Countrywide Financial

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Diary of share price movement.


The chaotic process started as far back as 2003. The correction in 2003 to below $20, had it persisted and been maintained, would have prevented the share crash of 2007 and 2008. The lesson from this stock is that chaotic share fluctuations are highly risky. As the growth rate does not respond sufficiently to the responses from the market, the share explodes into chaos. This is a highly invested share due to the stakeholders being home owners. You therefore see a protracted period of optimism, with repeated rally's. From the beginning of 2004 to the end of 2007 and into 2008 there are clear warning signs from the chaotic nature of the share price that this is a stock under extreme stress.
countrywide 2 year to 2008On a 2 year window, the chaotic condition is not so evident. It is only by viewing the growth rates relative to the historic norm for this stock and seeing that each rally is too optimistic that once can decipher that this stock is in trouble. A sustainable share price is in the region of $20. After a period of correction, the sgare should return to this quite quickly. Should the threesome of the banks, the investors and the construction entrepreneurs proceed with more caution this chaotic phase could end.

As housing is so fundamental to people's existence and investments, the chaotic phase that stared in 2004 was not properly responded to. The "edge of chaos" was attained in 2004. It is important to note two factors involved here, the rate of increase of the share price and some limit or perceived capacity to the actual share price. The share price capacity is established through a combination of real economic factors and investor perceptions.





Copyright © 2002 Nature's Holism by Laurence Evans , All Rights Reserved.