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. On 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.
On 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.