1. Market does not care who you are. It will wipe you out if you are not prepared, even if you are the son of a conglo with prime A1 information.

2. If you can’t explain what you are buying, you don’t buy a business, you buy a ticker.

3. It went up, you “just” do not know when to sell. But you know its not just a “just”. So you are -60% now.

4. Blaming the macro, the government, the geopolitics feels good because it means you never have to change anything.

5. Everyone is a genius in the stock market, on hindsight.

6. “I will sell when I break even” is not a plan. It is a prayer.

7. You didn’t lose the money when you sold at a loss. You lost it when you had no proper plan when you bought. Selling is an admission of your past mistake.

8. No body is responsible for the mistakes you made in the market. Not your parents. Not your friends. Not your investment guru. Only you are responsible.

9. Therefore, nobody is going to save your portfolio and turn it around in an instant.

10. 15% per year looks like peak stupidity, when your friends are bragging 400% returns.

11. Your ego is your worst enemy and you know it. But you still choose to (fill in the blanks yourself)

12. Everyone says they have “learned the lesson”. But most still keep their position.

So therapy does not make you immune to the mistakes

It just shortens the denial phase to accept reality. It expedites you growing up and graduating from get rich quick schemes and irresponsible investing behavior.

Which is why we are building Recompound Balik Modal. You transfer the pasrah, stress, anxiety to us. And you get all the things we stand for:

• Money stays with you (no sharing sekuritas password)

• Restructuring plans shared with you transparently

• Investment recommendation from actual licensed investment advisor

• You pay once all the way until you break even

Learn More

Disclaimer

Not investment advice. Recompound is the platform; the advisor is Budi Ryan, OJK-licensed investment advisor.

Disclaimer: This article is my personal opinion, written for educational purposes only. Nothing in it is financial advice, and nothing here is a recommendation to buy, sell, or hold any security. The two portfolios below are a simulation I built to illustrate a point: the return sequences are made up, shuffled, and shown before fees and taxes. They are not a forecast, not a promise, and not Recompound's track record. Investing carries risk, including loss of capital. Please do your own research and speak with a licensed professional before making decisions.

Here is a question I ask on almost every first call with a prospective client. Two portfolios, same starting capital, same fifteen years.

Portfolio A returns about 15% a year on average. Slow, but it never falls far. Its best year is +35%, its worst is −7%. No year worth bragging about, no year worth crying about.

Portfolio B returns +100% in eight of the fifteen years and −40% in the other seven, in random order, like a real market. The good years are spectacular. The bad years are brutal.

Which one do you want?

Most people pick B. And honestly, I understand why.

The treasure-hunting mentality

Who doesn't want to find the next multibagger? The buried treasure that goes up 1,000%. Put in US$6,000, take out US$60,000. In Indonesia we even have a name for the hunt: cacing-cacing naga-naga, "worms and dragons". You buy a tiny stock (a worm) hoping it turns into a dragon.

And let's be honest about the other reason, because nobody says it out loud: ego. "I got 10x on this stock" is a much better story at the bar, or in the group chat, than "my portfolio went up 15%". Nobody has ever gone viral with a 15% year.

What people rarely account for is how rare the treasure actually is. Genuine 10-baggers are needles in a haystack, and the haystack is on fire half the time. I used to build credit-scoring models for a living, and the first thing you learn about rare events is that the stories you hear are the survivors. Nobody posts the worms that stayed worms.

Portfolio A is the opposite mentality. Not treasure hunting. Planting a tree. Small at first, grows a little every year, and you never dig it up to check the roots.

The early years feel terrible

I won't pretend Portfolio A is fun at the start.

Year one: 1.17x. Year two: 1.45x. Year three: 1.65x. Three years in and your money hasn't even doubled. Meanwhile Portfolio B is at 2x after year one and 4x after year two. At this point B looks like the obvious winner, and the people holding A look like they are missing out.

Hold that thought.

Now run it for fifteen years

Portfolio A finishes at 8.14x its starting capital. Portfolio B finishes at 7.17x.

The tortoise wins. Not by a landslide, but it wins, despite B having a "much higher" average return. On US$60,000 (roughly Rp 1 billion, the number I use with Indonesian clients), that is about US$488,000 versus US$430,000.

And here is the part that surprises people the most: it does not matter in which order B's good and bad years arrive. Multiplication is commutative. Shuffle those eight +100% years and seven −40% years any way you like and the ending is always 2⁸ × 0.6⁷ = 7.17x. The order changes only one thing: how painful the ride is.

What the table hides

Look at the red line. In year 8, Portfolio B touches 6.91x. Two years later it is at 2.49x. It lost 64% of its value in 24 months. Then it does it again from year 13 to year 14.

Now look at year 14 specifically. Portfolio A is at 7.01x. Portfolio B is at 3.58x, half. B's ending only looks close to A's because, by luck, year 15 happened to be one of the good years. If you needed the money in year 14, for a child's university fees, for a house, for a parent's surgery, you would have cashed out with half of what the tortoise had.

Portfolio A also has red years, three of them. They are shallow. That is the entire difference.

"But B's average return is more than double!"

It is. And that is exactly the trap, so let me be precise about it.

Take the fifteen yearly returns of Portfolio B and average them. You get +34.7% a year. Do the same for A and you get +15.7%. On paper, B is more than twice as good.

Now look at what compounding actually delivered. A: 15.0% a year. B: 14.0% a year.

Twenty percentage points of "average return" evaporated. Where did it go? Into the arithmetic of losses. A +100% year followed by a −40% year is not +60%. It is 2.0 × 0.6 = 1.2, or +20% over two years. And a −40% year needs a +67% year just to get back to where you started. Losses and gains are not symmetric, and the bigger the swings, the bigger the gap between the average you brag about and the money you actually have.

Compounding does not care about your average. It only cares about how deep you fall.

In finance this has a boring name, volatility drag. In my old job we would have called it the difference between the mean of the training set and what the model does in production. Same idea. The average is not the thing you get to keep.

The price that isn't in the table: your mental state

The simulation above is a spreadsheet. It assumes a person who sits through fourteen years of ±40% swings without doing anything stupid. I have met very few of those people. I am not sure I am one of them.

In the real world, Portfolio B means: put in US$6,000, watch it become US$3,600. And if the bad years arrive back to back, as they did in the simulation, US$2,160. Are you actually going to sit still?

Because the −40% moment is precisely when the irrational decisions show up. Panic. Cutting losses at the bottom. Switching strategies. Or, out of pure desperation, trying to call the top and the bottom of every stock, which is neither realistic nor necessary for success in this business.

And remember: in the real world you do not get the schedule. You will never know in advance which year is the +100% and which is the −40%. The only certainty is that if you bail at the bottom, the compounding is broken right before the part that would have paid you.

So in practice, Portfolio B's real-world result is usually worse than the simulation, because the simulation assumes nobody flinches.

The second price: your time

Treasure hunting eats time. Screening hundreds of tickers, watching the group chats, late nights on annual reports of companies you will never buy. All of that to find one needle.

Now imagine spending that same time on something with a far higher hit rate: your job, or your business. The output of that effort becomes extra ammunition for Portfolio A.

Suppose you add just 10% of your original capital to Portfolio A every year, out of earned income. Fifteen years later A finishes at 12.8x instead of 8.1x. Nearly double Portfolio B. The tortoise, fed regularly, is not even a close race any more.

We eat with money, not with percentages

This is the sentence I would most like people to take away.

Investing is not a competition for the highest return. It is a search for the most stable return you can compound a large amount of money on, for a very long time.

That distinction is also why the wealthy keep getting wealthier without doing anything heroic. 15% on US$600,000 is US$90,000 a year. To earn the same US$90,000 from US$60,000 you would need +150%, every year. One of those is an investment strategy. The other is a lottery habit.

A larger base plus a consistent strategy beats a small base plus a miracle. Nobody who is already rich needs to hunt dragons. That should tell you something about how the rich got there.

Closing

One honest caveat, because I don't want to oversell a spreadsheet: this is a stylised simulation. Real returns are not this neat, and a real 15%-a-year portfolio is hard work to build and harder to hold. The point is not the specific numbers. The point is the shape: shallow drawdowns compound; deep drawdowns, however exciting the recoveries, quietly tax you every cycle.

At Recompound we are not hunting the next multibagger. What we chase is more boring: consistent compounding with drawdowns kept in check, so that our clients can actually stay in the game until the end, without cutting losses at the bottom. Downside first. Upside takes care of itself.

If you would rather have the dragon, I understand. Just read this post again in year 14.

See you on the next one.

Disclaimer: This article is my personal opinion, written for educational purposes only. Nothing in it is financial advice, and nothing here is a recommendation to buy, sell, or hold any security. Client age figures are from our own records as of August 2026. Client messages are quoted verbatim but anonymised, with stock tickers masked, and shared with respect: every one of them could have been written by me at some point in my life. The studies cited are about smoking cessation and goal-setting, not investing; I use them as an analogy, not as proof that any investment approach works. Investing carries risk, including loss of capital. Please do your own research and speak with a licensed professional before making decisions.

There is one concept I believe in that I have never seen in any finance textbook:

People have to get wrecked first. Then, and usually only then, do they change for the better.

Indonesian has the perfect word for the state that produces this change, and since a good share of you reading this are not Indonesian, let me spend a paragraph on it, because the whole post hangs on it.

What "kepepet" means

Kepepet (roughly "kuh-PUH-put") comes from pepet, to press or squeeze. It describes being cornered: backed against a wall, out of room, out of options, out of time. It is the word you use when you finally pay the bill on the last day, or take the job you swore you'd never take, or sell the motorbike because the rent is due tomorrow. There is a well-worn Indonesian saying that the most powerful force in the universe is not love or money, it is the power of kepepet, because a cornered person will do things that a comfortable person has been "planning to do" for ten years.

It is not a pleasant word. It is also, after a few thousand user calls, the single most reliable predictor I know of whether someone will actually become a long-term investor.

Let me show you where that belief comes from. Spoiler: it starts with a number almost everyone guesses wrong.

The age question

The question I get asked most often at dinners, right after "so what do you actually do":

"How old are your clients, on average?"

Almost everyone guesses early twenties. Fresh graduates, first brokerage app, first taste of cuan (Indonesian slang for profit, borrowed from Hokkien). It's a reasonable guess, but wrong.

Our average client is 35. The majority are between 25 and 39. People in the thick of it: a career, a mortgage, a family, a first kid starting school. A good number are the sandwich generation, funding kids and parents at the same time.

When I first pulled this number, I was puzzled. Why not the young ones? They have the longest runway. Compounding should matter most to them, and they're the ones posting about stocks all day.

The answer only showed up after Toby and I had personally taken thousands of onboarding calls. The surface reason is always the same: "I'm busy." True, but not the real reason. If the conversation goes deep enough, a more honest sentence comes out. It's phrased a hundred different ways, but it always means the same thing:

"Jatah fuck-up gue udah makin tipis."

Literally: my fuck-up allowance is running out. Jatah is a ration or quota, the kind you get for rice or fuel. The clients' phrase, not mine, and I've kept it because no polite translation carries the same weight.

The allowance

Everyone starts adult life with a quota of financial mistakes they can afford to make. It isn't written anywhere. Everyone knows it's there, and everyone spends it.

Following a friend into a stock. Chasing the hot coin. Hunting the next multibagger. In Indonesian retail slang, hunting cacing-cacing naga-naga: "worms and dragons". A cacing (worm) is a tiny, illiquid stock, often trading near the exchange's minimum price; the dream is that your worm turns into a naga (dragon), a ten-bagger. It's a lottery ticket with a ticker symbol. Going all-in with Rp 10 million (about US$600) hoping it becomes tens of billions. Or the slow-motion version, which is the most common one I see: investing for years, making great money in the bull market, and giving all of it back in the bear market.

