Kick-Downs and Comebacks: Lessons Learned on the Test Track and inside my code
The connection between automotive engineering and financial market strategies.
A warm hello to all new readers! I’m glad you are on board.
New here? I’m Michael and on a mission to make beating the stock market as easy for you as choosing your favorite ice cream. I write an algorithm that does exactly that.
How it all started. The journey so far.
Let’s hit the gas and get straight to the track.
Behind the Scenes
We all remember the first times
Remember when you first started driving and went pedal to the metal? For me, it wasn’t about the speed, it was about entering a new universe. There’s something almost magical about feeling, or better the connection between that raw acceleration power of an engine coming to life under your foot. And then, there was shifting the manual gearbox—it’s like you are testing the car’s limit, and yours too. At least my coordination limits between the clutch, gearbox, and gas.
It’s no wonder the invention of the automatic gearbox felt like a godsend gift, especially when I recalled my first stop-and-go traffic. Let’s have a round of applause for the geniuses behind it. True hidden heroes for anyone who’s ever been stuck in bumper-to-bumper traffic.
My first meeting with an automatic gearbox was in a Mercedes S-Class. There I was, a young engineer on a test track, trying not to turn a prototype into an expensive pile of trash. My colleague, who was sitting in the passenger seat, didn’t seem to think much of my careful pedaling. “Hit it harder,” he nudged me. I was a little embarrassed when I realized I hadn’t maxed out the car’s potential.
That extra boost? Mind-blowing.
His insistence led me to discover a hidden feature - one I wasn’t aware of - the famous kick-down. An extra push was unleashed just by a tiny switch underneath the pedal - a big surprise for me at that time.
Fast forward to this week, and this lesson came full circle again.
The forest and its trees
Sometimes, it’s easy to miss the forest for the trees—or in my case, the data I should’ve been analyzing.
Let’s say: you’re looking for earnings per share within a specific range, but if your raw data doesn’t even cover the full spectrum of your search, you’re missing out before you’ve even begun. It was a simple oversight, forgetting to adjust one parameter for a value, but it was like failing to press the pedal all the way down.
Why is that important? Remember when I ditched penny stocks and expected a performance dip? There was a dip, but with many formula adjustments, I’ve got back much of that lost ground.
Looking for those “unimportant” details over and over again is like finding that sweet kick-down switch. I stopped counting the times I’d read through my code.
What else happened?
And there is a second tweak I will make in my results evaluation. I’ve told you about the Deflated Sharpe Ration Prof. López de Pedro developed.
I wasn’t quite sure about a detail he had written in his book and what better way to answer questions than to ask the source directly? So I took a sip from my cup of courage and wrote him an e-mail. I wasn’t expecting a reply as I’m sure he’s very busy. So I was all the more happy when he did reply. He confirmed my gut feeling and was even kind enough to send me a link for further reading material. How cool is that?! I have to study it now, but I’m really looking forward to it.
And third;
I’m going to take a short break from Substack for three weeks. Nothing to worry about. Just some personal time-consuming stuff that needs my attention. The work on the algorithm continues. Why the break? When you rush things it comes at a cost. I don’t want my articles to suffer because I don’t invest enough time to write the articles. I will also use the time to think about what else I’ll write about and for that, I also need some time to think about. So don’t be surprised if I remain silent for the next three weeks.
The last one on the update side:
I’ve created a cheat sheet about some details in the Income Statement. For me, this statement was confusing for a long time and I still look at my notes to remember some details. Why? Many positions in financial statements have different names - and mean the same. That’s annoying, so you have to find ways to help yourself.
Take a look at it. I hope it’s useful for some of you guys too.
The Plan
Work work work work 😊
What’s on my head
Nothing this week except work 😊
Nuggets I’ve enjoyed
This Joe Rogan podcast was good. It's about what's happening politically right now, or could be.
Have a great day StockStar!
Hit that heart if you love the first times!
Michael
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I share my stock investment story without sugarcoating – you get the good, the bad, and those tricky ego trips. I'm developing a service with a mix of smart code and proven investment strategies, making stock analysis a thing of the past if you wish. Why? Because life offers so much more beyond the confines of stock analysis.
Disclaimer:
The information in this article is my personal opinion. I’m not a certified investment professional. It is not consulting, nor does it constitute investment recommendations.
I do my research carefully and follow my personal investment strategy.
The stock market is a complex building with its own rules. There are no rules set in stone, like the rules of physics.
Therefore, use the contents of this newsletter at your own risk and do your own research as well. Investing in the stock market can lead to a total loss of the capital invested.