5.00AM, on a Sunday morning and I am not happiest to say that I don’t usually wake up at this hour. Hint: I wake up much much later than 5.00AM. But I have made a promise to a client, David, to run with him at 5.30AM. I certainly do not want to let him down. David is a professional consultant who’s been in the industry for years. He’s also crazy disciplined, not having missed a single day of work out since 2019.

But no, his last name is not Goggins.

So at 5AM when my alarm rings, I take the next logical step which is to snooze it and go back to sleep. Then I wake up for real at 5.20AM. I swear I am faster than Usain Bolt when I have to reach the fridge to drink some left over coffee (200ml) and I quickly don my Recompound running T-Shirt. After changing and doing speedy toilet things, I eagerly wait for David to arrive at my front door.

So David arrives on my front door and here’s a warning. This probably will sound like a major flex, please try your absolute best not to hate me.

Yes, even a flex that is even more major than showing off your Ducati Panigale, McLaren or crazy expensive wedding in Bali. I don’t know about you, but Ducatis gets old after a while.

Here is the flex:

David and I will be running for 78 minutes at 5:40 min/km pace and 12 minutes at 5:10 - 5:15 min/km as the last push.

That amounts to around 16km of running in one and a half hours.

But this run is really important because it has been advertised in Recompound IG that I will have a 5K challenge against David. He takes on the Air Force 5K on December 7th; then I will be running a Parkrun in the UK and we will see who gets the better 5K time.

At the time this post is written, we don’t know the outcome of the challenge yet. So that’s the fun part. You probably will never find out the outcome. But here are the stakes.

If David manages to beat me at a 5K, he will get a 10% off from his next invoice. Which means if his portfolio hits an all time high value and let’s say the fee is Rp 10.000.000,- then he only needs to pay Rp 9.000.000,-.

But that seems small isn’t it?

Well that’s because it is only half of the story. If I manage to beat David (which is unlikely), he will commit double the amount that he’s already committing. David has already committed a big amount. So if Toby wins, David will commit double big.

So off we go into the first 5K of the run.

David is a consultant. A smart one. The biggest job of a consultant is to ask good questions to a person who’s helping him with his investments. He also had to get his questions across, fast (ideally in the first half of the run). Because at the later half of the run… I wouldn’t be able to talk.

David: How did you start Recompound?

How did you come up with the idea?

What does it feel like running the company day to day?

The morning run session that was an active physical session quickly morph into an active running my memory session about the journey I have gone through building Recompound.

I recounted the story about the lows of a Co-Founder break up, the highs of getting our first customer, the lows of market uncertainty, the highs of getting investment from an external investor, and the highs of building a team and a solid customer base.

As I recounted the story, a part of me felt this immense sense of both pain and pleasure.

But I realised that through this roller coaster journey, I have been feeling rather lonely. My journey to lose 18kg from an overweight 93kg was lonely. Running everyday alone. Going for those long runs alone.

My journey to run Recompound also feels lonely. Going to the office alone when we were still a 2 man team. Yes, Budi is always besides me and he’s doing some coding work right now at the time I am writing this blogpost. But sometimes it feels like the journey is just me and Budi against the madness of the people in the market.

The worst part is hearing the painful story of people losing all of their hard earned money. Not just from stock market. But from crypto, from poorly managed family business, for example a Dad just gave the son a stupid amount of money. And then the son opened up some unprofitable business for the sake of “looking cool” on social media. The Dad’s money ended up down the drain. The worst part is, the Dad only got to know about the son draining his bank account when he wanted to commit and register to Recompound...

He was telling the son to use a bit of the money he gave to join Recompound. And the son was: “Tapi pa.. (But Dad...)” (the money was gone basically).

Of course, the Dad and the son do not talk about finances.

Hearing that classic example of poor capital allocation stings really badly.

So naturally I’d question my own sanity and the worthiness of going through everything. Why are we acting responsible when everybody else is trying to “game” the system. Why are we trying to be intelligent when everybody is gambling their money away?

Then it hits me

David: TOBY stay with me. Last push! Just 10 more minutes of running and we’re done.

We are at the home stretch. Come on bro. Just stick with me.

You got this.

Don’t give up on me bro.

Come on Toby!!

Haha at that point, I was almost done. My vision was a bit blurry from trying to keep up with David. I went silent and all I could focus on is keeping up with his legs being a couple of meters behind.

After a gruelling 10 minutes that felt like forever, we eventually finished that 16K run and I felt happy running with David. It was bliss + happiness that I rarely feel in my life. But after grabbing coffee, sitting down and have a nice morning chat with David, finding out that he speaks pretty darn good Spanish, I can’t help but wonder.

Toby asking himself:

Why the heck am I so happy?

Why do I feel so blessed?

The harder and the longer I paused to answer the question. The clearer the answer became. I guess the run with David is one culmination of the work that I have put in in this crazy journey. That run meant so much more to me than a “run”.

It was the exact representation and the exact outcome of being better and being more consistent in growing my business. It was a firm reminder that feelings of questioning my sanity when building my life and my business is dead wrong.

Because running with David is a living proof of how everything I have done is absolutely worth it.

Without the unseen work, the lonely journey, the tiring review of investment materials for customers, coding, answering client questions, running; I wouldn’t be physically able to run with him. Heck, he wouldn’t be a client! We won’t cross path on our lives had I stayed in my cushy job a couple of years back.

For the longest time I have always wanted a running buddy.

I’ve always thought that it is because I needed someone to challenge me to be better physically. But it turns out, David, my running buddy has given me happiness that acts as a reminder in making all the pain of going through life and business, worth going through.

Something so much more precious than a running challenge.

If you vibe with the story

It has ended for this time, but the effort of building a business and progressing to be better people is definitely ongoing. It usually requires plenty of decision making under uncertainty.

How do should we think about making our judgements better? Is there a way to optimise our decision making skills?

I believe there is! Not just in investments but in life in general. You can click the below button for us to give you ways to optimise your decision making over the next 10 days.

10 Days to Optimize Your Decision Making