At 22 this feels like an adventure. At 35 it feels different, because life's invoices have arrived: household costs, school fees, a parent who needs help. And you look back and realise that after years of "investing", the money has not actually gone anywhere.

The science has a name for this

For a long time I thought this was just a Recompound observation. Then I went looking, and it turns out medicine has been documenting exactly this pattern for decades. They call it a teachable moment.

Take smokers. Doctors tell them at routine check-ups, year after year, that smoking will kill them. In studies of that kind of routine advice, roughly 2 to 10 percent quit.

Now take smokers who have just had a heart attack. In one study of acute coronary patients, about 70 percent quit within a month, and two-thirds were still off cigarettes a year later.

One. more. time. The information is identical in both groups. Smoking kills you. Nobody learned anything new in the ambulance.

The only variable that changed was kepepet.

There is a gentler cousin of this, documented by Wharton researchers under the name fresh start effect: people's commitment to change spikes right after temporal landmarks. New year, new month, and especially birthdays. Turning 30. Turning 35. A first child. Quiet alarms, but they ring deep, and the message is always the same: your playing-around allowance is almost gone.

We watched this happen live in 2025

Theory is nice. Let me show you a teachable moment on the Indonesian stock market. A little context first for readers abroad.

In 2025, a group of stocks linked to Indonesia's big family conglomerates, saham konglo in local slang, went to the moon. Not "had a good year" vertical: hitting the exchange's daily upper price limit (locals call it ARA, auto reject atas) day after day, on valuations that had stopped meaning anything. Every group chat was on fire. We sat it out, and we got criticised for it, including by our own clients. We were stubborn as a rock. Here is a sample of what landed in our WhatsApp that year, verbatim, anonymised, tickers masked, with translations:

"Fomo ga sama sahamnya Pak 😂" (July 2025)
Aren't you FOMO about Mr 's stocks? 😂

"Kalo yg paling mending berjudinya yg mana bro? B＊N apa P＊O? Hahaha" (July 2025)
If I'm going to gamble, which one's the better bet, bro? B＊N or P＊O? Hahaha

"ALL IN B＊N BOYSSSSSSSS!! MASIH MURAH JANGAN KETINGGALAN KERETA!!!" (October 2025)
ALL IN B＊N BOYSSS!! STILL CHEAP, DON'T MISS THE TRAIN!!!

"Asik bgt saham konglo" (26 January 2026)
Conglomerate stocks are so much fun

Look at the date on that last one. It was sent one day before MSCI sent what I've come to call its love letter to our exchange.

On 27 January 2026, MSCI, the index provider whose classifications decide where trillions of passive dollars can go, put Indonesia under review for a possible demotion from Emerging Market to Frontier Market status. The behaviour of exactly those conglomerate stocks was one of the main triggers. These stocks collapsed. Yesterday's daily upper limit became today's daily lower limit (ARB, auto reject bawah), berjilid-jilid, volume after volume, like a bad soap opera. At its worst, the Jakarta Composite Index was down about 42% from its peak.

And the same people who sent those messages? Tobat. Repented, in the full religious weight of the word. Some had the courage to cut their losses and then genuinely changed how they invest. Others surrendered, stuck in their positions, waiting for the price to come back to what they paid.

From total euphoria to wrecked to repentant took about one year.

I'm not sharing this to gloat. Being batu for twelve months while your clients call you old-fashioned is not fun, and I'd have preferred to be proven right in a cheaper way for everyone. I'm sharing it because it is the cleanest teachable moment I have ever watched in real time.

And then they actually change

This is the part that makes me keep believing in kepepet rather than resenting it.

Once someone is cornered, they genuinely change. The client who was all-in on a dragon stock last year is now asking about moats, valuation, whether the dividend is sustainable. Their portfolio stops being a casino and starts being a compounding vehicle. Slow, but more sure, towards financial freedom and a retirement that doesn't depend on guessing blindly.

That is the power of kepepet. It is not a nice power. It arrives as a heart attack, or a 42% drawdown, or a school bill on the same day as a margin call. But I have never seen anything else work as reliably. Not books, not YouTube, not us.

Closing Remarks

You can't manufacture kepepet on demand, and I wouldn't wish it on anyone. But you can borrow a little of it before the market lends you the real thing at a much higher interest rate. Two things.

One: write the sentence yourself, today. "My allowance runs out on (date)." A year, an age, an event: first kid, fortieth birthday, parents retiring. Then put that date in your calendar with a reminder. This isn't about discipline. It's about turning a vague feeling into a concrete thing, which is exactly what the fresh start research says actually moves people.

Two: send this to the friend who is still hunting dragons. Not to lecture. Just while their allowance is still there. A teachable moment delivered by a friend costs a lot less than one delivered by the market.

And if you're one of the 35-year-olds who has already had your moment and would rather never have another: that is, more or less, exactly who we built Recompound for. Every client gets their own WhatsApp group with us, and the penguatan iman (faith reinforcement, what our clients call the pep talk they need during a crash) is free.

See you on the next one.

References

• McBride CM, Emmons KM, Lipkus IM (2003). "Understanding the potential of teachable moments: the case of smoking cessation." Health Education Research 18(2):156–170. Routine clinic advice: 2–10% cessation; hospitalisation or diagnosis: 15–78%.

• Acute coronary syndrome cohort (116 patients): ~70% quit at one month, ~67% abstinent at 12 months (Journal of Smoking Cessation).

• Dai H, Milkman KL, Riis J (2014). "The Fresh Start Effect: Temporal Landmarks Motivate Aspirational Behavior." Management Science 60(10):2563–2582.

• Marks H. The Most Important Thing (the six-foot man and the five-foot stream).

• MSCI review announcement, 27 January 2026; IHSG (Jakarta Composite Index) drawdown of approximately −42% from peak (Bloomberg data via @BagusPerdana_).

• Client age data: all active Recompound clients, August 2026 (mean 35.1, median 34, 72% aged 25–39).

Hypothetical. Not a real product.

Disclaimer: This article is my personal opinion, written for educational purposes only. Nothing in it is financial advice, and nothing here is a recommendation to buy, sell, or hold any security, or to buy or avoid any course, book, or programme. The Haaland masterclass is a made-up illustration. Jordan B. Peterson and Ray Dalio are mentioned only as public examples of well-known people who sell their knowledge; no criticism of either is intended, and nothing here implies their endorsement of anything I write. The Indonesian practitioner referred to below is deliberately unnamed; the details of their journey come from their own public interviews. Investing carries risk, including loss of capital. Please do your own research and speak with a licensed professional before making decisions.

A bit of context for readers outside Indonesia, because this post won't make sense without it.

In Indonesia, selling investment courses for a fixed fee is not a niche. It is an industry. The founders are genuine celebrities on mainstream social media, they are on every podcast, and every few months one of them launches a new programme with an annual subscription that makes people choke on their kopi. Think of the trader-influencer scene in the US or India, then add a market where most participants are first-generation investors whose parents kept everything in property and gold. Demand for "teach me how" is enormous, and the supply has grown to match it.

I should also name my conflict of interest before you find it yourself. These businesses are, in a way, Recompound's antithesis. They charge a fixed fee to teach you to do it yourself. We charge a performance fee to help you do it. So read what follows knowing that, and judge it accordingly.

Because what I want to say is not what you'd expect from the antithesis.

Erling Haaland opens an online course

Here's a thought experiment I use with new clients, and it settles the argument better than any social media thread I've seen.

Haaland launches "How to Become a World-Class Premier League Striker." US$1,500 a year, about Rp 25 million. The syllabus is genuinely daging (an Indonesian compliment: "all meat, no filler"): how to improve your shot conversion rate, how to exploit set pieces, the recovery routine of a top player, the diet, weekly tactical breakdowns. Big yellow JOIN NOW button.

Is the knowledge real? Hell yes. The man teaching it is one of the best strikers alive. The Golden Boots are real, the goals are real, the salary is real. Nothing in that syllabus is a scam.

But that was never the question. The question is:

Do you become a Premier League striker because you paid for the class?

Could you? Sure. But what are the actual chances? You'd have to quit your job, train full time for years, eat like a monk, and get injured, repeatedly, on purpose. Haaland's knowledge has never once been sold separately from Haaland's process. It can't be. The process is the product.

Legends sell their knowledge too

Haaland is hypothetical, but the pattern isn't. Look at who else sells what they know.

Jordan B. Peterson sells online courses, on writing, on psychology, on how to run your life. Millions of people have paid for them.

Ray Dalio sells books. Principles, for about the price of a lunch. And this is the one that looks properly counter-intuitive, because Dalio founded Bridgewater Associates, for years the largest hedge fund in the world. Why would the man who runs Bridgewater sell you the manual for how he does it?

Because the manual is not Bridgewater. Dalio can publish every principle he has ever written down, and you still cannot run Bridgewater. Warren Buffett has been publishing his entire philosophy in free shareholder letters since the 1960s, and there is still only one Berkshire. The knowledge can be sold cheaply, or given away, precisely because it is not the scarce part. The scarce part is the forty years, the team, the discipline under fire, and the mistakes that were already paid for.

None of these people are frauds. They are simply selling the only thing about themselves that can be packaged.

Now replace the word "striker"

Replace it with anything you admire. Trader. Investor. Founder. Surgeon. The pattern is identical every single time, and that is why I want to be very clear about what I am not arguing.

I am not arguing that the people selling investment courses did anything wrong.

Take the practitioner behind the latest expensive programme in Indonesia. I've listened to enough of their interviews to believe they made it, for real, from the market. Not from selling courses about the market. From the market itself, first, and for years before anyone knew their name. The knowledge is real. I respect people like that, whether they call themselves traders or investors. And I say that as someone whose own investing education was otodidak (self-taught), paid for with real losses, which is a tuition fee you can only pay in cash. Nobody gets a discount on that one.

So no, there is no takedown coming. Something more useful, I hope.

The price that isn't on the brochure

Here is what I would print on the enrollment page if it were mine to write. All of it is what the practitioner has said about their own journey, in their own words, across various podcasts.

Analysing the market morning, noon and night. For years. Not a weekend hobby: a full-time job.

Sitting through brutal drawdowns when the market wasn't cooperating, and still executing the system while their mental state was in pieces.

Going negative on margin. Starting again from zero. At one point, borrowing capital from a friend to keep going.

And after all of that, still no guarantee of immediate success. The success came. It came after the part nobody puts in the highlight reel.

So the brochure says US$1,500 a year. The real price is the years, the drawdowns, the margin call and the friend who lent them money. And notice: that price is not hidden by the seller. It is hidden by the buyer, from themselves.

"But the guy really did make it from the market!"

Yes. That is exactly my point, not a counter-argument to it.

Haaland really did score those goals. That is precisely why his goals are worth nothing to your career. Somebody else's process, fully completed, is the least transferable thing on earth. You can watch every one of his goals and it does not add a single goal to yours.

The problem was never the class. The problem is what the buyer expects to happen after paying.

Somebody pays the subscription and quietly expects that five years from now they'll be financially free, no longer working, without having paid anything like the effort the teacher paid. That is not a knowledge gap. That is an expectation gap, and in this business the gap between expectation and reality is where nearly all the suffering comes from.

Not everyone can become a trader or investor who reaches financial freedom in five years. Not everyone can become a Premier League striker, or a surgeon. And that is not a disgrace. That is the base rate.

Three questions before you pay

Before paying for any programme like this, the honest questions are not about the teacher. They are about you.

1. Am I willing to sacrifice the profession and expertise I've spent years building? Because this is a full-time job, and you already have one.

