#GrowwQuotient: How to spot red flags in a stock?

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Have you ever wonder why you aren't getting any allotments in IPOs?

Here's how IPOs are allotted.

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Once all the bids are collected & the IPO closes, it is the responsibility of the Registrar and Transfer agent (RTA) to finalize the allotment of shares. The RTA follows the rules laid down by SEBI in "General Information Document for Investing in Public Offers."

In the Retail category, if there is oversubscription (aka the demand for the allotment of shares is more than the actual number of shares reserved for this particular category), then allotment happens via the draw of lots method. Let us try to understand this using an example.

Assume a company offers 1000 shares via IPO, 10% earmarked for retail category, i.e. 100 shares. After the bidding window, RTA collates all the information. The lot size is 5 shares. Retail can bid between 1 to 5 lots.

The company receives various bids across different lot sizes; here is the breakup. A total of 2850 shares applied, which means the retail category is oversubscribed by 28.5X (2850/100).

Some unusual insurance policies that you've probably not heard of.

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1.) Death by Laughter Insurance

So you think you’re so hilarious that you could make people laugh themselves to death? Well then this is the perfect insurance for you.

Introduced by Lloyd’s of London, this is a unique kind of liability coverage designed to protect stand-up comics or anyone who has a killer sense of humor, literally.

2.) Spooksafe Insurance

Do you live in a haunted house? Or does your dead uncle visit you often? If yes, then you might love the idea of getting this insurance.

UK-based insurance company Ultraviolet has designed this policy to protect victims of attacks by the paranormal, including ghosts and poltergeists, as well as by popular folklore beasts like werewolves and vampires. Crazy!!

You want to buy a house.

You take a loan from the bank.

The bank asks you, “what if you don’t pay back?”

You say, “take my home and sell it”.

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That makes sense. The bank gives you a loan and in case you don’t pay, the bank will take over your house and sell it and recover its money.

That’s collateral.

Banks also lend money to big corporations. With them, banks don’t always have collateral.

So a loan where the bank has collateral is considered safer for the bank.

In the early 2000s, the banks in the USA were giving out loans to people for buying houses.

The economy had just recovered from the tech bubble in 2000 where many banks had given out loans to businesses that had shut down.

In that backdrop, the banks found giving home loans safer.