We'll get to what the term "allocation notice" means in a minute, but first a brief aside about IPOs. (Hint: allocation notices are related to IPOs.)
Companies begin trading their stocks by conducting something called an initial public offering, or IPO. This means that they set aside some of the company's stock, which is then made available to the public. Before it begins trading, though, some insiders and others with an inside track get offered shares. They can then sell the shares on the public market after the stock begins trading.
If a stock is popular, this can lead to a big payday for people who got this early IPO stock. For that reason, the line for these shares is often pretty long (figuratively, of course; rich people, like those with the inside track for IPO shares, rarely wait in actual lines).
When the IPO process is underway, potential investors put in their request for some of these early shares. Due to the popularity, there might not be enough shares available to fill every order completely.
Now we get to the term "allocation notice." An allocation notice represents how the investor finds out if their order will get filled, and if they will get the full amount they asked for or a partial order. Hence, investors are notified of their allocation (makes sense, right?).
Think about it as the part of a speed dating event where you find out if the people you picked also picked you. Only, in this case, you might find out that you could get 79% of a date.
Related or Semi-related Video
Finance: What is an Aggressive Growth Fu...59 Views
Finance a la shmoop what is an aggressive growth fund a go-go fund
and/or a high-octane fund ah yes investment funds have oh so many [People put sticker notes on investment fund file]
labels there are income funds comprised mostly of bonds usually in high yielding
dividend kind of stocks and you can buy them managed like in the form of a
mutual fund or unmanaged in the form of an index fund there are growth and
income funds usually a combo of stocks and bonds so in theory the funds value [Value tree appears]
grows but it also throws off a lot of cash along the way then there are just
growth funds notice the word aggressive isn't in there on the volatility
spectrum well they live out here right-hand side of the bell curve when [Growth funds on right side of a bell curve]
times are good they're very good when times are bad they're also not good in a
good year a growth fund can be up 15 20 % maybe more in a bad year well down
the same so now tack on the word aggressive in front of [Man puts aggressive label on investment fund file]
that fund flavor and you can maybe double the volatility for the good and
the bad and the high-octane fund is you know an allegory for gasoline on a fire [Man with gasoline tank by a fire]
it can really roast you nicely and warmly in the cold night or it can well [Fire creates explosion and man runs away]
do that so what do aggressive growth funds like these invest in you know go
go aggressive let's go not just once but twice
well they invest in typically risky volatile stocks a whole lot of
technology stocks that are unproven small tech companies are regular
favorite of this class is this little company the next Amazon in 20 years or [Woman sat at a computer desk]
is it Pieceocrap.com well over long periods of time and
inside of bull market era like decades where the market generally goes
up like it has been since 2009 while aggressive growth funds might compound
at 11 12 13 14 15% something like that whereas a bit more conservative
just growth funds might only compound at 8 9 or 10% but those two
percentage points of compounding actually matter a lot over the long-run
remember that rule of 72 well take the compound interest and divide it into 72 [Rule of 72 on a 100 dollar bill]
and that's how long it takes to double well it applies here as well the
aggressive, in aggressive growth fund should in theory anyway add two percent
in returns or reward in good times thanks in large part to the added risk
taken in that category so 36 years pass and that aggressive growth fund all else
being equal should be double of what a normal growth fund should be but with a [Aggressive and Growth funds marked on a graph]
whole lot more volatility see that 2% divided into our little rule of 72 thing
there well that's 36 years to double with that extra 2% so if you can handle
the volatile, violent, flame field rocky mountain style peaks and volatility [Lava spews out of volcano]
valleys of depression canyon and kill me now cave well then you'll love the view
from Everest Lookout and punitive taxes peak if you're an investor like the
wealthy and aggressive go go high octane funds yeah go go for it [Woman skiing on mountain and falls off the edge]
Up Next
What is an IPO? IPO stands for initial public offering. These are used when a company decides to go public; meaning people can buy shares of the co...
What is a greenshoe option? When Morgan Stanley launched Facebook’s IPO, they had humongous demand. The demand was so great that Morgan Stanley t...
What is a holding period/144a? The road to becoming a successful public company often entails selling equity or debt in private placements to “ac...