2. Am I willing to dedicate myself for years, not months, to actually put this into practice? The teacher did.

3. Am I willing to carry a severe drawdown with my own money and stay disciplined through it? Not in theory. With the mortgage due.

If your answer to all three is yes: go for it. I mean that, and I'd be happy to be proven right about you.

If you paused on any one of them, keep reading, because the next part is the good news.

The good news

Most people, when they're honest, pause on at least one. That's fine. Here is what they forget:

You do not have to become Haaland to be financially free.

The world is full of people who will never score in the Premier League and are perfectly wealthy. They didn't buy the striker's masterclass. They did something a lot less glamorous: stayed in their own lane, kept earning from the thing they were already good at.

Howard Marks has a memo I keep coming back to, "Fewer Losers or More Winners". His point: the investors who end up on top over a long career are rarely the ones who chased the top decile in any single year. They are the ones who were consistently above average and never blew up. Haaland is a top-decile-every-year athlete. You do not need to be. You need to not blow up.

"Isn't this just you protecting your own business?"

Fair question. I flagged the conflict at the top, so let me be equally direct about what we actually do, and you can judge for yourself.

What I sell is the boring alternative to the masterclass: you don't quit your job, you don't stare at a screen all day, you stay focused on your own expertise and on being a decent husband or wife, and a licensed investment advisor (in Indonesia the licence is called Penasihat Investasi, issued by OJK, our financial regulator) does the stock research.

Two things I would demand from anyone offering this, including us:

First, your money stays in a brokerage account in your own name. It never moves to us. We cannot run off with it, because we never touch it.

Second, you only pay when your portfolio grows. If we don't perform, we don't get paid. Our incentive and yours point the same way. This is the exact opposite of a fixed-fee course, where the seller is paid whether or not you ever make a rupiah.

And honestly, my own returns don't matter much to me. What matters is your return, and every other client's. If only we make money, what's the point? That's why we publish the returns of all our clients, calculated the way a mutual fund calculates its net asset value, updated daily, at recompound.id/performance. No sign-up needed. Past performance, as always, guarantees nothing.

What we cannot promise

I can't make you financially free in five years the way the practitioner did it for themselves. Nobody can promise you that, and if someone does, that promise is the most expensive item in the brochure. Kita bukan dewa. We are not gods.

What we offer is slower: compounding that is steady rather than spectacular, with drawdowns kept in check to the best of our ability, so the journey doesn't give you a heart attack and you can actually stay in it until the end.

If you're looking for a striker's masterclass, buy one from a striker. Just read the brochure twice, including the part that isn't printed.

See you on the next one.

Today’s post is a light one and I will be writing about how to make sure that you never compound your wealth. There is a popular method that has been written by famous investors, market participants, economics experts and the like. That method to kill compounding is very easy to grasp.

Buy at the top and sell at the bottom.

Now the popular emotion that allows us to behave in this manner is none other than fear and greed.

For example, when the market plummets like what we saw in Indonesia in June 2026, the fear disguises as prudence and we’d say to ourselves (sometimes in panic):

“I want to minimize my loss because the stocks can go down in price further,”

When the market reaches an all time high, the greed disguises as opportunism and we’d say to ourselves:

“I want to maximise my gains because an opportunity like this is rare, it’s different. It has never happened before. There is no risk”

Well, that is fear and greed in action and we know that these two folks are great at killing compounding. But I’d like to surface two more emotions that are also effective at killing compounding.

Spoiler: by virtue of our language, Indonesians will have it easier in understanding these emotions.

Before that, let me show you a flowchart of an investment process

In of itself, investing is a good problem. It is good because at the very least we know that we have wealth in the moment. But it is still a problem because it usually means we don’t know where to put the excess cash. For example we got a huge bonus or a huge inheritance or a huge business windfall and so on. If we let it sit in cash, it will be eaten by inflation.

So that’s where we begin. We assume that the excess cash amount is Z.

Step 1: Method Selection

Now we will look for all sort of investment solutions to solve this problem. It could be one or a mix of:

• buying mutual funds

• stocks DIY

• buying bonds

• participating in cryptocurrency

• index funds

• algo trading

• hodling precious metals and so on (kos2an, sell put options, rolex, artwork, fractionalised property gosh there are so many investing options nowadays isn’t it)

So lets assume that you settle with a method that seems appealing you most at the start. We call that, method X.

Step 2: Wait a bit

After the selection of method X and making your investments, perhaps from a combination of:

• heavy binging of YouTube videos

• asking your financially savvy friend

• looking at threads or twitter

• downloading popular wealthtech apps

It is time for you to do the most boring part. Waiting..

Step 3: Is it working?

At the start, you are still eager to check your investment performance and progress. You open the app, look into coverages to your investments in social media if any. And so on. Essentially you are into the phase of asking yourself.

“Is my investment working?”

It is a simple yes or no question.

Step 4: Darn it, it is not working.

An investor rarely gets a method X that works for them the first try. Usually caused by a combination of ego, inexperience, ignorance (basically being a normal human being). So there will be an exit from method X.

But the excess cash Z’ is still a problem. So there needs to be a new method Y that replaces the old method X. And usually, that new method Y is gated by an entry condition.

So two emotions that are effective in killing compounding

Lets be precise here. The thing that will guarantee you to kill the compounding are these two emotions that governs your exit condition from method X and your entry condition to method Y respectively.

These two emotions (like fear and greed) appear to go hand in hand.

One emotion governs the exit condition for method X. That emotion is kapok.

In English, kapok would be the feeling of saying to yourself “never again”. Knowing Bahasa Indonesia certainly does help here.

Another emotion governs the entry condition for method Y. That emotion is envy.

Why they come as a pair

Kapok does not just end method X. It changes the problem you walk into method Y with.

At the start, the problem was “where do I put Z”. After kapok, the cash is likely smaller, call it Z’ and the problem is no longer “where do I put Z’”.

It is “how do I get back from Z’ → Z, quickly”.

Psychologists have measured what that does to people. Someone who is underwater takes more risk than someone who is above ground. It is the same reason a gambler who is down at midnight is likely to make riskier bets at 1AM.

Now, a person who is looking for a quick recovery needs a candidate. Envy supplies with one. Note what kind of candidate envy supplies. Not a random method. The method that has just gone up the most, in someone you can see. Which is precisely the method that is most likely to be at its top.

I’d argue that the emotions aren’t disjointed. They are more like supply and demand. Kapok creates the demand for a fast recovery. Envy supplies the fastest looking one.

“Bro gua invest di sini baru setahun cuan udah 50%” - ”Bro I invested here for a year and I am up 50%”

Neither does the full damage alone. Kapok without envy usually ends up in uninstalling your sekuritas app or liquidating all of your investments and putting them back into your savings account.

Envy without kapok is a temptation you can sometimes resist, because you are not underwater.

Together, they are a potent combination to kill compounding. Kapok is the sell at the bottom. Envy is the buy at the top.

And then method Y, bought at the top, is the one most likely to produce the next kapok. Kapok, envy, kapok, envy. Each round the drawdown is a bit deeper and the recovery has to be a bit faster.

Closing remarks

Enough cycles of kapok and envy in my experience produces something that puts a nail in the coffin for most investors. That is financial trauma. This can entail pronouncing a whole class of assets as a sham.

All of the sudden, investment universe of an investor becomes smaller and smaller. All the way until the investment vehicle they have to help them compound their wealth is pretty much nothing.

So I am not going to ask you to feel less kapok or less envy. Nobody can do that on request. I certainly cannot.

What you can do is to see the fuel for each emotion.

Envy needs a neighbour. Fewer methods in view means fewer neighbours, and fewer neighbours means less envy. This is case in point where having fewer options beats having more. For example, mute the group chat where the cousin posts his screenshots. That counts as an intervention.

Kapok needs a clock. Decide the date, call it a deadline, on which you will judge method X, and put it in your Google calendar. Until that date, “is it working?” is not an open question. Not because you are disciplined. But because you’ve set Google calendar.

Neither of these requires you to be a better person tomorrow in “controlling your emotions”. I certainly don’t quite believe in being able to do so. Maybe a post on this next time.

Cheers.

Disclaimer: Everything in this post is my personal opinion, written for educational purposes. It is not financial advice, and nothing here is a recommendation to buy, sell, hold, or switch between any security, asset class, or investment method. The neighbour and his 35% are illustrative, not a real return, and nothing in this post suggests that any method will beat any other. Noticing kapok and envy does not remove them, and no approach guarantees against loss. Please do your own research and consult a licensed professional before making investment decisions.

Chris Williamson posted a video about life unteachable lessons. These are lessons he defines as obvious lessons (basic b*tch) that people from generations before us have warned us about. Yet almost always, we refuse to pay attention to them. As a matter of fact, we are so adamant that these lessons will not apply to us that we have to learn them through our own experiences first hand. In the end, it becomes a bitter pill to swallow once they are learned.

I’d say that the texture of his essay is complete because they are not about the lessons themselves, but it is about our psychology in viewing them before we experience them and after we experience them.

Before we experience these lessons, we will think to ourselves and proclaim to the world:

This is not going to apply to me. I am different. I am special.
My background is different.

After we experience these lessons, we will broadcast our learning in the grandest of manner saying to people how important it is based on your experience. Yet we will be met with a wall. Only a handful will probably truly pay heed. And the rest will go on their ways.

But why? Perhaps it is because the lessons are trite. So trite that I cringe reading them. Here are some of them:

• Money alone won’t make you happy

• Fame won’t give you self worth

• You should see your parents more

• It’s perfectly OK to cut toxic people out of your life

• Worrying is not improving your performance

• All your fears are a waste of time

• You chase the beautiful woman or handsome man not because you love them, but because they are physically attractive and hard to get

• and so on.

Cringe isn’t it?

Well, investing is a subset of life.

And in this essay, I am going to repeat some investing unteachable lessons. These are the lessons that at the start of your investing journey, you will often hear from more experienced investors. But because you have not experienced investing yourself, you would almost always think that:

This is not going to apply to me. I am different. I am special
I know myself well.

How do I know this? Because this is what I feel when I first started investing. These advice are so commonly given by great legendary investors yet they are usually not taken seriously at all. I always say to myself:

Watch me invest while being able to stay detached from my emotions, while being able to always make the right call, while being able to be truly independent in my thinking, while not being able to be envious of other people’s returns and so on.

And then I would go on and make those mistakes myself 🙂

The craziest part is that here I am writing about those mistakes “warning” people about how important it is to learn from them and to not commit to them. Even when I know for myself that people are going to not take seriously. It is truly a mind blow isn’t it?

The pattern that I am seeing is that people will experience one or two lessons. Then cast blame on some external factor:

• macroeconomy

• government

• geopolitical factors

Then they will proclaim that I am not the problem, these other guys/factors are causing my investments to fail. Because of that, I can no longer invest.

So here it goes. The lessons are trite, you have been warned.

Lesson number 0. Psychology in investing is important.

It is blatantly obvious that the same analysis of an investment opportunity, could lead to ultimately very different behavior in terms of buying or selling positions. That ultimately will also affect investment returns. Most spend most of their time on the analytical framework, which is reasonable. But not enough time and resource is being spent to study and then optimise behavior that would be ideal for us to achieve consistent investment success.

Why people don’t take it seriously:

I think because people tend to hate to admit that they don’t have a handle on themselves, that they don’t know about themselves and they are not fully a master of themselves. While in actual fact, knowing and mastering yourself is one of the most difficult things that one could do.

Keeping a promise to yourself is hard. Not lying to yourself is hard. Staying accountable to yourself is hard. Knowing how we feel in the moment is hard. Knowing your true preference vs others’ expectations masquerading as your own passion is hard. These things are so hard that Sun Tzu opened the Art of War with them: know yourself.

But somehow, we don’t want others to see that we are struggling with ourselves and therefore we choose to ignore this lesson altogether.

Lesson number 1. Greed will make you buy the top.

Every legendary investor tells you the same thing: be fearful when others are greedy, be greedy when others are fearful. Buffett said it, but he inherited it from decades of markets repeating the same story. The quote now is everywhere in the investment space. It even gets used to support an investor’s confirmation bias, or hope strategy.

Why people don’t take it seriously:

Perhaps people become greedy anyways because it does not feel like it. It feels more like rare phenomenon. An exception to the rule. “this time is actually different, we are colonising Saturn, we are mining in the moon, intrinsic value does not matter now.”

I believe nobody sits at their desk near the top of a bull run thinking “I am being greedy right now.”

It only reveals itself as greed later on in hindsight, once the position is down 60% and staring at the screen asking what you were thinking then.

Lesson number 2. Fear will make you sell the bottom.

The mirror image of lesson one, and somehow just as unteachable. Don’t sell in a panic, the market always recovers, time in the market beats timing the market. You’ve seen 1998, 2008, 2020, 2022 all bounce back eventually. You understand, you’ve seen the charts. And you think to yourself: “I will not sell my positions during a market downturn”

And then the drawdown actually happens to your money, and every rational thing you knew evaporates. Howard Marks calls the endpoint of this capitulation.

Why people don’t take it seriously:

I think it is because fear disguises itself as prudence. “I am just protecting what I have left” sounds responsible. It sounds like risk management. It only reveals itself, in hindsight, as the single worst decision of the cycle. A missed opportunity.

When else will I get to buy that asset again at that bargain. 10 years later the opportunity comes and most will sell at the panic again. That is just how it is.

Lesson number 3. Ego won’t let you admit you’re wrong.

You buy a position. It goes against you. Instead of selling, you average down — not because the math says to, but because admitting the mistake feels like admitting you were the mistake, in front of the people you built the ego to impress.

That’s the trap: the ego built to win the social game is exactly what makes you worse at the real one. Investing rewards humility — updating your view the moment the facts change. Ego needs to be right. Investing needs you to become right and strangely by admitting when you weren’t.

Why people don’t take it seriously:

Perhaps it is because ego is invisible to the person carrying it. Nobody thinks “I am too proud to admit this trade is bad.” They think “I still believe in the thesis” even though the data says otherwise.

Lesson number 4. Envy will make you abandon what works.

You’re doing fine. Your process is sound. Your returns are reasonable given your risk tolerance. 15 - 20% per year for 4 straight years. Not crazy good, but not bad at all.

Then a friend on a group chat posted: +62% YTD. And also a chart of his investment performance. You then think to yourself, what am I doing wrong? My numbers look small compared to this guy. All of the sudden your good strategy feels inadequate.

Howard Marks puts it bluntly that envy causes investors to abandon sound approach in favor of chasing that new method some else is using. Not necessarily because the new thing is better. But because someone else made more money in the moment.

Why people don’t take it seriously:

Perhaps because most people never register it as a trade-off. Chasing someone else’s return doesn’t feel like giving anything up — it feels like a going for a better outcome.

What it actually is, is a swap. Optimising for staying in the game and optimising for looking good this quarter are not the same objective, and most people never notice they’ve switched from one to the other.

We are very well aware that value investing might not produce the best returns in this quarter. But when it does, there will be plenty who want to switch strategies to do value investing.

Bonus lesson: compounding is slow and underestimated

This lesson is exceptional because it is very, very unteachable. Even when I repeatedly say: we tend to overestimate the things we can achieve in a week, but underestimate the things we can achieve in 5 years — I still commit to trying to achieve too much, and worry if I haven’t done enough during the week.

The craziest part is I know the maths. I have run the compounding table more times than I can count. I know that flat, unremarkable-looking growth in year one and year two turns into something that looks like a hockey stick by year eight, if you just leave it alone. I’ve read the studies. I’ve made the spreadsheets. And I still catch myself, quietly measuring my progress against a timeline that has no relationship to how compounding actually works.

It’s not a knowledge problem. Nobody fails to compound because they didn’t understand the concept. They fail because understanding a concept and feeling it in your bones on a random Tuesday when nothing seems to be happening are two completely different things.

Closing Remarks

If this essay has allowed you to ruminate some of these hard earned lessons without you actually experiencing them, it has served more than its intended purpose. Sometimes, some things are meant to be learned the hard way, but not always. If you think that this essay would be helpful to anyone in your circle, go on restack or share it.

Cheers!

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This timely article is probably most important one I’ve written this year—maybe in years. If I don’t get it all right, I look forward to your comments and corrections. If you believe it can be of use to improve quality of your circle, please share it. As always, they are my opinion and they are not to be construed as financial advice.

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One morning, Hendra was the proudest man in Jakarta. He sipped his morning coffee and started his day swiftly.

He held an envelope in his jacket pocket. It contains the enrolment deposit for his daughter’s first semester at university. Hendra is a simple man. He works at Astra Graphia as a salesperson, selling Fuji Film printers to offices (mostly companies within the Astra Group as well). But his salary was enough for him to save for his daughter’s education.

A little every month, for years until his daughter got accepted to Universitas Indonesia. What a moment. He never made it to university himself, but his sacrifice and hard days in the office would soon pay off to something great in the future, through the life of his daughter.

He took the route he always took, down Jalan Gajah Mada toward Glodok. The same shophouses he had passed 10,000 times — the gold sellers, the electronics counters, the hardware stalls run by the same families for three generations.

Except today there was a gridlock. He sensed something wrong when he smelled a distinct smell of smoke on the streets.

He initially was still calm, but he grew restless as he overheard people from afar screaming and shouting.

Hendra decided to leave his car. As he started brisk walking towards the bank, he saw from a distance that Glodok Plaza was alight. Further down, the old market was alight. The street lamps had come on early, because the afternoon had gone black with smoke.

Hendra was delusional, maybe the bank is still open. He proceeded forward through a group of strangers carrying televisions and rice cookers and whatever they could carry. Only to finally learn that the bank building he wanted to pay a visit was literally on fire.

And the envelope was still in his pocket, worth 9 months of his salary at Astra Graphia. When he saw that the building was lit on fire, he finally realised that his plan had to wait. He must quickly go back home. He’d need to at the very least make sure that his daughter is safe.

He ran.

That is not the opening of a film.

That is May 1998, reconstructed as faithfully as I can through the eyes of one ordinary man who set out to do nothing more than deposit his daughter’s university tuition fee. Across the city that week, more than a thousand people would die — most of them burned, hundreds of them inside a single shopping centre in Klender.

And here is the cruelty that adds to it. Lets say Hendra made it out, got his daughter and a single bag to the airport to flee the country. The money had saved up already betrayed him too. Rupiah had collapsed from around 2,500 to the dollar to as much as 16,000. Even the escape was a loss.

The banks you trusted, gone

Start with the most reputable bank in the country.

It was owned by a mega business empire Indonesia, run by the tycoon sitting close to Soeharto himself. If any bank on earth appeared untouchable, it was this one. This is the bank the middle class handed their salaries to without thinking further.

During the riots, it suffered a violent run. In a matter of days, deposits collapsed from around Rp56.8 trillion to Rp34 trillion — and 122 of its branches were burned and damaged. It didn’t survive and the state had to step in to park it inside Badan Penyehatan Perbankan Nasional (BPPN), the bailout agency.

The deal to salvage the bank was messy and topsy turvy. But less than 30 years later, the bank went on to be the most valuable public company by market cap in Indonesia.

That company was BCA.

The state owned banks did not have it any better. There were four of them that went under:

• Bank Bumi Daya

• Bank Dagang Negara

• Bank Exim

• Bapindo

They were so broken they couldn’t survive on their own. They were fused together into a single entity. And again, less than 30 years later, it became the largest bank in Indonesia by assets.

You know that entity today as Bank Mandiri.

Let me stress this once and for all, because this is easy to skim past. These banks did not have a “rough quarter”, or “slower-than-expected growth”, or “NIM compression” or “made by government to channel money to villages”.

They died.

And the rescue?

The years after the fires didn’t restore anyone’s faith either.

The dead banks were swept into BPPN, the bailout agency, and the government had political will to save them. It just cost a fortune which was on the order of 50 to 60% of GDP to recapitalise banks whose books were garbage. Yeah, the initial capital for the government to setup Danantara is about 1.4% of GDP today. That number looks cute compared to the amount in proportion they had to spend to rescue the banks.

Was the intent good? Yes of course. Because you do not want a country with no functioning banks.

But how about the execution? Predictably, there was corruption involved.

You’d think every rupiah back then went purely toward saving the dead banks?

Well, the most famous example is the Bank Bali scandal. A businessman named Djoko Tjandra engineered a disputed “cessie” (debt-claim) deal that ended with Rp904.6 billion of public money being paid out through Bank Bali — funds tied to the very bailout that was meant to be stabilising the system.

Let me be careful here and stay strictly with what the courts and the press have established. Tjandra was acquitted at first, then convicted on review by the Supreme Court — sentenced to two years and ordered to forfeit roughly Rp546 billion to the state. The day before the ruling, he left the country. Here is how The Jakarta Post headlined it when he was finally caught, eleven years later:

“Indonesia brings graft fugitive Djoko Tjandra back from Malaysia.” — The Jakarta Post, 31 July 2020

So now put yourself back in Hendra’s shoes, assuming he made it home safely that day. He watched the violence, he watched his savings evaporate, he watched the most reputable bank in the country collapse. To put sprinkles onto the ice cream sundae, he then watched the rescue itself mired in a corruption scandal.

What more can you ask. I mean if I were to be Hendra, I might walk away and never trust a bank in Indonesia ever again. Let alone, becoming a minority shareholder in one. That would be max insanity.

His feelings would have been justified. In 1998, the skeptic was the smartest person in the room.

And then the world kept testing it

Fast forward ten years, 2008. We saw The Global Financial Crisis.

If you’d lived through 1998, perhaps your reaction was completely reasonable: Ah, sudahlah. Indonesia is finished. There is no chance this economy weathers a crisis of this size, not with this many corruption cases sitting at the top.

And the markets did get hit. IHSG went from 2,830 to 1,113 that October. The Rupiah weakened from Rp 9,000 to Rp 12,400 at its worst in November 2008.

How about BCA?

While banks in the US were imploding, BCA’s lending slowed but it remained profitable. It booked around Rp3.3 trillion in just the first half of 2009. And Indonesia grew +4.6% in 2009 — the third-fastest in the entire G20, one of only a handful of major economies on earth that didn’t shrink.

Fast forward 12 years later after the Global Financial Crisis

The economy is literally shut down. People can’t leave their homes. The country posts its first recession since 1998 — GDP −2.07%.

Surely this is the one that finally breaks the banks in Indonesia. Well quite the opposite. BCA printed money.

BCA’s net profit for 2020: Rp27.1 trillion.

Yes, that was a dip, down about 5% from Rp28.6 trillion in 2019. The bank deliberately parked enormous provisions against the loans it restructured for struggling borrowers. But read the number again. In the year the entire economy was switched off, BCA still earned twenty-seven trillion rupiah. It didn’t lose money. It didn’t wobble. It was certainly quite far from dying.

It earned slightly less for one year, then went straight back to compounding:

• 2021: Rp31.4 trillion

• 2022: Rp40.7 trillion

• 2023: Rp48.6 trillion

In three years it went from a COVID “low” of Rp27T to nearly Rp49T which is an all-time record. The share price followed, printing high after high (right up until the 2025 drawdown I wrote about in To those holding big banks — but that’s a story about price and sentiment, not about the business underneath it).

So by now, something genuinely strange had settled in. Owning banks was no longer the reckless move. It had become the prudent one. Virtually everyone — advisors, respected investors, your disciplined uncle — was urging you to hold banks as a core equity position.

How did that happen?

Let us sit with the seismic size of this shift for a second.

Picture a population that was traumatised into distrusting banks. They watched them collapse and they also watched the bailout get robbed by greedy elites. Yet they somehow turned into a population that treats banks as the bedrock of Indonesia’s capital market.

And this isn’t dumb money talking itself into a story.

If we take a look who actually owns BCA (you can take a look at the daftar pemegang saham). You have:

• Norway’s sovereign wealth fund is in there

• big global index and pension funds

• among others

They are not a random retail you’d find on a discord channel that broadcasts price predictions every minute.

Here’s the part where I think is rarely discussed.

While everyone was, correctly, furious about the corruption and the looting and the Djoko Tjandras of the world, something boring and durable was being built in the background.

They are real instruments:

• LPS / deposit insurance (2004) — the backstop Hendra didn’t have.

• Independent central bank (1999) — no more BLBI-style political liquidity hosing.

• Caps on connected lending (~10% of capital) — the big one; it outlaws the exact thing that killed the banks (owners lending to themselves).

• Higher capital floors + consolidation + Basel buffers — why CAR now sits north of 20%.

• OJK (2013) — dedicated bank watchdog.

• Crisis playbook (2016, the KSSK committee) — coordinated handling instead of a panicked scramble.

These things are not trendy to be discussed. The robbery and scandal make headlines, but I see that the rebuild happens in silence over decades.

And that’s the trap ladies and gentlemen. The bad news is loud but the repair is almost always slow and quiet. If you listen to the loud volume, you’d come to the conclusion that the country is ending even when it is quietly becoming the very thing foreign sovereign funds want to own for the long term.

I am not from La La Land

In this economy and bad sentiment today, you are probably thinking that Toby is starting a patriotic singalong. Not really.

Is the government free of corrupt officials? Of course not. You could take the most recent one — the Makan Bergizi Gratis (MBG) or free nutritious meals program. Just days ago, in June 2026, the Attorney General’s Office arrested the former head of the National Nutrition Agency and two of his deputies as suspects. The scheme prosecutors describe is too familiar: rig the vetting portal so affiliated foundations win the kitchen contracts, then mark up the procurement and pocket the difference.

Just like a normal taxpayer, I am absolutely furious that my tax money is being spent to feed these dreadful creatures instead of being spent to feed school children who can’t afford quality meals.

So no, I am not saying that corruption has been solved. Corruption is still being committed and the people who do it should be prosecuted. Full stop.

But here is a question that matters equally. Is it smart to expect government to eradicate corruption completely?

No, of course not. No matter how good the system gets, no matter how qualified the official, there will always be someone, somewhere, who does the awful thing. Even in developed nations!

So yeah, it is reasonable to disappointed, angry and upset about the corruption that inevitably happens. What I think is not reasonable is to:

• look at a SELL INDONESIA headlines

• listen to gossips at your tongkrongan on how bad some officials are conducting their affairs

• read too many Telegram groups’ negative opinions that contain too much logical gaps mixed in with unofficial news or rumors

• and many other ways you get your information from

and then conclude that the country is about to go bankrupt, or collapse back to what it was in 1998.

But can it go back to 1998 though?

Well of course it can. There is always that tail end possibility.

But can you reach financial independence by winning the lottery? Yes you can.

Do you stop work when you know that you can win the lottery? Well I hope not 🙂

So the question to ask is: are you a realist or a cynic?

When you see the next scary headline — another scandal, another half-baked policy implemented at a large scale — ask yourself that question honestly.

If you’re a realist, that’s healthy. I believe that people should treat every new government regulation, every new program, with suspicion, so that we stay critical of what they actually do. Pressure them in whatever means or capacity we have as a lawful citizen.

Contribute, deliver good work and teach good values by real example, to demonstrate that the bad examples we see in the media are just below our standards.

But being a realist is not the same as being a cynic. And the line between them is thinner than people think.

A cynic is someone who can only criticise — who assumes that whatever anyone does, it must end badly.

And here’s the uncomfortable truth: being cynical is much, much easier than being a realist. The realist still has to weigh the evidence. The cynic has already decided to believe in just the negative things. Any new information about some negativity just reinforces their beliefs without much critical thinking.

Any positive news? It’s fake bro, if they are a cynic.

Think about it like religion. Expecting no official to ever be corrupt is like expecting no priest to ever be caught in a scandal. If that’s your standard, you will be disappointed.

The cynic’s response is to stop going to church entirely. To declare the whole thing hypocritical and walk away. There is no point in religion if we can’t trust religious leaders who commit awful scandals.

But I strongly disagree with that. Practising religious values and actually living them is still a virtuous, worthwhile thing to do, no matter how many individuals fall short of them.

If we can see that so clearly with religion, why is it so hard to see it with our government?

The banks that failed the population in 1998 are the banks the world wants to own in 2026. Like it or not, both things are true. And the herculean effort to save them from the gutters seems to not be for nothing in the longer run.

There are other long term projects that are running now in Indonesia. Danantara, IKN, MBG and so on. Your realism in the form of eye balls, critical thinking and constructive discourse in good faith is very much needed. Your cynicism can probably take a back seat.

Perhaps corrupt officials will never ever be eradicated from this planet. But also perhaps if you play your cards right, future generations might thank your contribution in ways you will never be able to imagine.

Cheers.

If you feel that there has been too much cynicism in your circle, share this post, or restack it. Let’s build more critical thinkers around here.

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Disclaimer: story written in this article not a real story. This story is fabricated based on many many calls that I take with potential customers. Also any mention of symbols, ticker or investment instrument is not to be construed as financial advice. This article is for educational purposes only to help readers reflect and see things from a different angle.

In a Gmeet meeting, a potential customer sat on his desk with a blurred background. I could tell from his expression that he was worried. I cordially invite him to share his investment experience. He muttered that he has two main investing portfolio comprising of Indo stocks. One is for long term and the other is for short term.

The idea for the long term portfolio is sound, he would only buy bluechip stocks that are perceived to always go up in price. This makes sense because the companies inside the portfolios are truly well known. Consumer juggernauts all the way to big banks. These aren’t the type of companies that go missing tomorrow.

Then, on the other hand, the short term portfolio is for him to do trades based on market psychology, employing various trading strategies. It tends to contain riskier plays. Often companies that are gossiped to be the next big thing in terms of its price action. The term for this changes depending on which class of investors they are.

Conglo 2025: cacing-cacing naga-naga

Covid 2021: saham pompom

Late 2010s: saham gorengan

1990s-early 2000s: saham bandar

Nowadays in light of the MSCI phenomenon, It is not uncommon at all to see -80%, -60% floating loss of “conglo stocks” that were popular in 2025.

From this, I could tell that most investors already have given up stocks completely. They usually will blame the government and everyone else but themselves about the current predicament. However, there is a small minority who’s brave enough to lean into the fear and take this moment as an opportunity to raise their standards in investing by calling us.

Meanwhile for big banks portfolio is now down 26.2% and the person is usually not too worried because they believe that big banks would grow in the long term. What becomes the point of contention is usually opportunity cost. Is my money working as hard as possible at the current moment? While they wait for the drawdowns to recover.

Now I have seen this a million times

So I thought that this is just the “norm”. Every other professional that I have spoken to over the last two years has the same two buckets (kantong investasi). But to me it is quite confusing.

Why when people have different financial goals, different time horizons, different family context, and so on, somehow converge on the same two buckets, weighted roughly the same way.

And they are smart enough to know that it doesn’t work for most people, perhaps including themselves

For the long term portfolio, they’d know that they are making the dangerous assumption that the price they pay for a share does not matter. The better and more popular the business, the more expensive it gets. And that’s fine by them because they believe that in the long term, the prices of these great companies will always go up. But they also know that when expectations are unmet, the share price could be severely punished. Famous example is Unilever.

Picture this in the mid 2010s, the stock has been rallying for well over a decade (see price chart above). It was championed by brokers, influential people as the stock that is considered evergreen. I still remember how the stock was sold to me personally (I was still in high school back then more than a decade ago).

Broker: Toby, do you know what people would still do during an economic crisis?

Gullible highschooler: What?

Broker: People would still take a shower. So companies selling soap like Unilever will always be relevant. That’s why it is an evergreen stock that will always go up in the long run.

Gullible highschooler: Wow!

Fast forward about 10 years later~

I am not saying that Unilever is a bad company. It is big and massively profitable. It’s just that I bought that company at a huge premium when I started my foray into stock investments. It taught me that you could not blindly buy an asset without caring about its price relative to the value of the company, no matter how good or famous or resilient they are.

For the short term portfolio, the flaw is easier to spot.

It fails the survivorship test

The successful trader on Instagram is a sample of one drawn from a pool of ten thousand. The other 9,999 abandoned their accounts and went back to work. The IG algorithm does not show the ones who went back to work. The trading course teacher does not talk about them. We build our worldview on a curated selection that is, by definition, statistically unrepresentative. And we know this.

The people I’ve met who run these two strategies are intelligent and genuinely knowledgeable. Many of them are doctors, engineers, consultants, founders. If you sat down with them and explained the flaws, they would nod and they will understand the risks of investing in this manner.

Yet they would go back to their portfolio and do the same thing especially at times when the strategy appears to be working.

So why do people want something, but they still do the opposite

Talk to the same people about FIRE. Financial independence, retire early. The movement that explicitly says the goal is freedom from financial obligation. Lower your costs, raise your savings rate, escape the salary trap and live from your investments.

Many of the people in the two-bucket portfolio also love FIRE.

And yet they still want to expose themselves to at least a decade long financial commitment with an uncertain (adjustable) expense that could elevate their future living expenses dramatically.

a.k.a.

They still want to buy a house.

Not just any house.

The house their peers, family, relatives, significant other would approve. These people believe in financial freedom. They want it. But they also sign the largest obligation of their lives, because of a widely held wisdom which is:

properti pasti naik (property will always go up)

Despite the elevated property prices especially high relative to average income earners. Despite the weakening demand. Despite the low yield. Properti pasti naik.

Therefore, they lock themselves up to a huge financial obligation. In their minds, if they need the money suddenly, they could always sell that property. Yet they also know that property is not a liquid asset.

Note: I am not saying that all property investments are bad here. But the kinds that I am hearing certainly is. The people I’ve heard about like to punch way above their pay grade to take up a huge mortgage and commit themselves to a long tenure of financial obligation.

So the puzzle seems to have layers here. Not just in investing in stocks.

I am seeing genuinely smart people making suboptimal decisions when they have rational knowledge that their decisions aren’t optimal. I mean you can agree with me that information is not the bottleneck here.

Even compute and analysis is not. You can ask Claude to make a financial projection for you for your purchase of a recent home. You could estimate your living expense and run simulations having 1, 2 or 3 kids now. If you don’t do it with AI, you could do it with a certified financial planner too. Its no longer expensive nor inaccessible for you to have this knowledge.

So something else is doing the steering of behaviour here.

What an academic says about this

Robert Cialdini is a social psychologist at Arizona State University. He is widely known for the book Influence: The Psychology of Persuasion, has sold millions of copies (hopefully I can sell that many books next time 😝). It is the foundational text on what he calls compliance. On how people behave.

There are many conditions in which people would be “obliged” to behave in a certain way. They are reciprocity, liking, consistency, authority and social proof. His point on social proof finally gave me some sense for what I have been watching all this while.

Cialdini starts with a grim example.

The name was Kitty Genovese in 1964, New York. She was attacked by a man that lasted for more than half an hour, outside her apartment building. The craziest thing is that there were 38 neighbours who saw or heard parts of it from their windows. None of them came down to help Ms Genovese. None of them called the police until it was too late. The journalists who wrote about it framed it as a story about people becoming more individualistic in New York. To be honest, I would probably write the same thing if I were to be the journalist.

But Cialdini does not agree with this. He argues that witnesses were not apathetic. They were reading each others’ action. Each person looked out their window, saw nobody else doing anything, and concluded from that absence: this must not be the kind of emergency that requires my action. The more witnesses there were, the less likely any single person was to act — because each additional silent observer made the social signal of inaction louder.

This case became very famous it earned a name called the bystander effect. When you don’t know that the situation is truly an emergency in public, you’d rather be a bystander and not do anything.

That is what Cialdini means by a behaviour that is driven by social proof. It activates under two specific conditions:

1. uncertainty about what to do,

2. and similarity to the people around you.

The Genovese witnesses had both. They were unsure what they were seeing — was it a domestic dispute, a prank, a real attack? The fact that the event occurred in the evening was a clear smoking gun. They assumed the other watchers were people with judgement roughly like theirs. So they used each other’s inaction as evidence. And Ms Genovese died in the incident.

To me the negative example showcases how powerful this social proof effect is in our behavior.

Another more grim example, we might think that we love our lives. But Cialdini puts forth another example of Jim Jones’s Peoples Temple in Guyana, 1978. Cult members voluntarily commit suicide by consuming poison after they receive the instruction from the leader and after seeing that others oblige. Over 900 people died that day. Many of them watched their neighbours drink first.

If people can kill themselves because of social proof, I’d bet my money that people can buy a house because of social proof 🙂

So here’s what you can observe

Remember that brilliant cousin or university friend you met for dinner the other day? Perhaps they announced that they have just recently purchased a house. An expensive one that is beyond their pay grade at the moment. They say that they take a 20 year mortgage to finance the house and the rates are adjustable after 5 years of instalments.

How do you feel?

Maybe after reading this blogpost you’d feel like:

Naahhh, I don’t want to buy that kinda house. That ain’t me Toby.

But imagine you meeting your parents and they naively ask,

David, when do you plan to buy a house for yourself? You’re not going to rent forever are you?

How would you feel then?

It is a similar innocent question as to when do you plan to have kids? Or when do you plan to get married? They mean well but it is still a loaded question. A question that requires deep thinking and deliberation instead of one that has to be acted upon after seeing your friends’ answers to them.

Stock investments is the same

How would you feel when you know that your smart friends are owning big banks alongside you and DCA-ing S&P500 religiously?

Remember that stock investment has 2 things that social proofs tend to work on really well:

1. Uncertainty

2. Similarity of what people around you do

You very well know that you don’t know what the US president would say or do tomorrow. And today you brush aside his brash actions because your AI stocks are still bringing in acceptable returns.

But what if they stop delivering the returns you’d expect?

How would you feel?

Will you be blaming the US government? Or will you realise that perhaps copying what others are doing at the moment is not the most prudent investment decision?

Most will do the former. A tiny minority will do the latter.

So arming yourself with knowledge is not enough

Social proof is a powerful force and I think that rationality is not a strong enough weapon to overcome it. I believe that combatting conformist thinking requires you to change which signal is closest to you.

Practically, that means three things.

First, get explicit about your own goals on paper, in your own words, before considering anyone else’s opinion. Read them more often than you read your family or friends’ WhatsApp group.

Second, surround yourself with at least one person who is a contrarian, and whose opinion you cannot easily ignore.

The third thing is ask yourself:

“Would I still want to own this thing if nobody knew?”

If the answer to owning something is yes based on your calculations and honest preference, then it is likely a good deal. But if the answer is no; then you probably have to think twice or thrice before pressing that buy button.

It is one thing to buy because you want it for your own interest (be it present or future). And it is a completely different thing for you to buy because you want to fit in.

Knowing the difference helps.

Cheers.

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.

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!

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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.]

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

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.

Disclaimer: Not financial advice, this content is about having conversations about finance for educational purposes only as a source of reflection. When in doubt, always contact your trusted financial advisor or financial planner. If you use the AI prompt below, be sure to be aware that AI can make mistakes. Ensure that you read the content carefully and if there are things that do not make sense, go back to your financial advisor or financial planner.

Talks about finance and wealth is something that seems to be a taboo, not only in Indonesia but perhaps globally. It is indeed a sensitive topic to discuss because our perception about money can be different from one another. One might feel that money should be safe guarded at all cost, others might not want to talk about money at all (avoidant) and want to focus on enjoying life. Talking about money becomes a huge chore and a hard conversation that few want to have unless absolutely necessary.

Furthermore what’s commonly observed

is that there is a group of people who’s the breadwinner to support the financial life of generations above and generations below (sandwiched). Although there are multiple stakeholders, conversations about finance and money might remain absent.

Imagine you have a WhatsApp group with your family:

• Alex (breadwinner wants to get promotion)

• Bob (father wants to buy a new fridge)

• Carol (mother wants to go to the dentist)

• Dalton (grandfather wants to do a medical check up in Penang)

• Emily (grandmother wants to take yoga classes for her wellbeing)

• Money (Alex’s wallet)

Alex financially supports the wants of B, C, D, and E. But Money is never really in the picture although Money is the ultimate decision maker as to whether the wants of all family members can be fulfilled or not. Because if there’s not enough money, Dalton might not be able to have a medical check up in Penang.

What’s worse, even when Alex couldn’t afford it with his income, he might end up unknowingly take up a tad bit too much debt. And… none of his family members would be aware that Alex is in trouble.

But why?

Why do we seldom talk about something that is as essential as money. Or at least every participant who has their financial need supported by another person might want to have a transparent picture of Money in the WhatsApp group.

I am very lucky to be able to have a nice conversation on

How to talk about finances to our family

with one of our customers, Rico. This is especially important for people who supports multiple generations’ financial needs who might want to look for ways to talk more openly and safely about money with their family.

It is barely scratching the surface about the topic but the video gives a good idea about where we can start. Enjoy!

Also, this is why the video might matter to you as a long term investor

Most people think investing is about returns.

But in reality, your financial outcomes depend on:

• your relationship with money

• your family’s relationship with money and their expectations on you

Your portfolio might have a hard time growing if a lot of your energy—mental, emotional, financial—is used to patch invisible holes at home.

Clarity and honesty protect not just your balance sheet but your well-being. So hopefully it would be of value.

For those who like to read

you can always get the show transcript from YouTube, and copy paste it in to ChatGPT or your favourite AI tool (I tested the prompt with the free ChatGPT model) with the following prompt:

“““

You are an editor and writer helping me transform a raw YouTube transcript into a polished blogpost.

The transcript is a conversation between Toby (host, Co-Founder of Recompound) and Rico (guest, customer). You do not need prior knowledge about Recompound—everything needed is described below.

Your Tasks

When I paste a transcript, you must:

Rewrite it into a complete, polished blogpost

Use this style guide to frame the writing:

• Tone: calm, reflective, long-term, psychologically aware, non-hype, data-driven but simple.

• Audience: busy professionals & entrepreneurs looking to improve their investment mindset.

1. Clean the transcript

Remove filler words like “uh”, “you know”, “like”, “kan”, “ya”, “basically”.

Remove repeated sentences, cut irrelevant small talk, and re-organize ideas so they flow logically.

2. Turn messy dialogue into a coherent narrative

• You don’t need to preserve conversational format.

• Convert the scattered points into a single-voice essay.

• Attribute ideas subtly (e.g., “Rico shared that…” or “As Toby explained…”).

• Keep only the most valuable segments.

3. Preserve the wisdom, not the wording

Use the transcript only as source material, not as literal sentences.

Rewrite everything into clean, professional, simple prose that fits the Recompound editorial style.

4. Deliver output in this format:

Title: (5–10 words, reflective, non-clickbaity)

Subtitle: (one sentence framing the insight)

Body:

• Opening hook (2–4 sentences)

• Body sections with clear subheadings

• Actionable takeaways (bullet points)

• Soft CTA:

If you want to improve your decision-making and long-term investing approach, you can explore more of our writings at Recompound.

When you’re ready, tell me:

“Paste your transcript below.”

“““

Closing remarks

Still here? I am curious about how you’d find the video or the ChatGPT summary, schedule a call with us if you have food for thoughts or just want to have a safe space to talk about finance.

Get in touch

If you want to know more about us and our work,

Click Here

Hi 👋 welcome to Recompound Blog - The Investment Mindshift. We help you better your mindset on investment and economics one article at a time. More: Our Values | Advisory | Get to know us | Picks | YouTube

Remember guys, not financial advice. But hopefully it will be a post to help you think about the topic more deeply if you haven’t already :)

Today is a longer blogpost, so maybe set aside about 30mins to 1 hour to truly read and absorb the ideas. Or read it multiple sittings is also fine.

Before you bash me, hear me out.

Devils is in the details and you will understand my argument when you read the entirety of the post 🙂

I honestly feel that “financial freedom” has been the holy grail of many people, not just in Indonesia, but globally. Many seem to want to earn that FU money and retire early. Manifestation would involve side-gigs, speculating in the stock market, cryptocurrency or other high risk assets.

But I am arguing that chasing financial freedom is commonly misunderstood and could be potentially one of the most dangerous ideas of our time. Especially when we see patterns of people achieving financial freedom too early often collapse.

Let’s take a look at football players

It is an extreme group of people. But understanding such phenomena can we grasp the potential pitfall of naively chasing financial freedom.

So a Premier League player (you got me I am a Man Utd fan) on average earns £35,000 per week — roughly £1.8 million per year. Even with a short 5-year career, that’s £9 million in earnings. After expenditure and taxes, maybe £4 million lands in their pocket when they retire.

At a 5% annual return, they could live on:

£200,000 per year — forever.

That’s pure financial independence for 99% of the people on the planet before hitting the age of 30. Yet the data according to BBC is quite shocking:

2 in 5 players go bankrupt within five years of retiring.

This is not even within the life time of the player. You give them 5 years and 40% of them go broke. Let that sink in for a moment. Now you can imagine if a sizeable portion of the population of working adults get to financial freedom but a good chunk of that free people end up broke then depressed. That’s a problem.

Clearly lack of money is not an issue here. You might be thinking that there’s something psychological:

• They live very luxurious lifestyle

• They have no financial education

• and more

I don’t buy these arguments as it is too simple. Premier League footballers might be one of the toughest nuts you could find on earth. They are not just talented, but level of discipline, focus and intelligence need to also be there. Otherwise they won’t be playing in the Premier League.

Need to learn financial literacy? I don’t think they are stupid enough, especially when resources is that abundant. You could literally go on to YouTube and educate yourself about finances. You could even hire a financial advisor to help you do investments in the financial market while you focus on other areas of life.

Need to stay away from flashy lifestyle? If they could be disciplined in preparing for matches, I also think that discipline is transferrable to many areas of life.

So it seems that the issue of professional footballers getting broke goes deeper than those superfluous explanations. I think it is biological. We’ll talk about dopamine next.

The Molecule That Drives Your Entire Life

Most people understand dopamine as the molecule that drives pleasure. That’s not entirely correct. According to Dr. Andrew Huberman of Stanford Medicine, dopamine is the molecule of pursuit, craving, motivation, and forward movement — not pleasure.

It is released when you:

• work toward mastery

• improve at something

• anticipate achievement

And here’s the first crucial insight that is the most important thing for you to remember today:

Dopamine is the chase, not the reward. Pleasure is what comes after — from other brain chemicals.

Dopamine is what drives you toward the thing in the first place.

That cute girl in the office that you see (if you are single of course), you might want to get her number. That’s dopamine.

Now Huberman explains that dopamine exists in two forms:

• baseline dopamine = your daily sense of motivation

• peak dopamine = short bursts when you achieve something, win something, or get excitement

You can imagine it as a pool filled with water. Baseline is when the water is relatively still. Peak is when there is a wave in the pool, which will create an inevitable crash (level below the baseline).

• You experience a dopamine spike (peak).

• Immediately after, dopamine drops below your baseline.

• Then baseline gradually recovers to its original level…

Now here’s the important bit - your baseline level determines your motivation

The lower the baseline, the lower the daily motivation. And according to Huberman, this baseline could be lowered by a crazy crash from peak dopamine.

How do you have a crazy crash? Consumption that causes a steep rise to the peak which is followed by a steeper crash. This causes the “water” to be taken out from the pool and the resulting baseline would decrease.

What kind of consumption?

• gambling

• drugs

• alcohol

• you know

But why consume? Again, because the feeling of not having the pleasure, below the dopamine baseline level is pain. We do not like pain so we are compelled to do things to get rid of it. And consumption is a magical and temporary cure that allows us to get rid of that pain and go for those peak dopamine levels.

But why consuming indefinitely is a problem?

Law of diminishing marginal returns

In economics, the more you consume something, the less joy you get from each additional unit of consumption.

• The first ice cream is amazing.

• The tenth is bland.

• The eleventh? You might want to pay a mukbang person to eat it for you.

So imagine you getting your financial freedom today. And you have said to the world that you are going to be a foodie that hunts for new hidden gem place every day.

Year 1 of being a foodie feels incredible. You get to try hidden gems, all sorts of cuisine

Year 2 not so bad.

Year 10. Maybe eating food would already stop giving you that same pleasure you initially started.

Year 30? Maybe you just want to eat home cooked food.

The worst part is that once you’ve realised that your life is miserable after so many years of consumption and you want to return to productive work, the inertia will be that much bigger and harder. Because it so happens that consumption gives you that comfort that also blunts your skill.

So let’s tie everything together sequentially to show the sync between neuroscience and economics. Most people chase money, imagining that once they “arrive,” they can sit back and consume forever. I’d argue that this is a dangerous idea.

1. Money → enables consumption. Once you arrive, you think you can buy anything.

2. Consumption → creates dopamine peaks. Every indulgence gives a short-lived spike (food, luxury, gambling, entertainment, etc.)

3. Dopamine peak → triggers a crash below baseline. After every peak, baseline dopamine drops temporarily.

4. Crash → generates pain. This is the “post-high emptiness” Huberman describes.

5. Pain from crash → compels more consumption. Brain thinks: “consume more to fix this pain” but that reinforces the problem.

6. Repeated consumption → deeper baseline depletion. The readily releasable pool of dopamine becomes depleted. Baseline takes longer to recover. Joy becomes harder to feel.

7. Lower baseline → lower drive, lower motivation. Huberman explicitly says: Low dopamine = low motivation, low excitement, low desire to engage.

8. Lower motivation → life feels depressing. This is why footballers, lottery winners, and retired athletes often spiral downwards.

9. Lower motivation → makes more consumption feel like the ONLY escape

And…. more consumption need? More money.

The worst part is consumption can deplete baseline which becomes a self-destructive loop:

money → consumption → peak → crash → pain → more consumption → deeper crash → lower baseline → lower motivation → more consumption → financial ruin

In other words, consulting law of diminishing marginal utility, “pleasure” you get from the same type of consumption activity diminishes as you get more of it. You’d want more to consume more extravagantly to “make up” for that dopamine crash.

it becomes either:

• you spend more to consume more stuff OR

• you feel pain and misery because of dopamine crash that is returning to baseline levels

Either way it is unsustainable. But this is not a doom and gloom blogpost that offers no solution. I think it’s good for you to achieve financial freedom by focusing on production that you genuinely enjoy.

How about production?

Now compare consumption with production.

When you produce — when you build, create, solve problems, serve others — something completely different happens:

• Your skill compounds.

• Your reputation compounds.

• Your relationships compound.

• Your impact compounds.

• Your fulfillment compounds.

• Your identity strengthens.

• Your dopamine becomes sustainable.

Economically and neurobiologically, production is self-reinforcing:

The more value you create, the more dopamine-rich the process becomes — and the more value you are capable of creating next.

It has a compounding effect.

This is the opposite of consumption.

Think of:

• a chef whose dishes improve every year

• a writer whose clarity deepens with every essay

• a coach whose players grow season after season

• an entrepreneur who builds something thousands use

• an investor whose circle of competence compounds

These people feel more alive the more they pursue their craft. Their dopamine is tied to effort and progress — exactly how the brain is designed to function. This is why many peak performers are happiest not at the destination, but during the years they are building toward it.

But there’s a catch: you can only produce indefinitely if you enjoy the process

You can only sustain production and enjoy compounding dopamine if you genuinely enjoy the craft itself.

If the work energises you, if the pursuit itself feels meaningful, if the effort feeds your dopamine instead of draining it:

• you don’t burn out

• you don’t need to escape

• you don’t collapse after milestones

• you don’t chase consumption for stimulation

• your sense of meaning grows richer with time

This is why some people can work joyfully for decades while others burn out in two years. The joy of the process is the fuel that makes compounding possible.

So..

1. the better you get, the more valuable you become

2. the more valuable you become, the more people you can help

3. the more people you help, the more meaningful your life becomes

4. the more meaningful your life becomes, the deeper your dopamine reservoir

5. and the deeper your dopamine reservoir, the more motivation you have to create value (going back to point 1)

This is the compounding loop of a meaningful life. And the money?

Money becomes the by-product

You don’t need to chase it because it is pulled toward you by the value you create. And you will create that value because the work itself feels intrinsically rewarding. Not because you’re forcing yourself, but because your brain’s dopamine system is aligned with the pursuit.

Closing remarks

Some food for thoughts for the weekend if you are reading this on a Friday. Are you chasing financial freedom and early retirement because you truly have something that you enjoy doing and pursuing that is of value to other people? Or is it largely because you want to consume for the entirety of your life? Or is it because you are simply working with the wrong people that you no longer enjoy your work?

If its a people problem, but you enjoy your work, means that you will need to figure out to clean your environment up :) or relocate to a better one. Either way, financial freedom is likely to not be the answer. Chasing it naively as this essay has explained can be dangerous.

So instead of chasing financial freedom, why not chase productive work that you truly enjoy and could do indefinitely? Financial freedom then comes as a bonus, a by-product of that.

Hi 👋 welcome to Recompound Blog - The Investment Mindshift. We help you better your mindset on investment and economics one article at a time.

This is a continuation to the article navigating Indonesia’s Investment Terrain. One sentence summary:

Being a working adult in Indonesia is hard especially if you want to accumulate wealth. The only options available seem to be short term in nature. Chasing hype, gunning for returns, etc.

What to do..

And the problem is so real that it is also felt by many of our clients. One of them is Sherwin.

If the image is not clear enough, here’s what he asked:

“hey guys, curious to hear your thoughts on this if you have the time. I’m not a professional investor or trader but I’m learning and observing markets and wisdoms in stocks, crypto, etc so I’m putting on my curiosity hat here.

So, lately I’ve been noticing my instagram algo pointing me towards a few stock players, large following, who’s been making large gains in the past 2-3 years (probably from those conglomerate stocks). For example, someone made 280% gain in 4 months and this person was rewarded by KB valbury for exceeding trillion rupiah transaction value.

Now, seems like some of these people are still quite new to the trading market i.e since covid but they are defying conventional wisdom (where 20-30% per year return is already good) and trying to target billions in gains or 3x-5x-10x return.

I’m wondering if indonesia stock market is just an entirely different market where conventional wisdom we see in books (typically targeted for US stocks market) don’t necessarily apply or there’s something fishy going on here?

My gut tells me that it’s a mix of luck, speculation, and timing and they’re using this to get people to buy their classes”

This is a very good question that is not easy to answer

Because we don’t know two things:

1. How lucky is the influencer in question

2. How skilled is the influencer in question

And therefore, how legitimate is the influencer in potentially bringing or inspiring returns for their followers. But aside from individual brilliance, there’s another layer to the question:

if we play it right in Indonesia, we could “3x-5x-10x return”. And this potential returns is unique to Indonesia.

I will answer the easier question first: is Indonesia unique as a market to bring in crazy returns?

No, I don’t think so. There’s a possibility of getting crazy returns in virtually any market given extreme individual brilliance or extreme luck. Even in the slow, boring Japanese market, if you all in on MUFG stock in late 2023, you would more than double your investment by early 2025. And MUFG is not a penny stock, it is a large cap company.

But did you all in on MUFG? Probably not.

But there might be someone in Japan who did. We don’t know.

That person in Japan might attribute his investment success on MUFG doubling to their luck and/or individual brilliance. And here’s the thing:

Possibility sells. Probability confuses.

In Daniel Kahneman and Amos Tversky’s seminal 1979 paper, “Prospect Theory: An Analysis of Decision under Risk,” they explained a powerful, predictable pattern in how humans make decisions under uncertainty.

It really was not about complex math, but a simple psychology. They presented subjects with two choices.

Problem 1: The High-Probability Choice

In this scenario, the odds of winning are substantial.

Overwhelmingly, people chose B. The near-certainty of winning $3,000 felt much better than the riskier, coin-flip chance at $6,000. When the probability of winning is high, we become risk-averse. We prefer to lock in the more probable, although smaller, gain.

Now, watch what happens when the context shifts.

Problem 2: The Low-Probability Choice

Go ahead. Take your time to choose.

…

…

Now most probably, you’d choose C. I mean I would choose C too. But here’s the thing.

Mathematically, Problem 2 is just Problem 1 with all probabilities slashed by a factor of 450. A rational person’s preference shouldn’t change. But it does.

Again in problem 2, an overwhelming majority of people flipped their choice and picked C.

Why? Because when probabilities are minuscule, our brains stop processing them logically. The difference between 0.1% and 0.2% feels irrelevant. Both are just “long shots.” or “mere possibilities”.

So our brain focuses entirely to the prize.

The decision-making process becomes:

“Well, if I’m going to get incredibly lucky anyway, I might as well get lucky and win the big prize.”

This is the Possibility Effect. We don’t value tiny probabilities linearly; we massively overweight them. The simple shift from 0% (impossible) to 0.1% (a possibility!) is a huge leap in our minds. To repeat, it is the change from 0 to 0.1% that our brain processes, not the concrete 0.1%.

0 → 0.1% is a big change!

0.1% → 0.2% is meh of a change.

Although mathematically, the magnitude of the change is equal. Now that right there is the psychological engine that powers the entire lottery industry.

The Influencer’s narrative to turn their success story into yours is “Problem 2”

Again, I am not saying that influencers are fraudulent (although probably some really are just insiders). But even if they are really that brilliant, their success story translated to your success story is a mere possibility.

Remember, it is not about the influencers that are smart or highly skilled. It is about you.

When they show you their portfolio, they aren’t offering you a 90% chance of making a safe 15% return. That’s boring. That’s probability, and probability is confusing.

Instead, they are selling you a “Problem 2” scenario. They are selling you Possibility.

They are implicitly presenting you with a choice:

• Option C (The Influencer’s Path): A tiny, undefined possibility of a 10x return.

• Option D (The Recompound Path): A less tiny, but still small, possibility of a 2x return.

So here’s why are you drawn to Option C: Influencer Path

Implicitly, I have mentioned that Influencer (Option C) and Recompound (Option D) only offers a possibility. That is why you are drawn to Option C. A big prize: life changing money! but at a very small percentage. While the Recompound path is boring. 20% on a good year?? Skip.

That’s one reason. But I am arguing that there’s another more powerful reason:

You think that Recompound path only has a probability that is slightly higher than option C.

That is where we (operators of Recompound) disagree whole-heartedly with you.

We think that the probability of achieving 10%+ returns is much much higher than just a mere possibility of achieving a big prized money. So to us, problem 2 is seen as follows:

• C: A 0.0001% chance to win $6,000,000

• D: A 95% chance to win $3,000

But then, at what probability does it mathematically make sense for you to choose option D? 20%. Now, look at this:

• C: A 0.0001% chance to win $6,000,000

• D: A 20% chance to win $3,000

That 20% still looks very uncertain psychologically! It is worse odds than a coin flip. Although you’d argue that 0.0001% to 20% is a mega leap. But still, you’d focus on the prize. $3,000 looks like a joke compared to a life changing $6,000,000.

Furthermore, if the influencer does a very good job in marketing:

• Using Ferraris, expensive watches → it increases the payout

• Using smart jargons that you are quite fuzzy → it increases the perceived possibility

The next thing you know, the payout for influencers shift upwards and the probability for Recompound to be mathematically convincing enough for you needs to be doubled:

Just like in Kahneman’s experiment, your brain ignores the near-zero probabilities and fixates on the jackpot. The influencer’s success story, however rare, makes the 10x outcome feel possible. And that feeling is intoxicating enough to make you forget that the real probability of you replicating their success is likely closer to 0.001% than it is to 1%.

The influencer’s strategy less about financial education; it’s about exploiting a well-documented cognitive bias. They are selling lottery tickets disguised as stock market wisdom. They know, consciously or not, that the dream of a life-changing gain is a much more powerful motivator than an analysis of likely outcomes.

But what should you be doing then?

Well, for starters, you kinda need to consciously fight your own brain’s programming. That’s hard. So kudos to you if you’ve been doing it successfully overtime 🙂

Especially since you now know that bad influencers are framing their pitch as a “Problem 2” (lottery ticket) scenario, your job is to re-frame it as a “Problem 1” (risk management) scenario.

You have to force your brain to do what it hates doing: ignore the glittering prize and focus on the cold, hard probability.

Ask yourself these three questions:

1. What is the real probability of me losing? Don’t focus on the influencer’s win. For every one of them, how many people tried the same strategy and failed? 100? 1,000? If you conservatively assume a 99.9% failure rate, the choice is no longer about the size of the prize. It’s about accepting a 99.9% chance of a failed execution of an investment strategy.

2. What is the pain of that loss? Prospect Theory’s other great insight is loss aversion: the pain of losing hurts far more than the pleasure of an equivalent gain. The influencer only shows you the joy of winning. How about the loss? How bad does it sting? What happens if that investment does not work out? How does that really impact your life, your stress, and your future plans?

3. What is my certainty price? Instead of chasing the 10x dream, what is the guaranteed outcome you would accept right now? Would you take a guaranteed 6%? Or 10% return? over a 0.1% shot at 10x? If you’re honest with yourself, the answer is almost always less than 10x moonshot that is promised.

By deliberately asking these questions, you shift from the emotional, possibility-driven part of your brain to the analytical, probability-driven part. You stop buying lottery tickets and start making investments.

You will be minority

Let’s be honest. Very few people will read this article, even fewer will understand the argument (although if you read this, most likely you will understand the argument), and even fewer fewer will actually implement it.

Expecting everyone to fight their cognitive biases is like asking every smoker to quit cigarettes tomorrow after telling them that smoking causes people to get lung cancer. Logical yes, but it is not happening. Smokers love their cigarettes. It’s addicting. The same goes for the pull of greed, the promise of a quick jackpot, and the dopamine hit of a “hot tip”. They are addicting.

The financial market, especially on social media, is a terrain that thrives on this weakness. It wants a majority of people to keep buying lottery tickets. It wants them to chase possibilities, not probabilities. Why? Chasing possibilities, trading in and out every second the price moves is a good business if you earn from people’s trading activities.

But that’s the point. You don’t need everyone to be sober. Only you need to be.

By choosing to see the world through the lens of probability and risk, you are stepping out of the majority and joining a small, quiet minority. This group is really not looking for a miracle. This group looks for a small edge over and over and over again. We are not playing for a one-time jackpot (although a jackpot sometimes do appear and they are very much welcomed); but we are playing for replicable growth.

The good news is that this minority is where the real, lasting wealth is built. While the majority is busy chasing the next influencer’s dream, you will be quietly compounding. And overtime, you can take a guess who would finish strong 🙂

Closing Remarks

But this raises a critical question. We just talked about the majority “chasing the next influencer’s dream.”

How about your friends? Or that cool aunt who works at an investment firm? Surely it is alright to listen to them right?

Well, if you glean knowledge from them only, this means that you are doing social learning. And it can be dangerous… So let’s use mathematics to show its danger.

Danger of Social Learning

Understanding this mechanism is a step in protecting yourself against the madness of the crowd.

Fact #1: Most retails underperform against the market.

Fact #2: Retails underperform because they make preventable investing mistakes over and over and over again.

Fact #3: They make the mistakes over and over and over again because they don’t know that those are mistakes. They think that that is the norm. It feels right for me to behave this way with regard to my investments.

It’s really like us binge drinking coca-cola every day and we wonder: hmmm why is my bloody sugar level seem to be unhealthily high? Why am I pre-diabetic?

Is it because of the Coca-cola? It cannot be (sarcasm), I drink it religiously after my meals!

This is what I believe

If you become self-aware to recognise these mistakes,

1. You cannot unsee them

2. You will be better than 99.9% of investors who don’t know that they are binge drinking that coca-cola and wondering why they are pre-diabetic

Which gives you a natural competitive edge. And yeah (un)fortunately, only very few of you will take it seriously. But I don’t mind. Even if 1 person becomes more self-aware for what I have to share, I am already more than satisfied.

Do I expect everybody who are aware of these mistakes be really good investors? No.

Do I expect everybody to be shredded with 6-pack abs after they know that the secret to fat loss is calorie deficit? Of course not. There are still so many knowledgeable overweight people out there. Just saying facts here.

But I do wish that for those who do become more self-aware that at the very least that they will not commit the mistakes we are about to discuss. Again, if it is valuable to one person, the video has already served its purpose. Enjoy!

Hi 👋 welcome to Recompound Blog - The Investment Mindshift. We help you better your mindset on investment and economics one article at a time. More: Our Values | Advisory | Get to know us | Picks | YouTube

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Disclaimer: This post is for educational purposes and is not investment advice. Figures and stock ticker cited are point-in-time snapshots that change frequently. Past performance does not guarantee future results. Index data and third-party sources are believed reliable but not guaranteed.

Same FOMO, New Story—Why “This Time Is Different” Still Hurts the Same

We didn’t set out to write a gloomy post. But the truth is personal.

Among our own families and friends—including people close to both of us (Toby & I) — many were pulled into euphoric trades and left carrying life-altering losses.

One story that hit us hard was a retiree Bapaks Bapaks who went all-in on a “can’t-lose” digital bank at the peak — with pension money he had earned over decades —only to watch it evaporate when the narrative collapsed.

You may have seen similar stories shared online lately; behind every chart is a real human trying to do the right thing for their family.

We’ve written before about how 2025 has felt—volatile, confusing, humbling.

As we approach October 2025, the mood reminds us uncomfortably of late 2021: the air was filled with optimism, the narratives are everywhere, and critical thinking is outdated.

Back then it was “digitalization” born in the COVID era — everything would go online, so anything with “digital bank” in the label “had” to be worth any price.

Research notes flowed, valuations floated, and serious people on Sudirman Street put out serious numbers.

Then gravity returned.

Receipts from 2021: what we were told—and what happened

• ARTO (Bank Jago) — A widely-circulated note in Oct-2021 initiated with BUY and a TP of Rp20,000, anchored on customer lifetime value and the GoTo ecosystem as growth rails; the TP explicitly implied ~29.7× 2022F PBV. The same report leaned on pandemic-accelerated online adoption and e-commerce flywheels (Tokopedia / Shopee) to justify runway.

  It even compared EV/users and argued ARTO’s valuation was “reasonable” given GoTo-enabled growth.

  

• AGRO (Bank Raya Indonesia) — RHB’s 2-Dec-2021 Initiating Coverage: BUY, TP Rp4,000 framed a “captive market + right platform” thesis, highlighting a hybrid on/offline model, the reach of BBRI’s nationwide network & BRILink agents, and a transformation that would clean up NPLs and drive CASA and NIM higher. It quantified the upside using a blend of GGM and value-per-customer (global digital bank comps).

  The same report projected CASA ratio rising toward ~78.6% by 2025 and NIM in the 7–8% range, consistent with the digital thesis.

  

• BBYB (Bank Neo Commerce) — Sucor Sekuritas’ Sept 17, 2021 “Research Notes” carried a BUY stance; the file we have is a truncated scan, but the saved title itself references a TP of Rp4,340 (document title alone captures the optimistic mood).

  

Prices? You know the rest.

ARTO ran to ~19,000 then closed 2022 around 3,000 —> -84%

BBYB surged to ~2,600, finished ~600 —> -77%

AGRO touched ~2,800, ended ~400 —> -86%

The narrative was airtight—until it wasn’t.

2025 rhymes with 2021 — different cast, same plot

Today’s trendy topic isn’t “digitalization.” It’s index inclusion.

Indonesian conglomerates are pushing hard to qualify for global benchmarks like MSCI and FTSE.

The street consensus:

“Prices can’t fall !! These konglos need to maintain prices for the indices.”

That story feels safe, institutional, almost mechanical.

But what’s safer than a narrative everyone believes — right at the top?

Sir John Templeton warned us:

The four most dangerous words in investing are: “This time it’s different.”

Those words glow brightest at the Pucuk.

Our north star (and why we’re writing this)

We believe one rule above all:

Long-term stock prices are pulled by long-term earnings power.

Short-term prices are pushed by short-term expectations.

Don’t believe us? FuNDaMenTal iS DeAd ? Just look at these charts:

10 year Price vs Earnings chart of ITMG, a major Indonesian coal mining company:

10 year Price vs Earnings chart of BBCA, virtually everyone uses this bank in Indonesia

10 year Price vs Earnings chart of OCBC NISP: A bank with origins from Singapore

10 year Price vs Earnings chart of HMSP: The myth the legend DJI SAM SOE !

10Y Price vs Earnings chart of UNVR: Probably the largest consumer goods company in Indo

When expectations sprint ahead of what a business can earn, sooner or later, prices mean-revert to the earnings reality.

When a company compounds earnings faster than the crowd expects, sooner or later, prices eventually catch up — and often overshoot the other way.

That’s why we’re not against “irrational” cycles.

If you’re a true pro who spotted the wave early and managed risk well—seriously, well done. It can change your life for the better.

Our concern is for late-arriving retail investors who enter when expectations are already sky-high, believing “it cannot go down !” often with savings they cannot easily replace.

That’s where real lives get hurt—and where the stock market earns an unfairly bad reputation in Indonesia.

The market is not a casino by design. It can be a path to financial freedom—if you let time, discipline, and real earnings do the heavy lifting: diversify across quality, pay attention to margin of safety, and be humble about what you don’t know.

Closing Remarks

We’re sharing this because we’ve seen the cost up close on our own close friends and families.

Btw this is why we built Recompound at the first place:

If this post helps even one person pause, ask a harder question, or size a position more safely, then it’s worth it.

Invest safe.