Salam,
I am working at a startup and my boss offered me stock options. For a while I have been thinking of this whole concept of the stock market. Frankly I can't see how it is in any different from the practice of usuary or gambling. In all of these cases, one is making (or losing) money without working for it. And it is this fundemental principle (if I remember correctly) that the Qur'an forbids.
The Qur'an promotes stability and these things make a person's fiscal situation unstable and without a firm foundation.
Any comments?
The Stock Market
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noman waseem
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The Stock Market
Noman Waseem
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noman waseem
- Posts: 64
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The Stock Market
Salam,
Specifically I was referring to the following verse:
2:219 (Certain things that hinder humans from attaining the aforementioned Noble Objective are now mentioned.) They ask you (O Messenger) concerning alcohol, intoxicants, games of chance, and gambling and money earned without labor. Say, “There is great detriment in these things as well as some benefits for mankind. But the detriment of them is much greater than the benefit of them. They drag down the individual and collective social potential.†And they ask you what they should give. Say, “All that is surplus.†Thus God makes His messages plain for you, that you may reflect.
People make (and lose) a lot of money in the stock market without working much for it. And it seems that the richer one seems to be, the less they have to work to make more money. So...any comments on the very concept of a stock market in relation to the above verse?
Specifically I was referring to the following verse:
2:219 (Certain things that hinder humans from attaining the aforementioned Noble Objective are now mentioned.) They ask you (O Messenger) concerning alcohol, intoxicants, games of chance, and gambling and money earned without labor. Say, “There is great detriment in these things as well as some benefits for mankind. But the detriment of them is much greater than the benefit of them. They drag down the individual and collective social potential.†And they ask you what they should give. Say, “All that is surplus.†Thus God makes His messages plain for you, that you may reflect.
People make (and lose) a lot of money in the stock market without working much for it. And it seems that the richer one seems to be, the less they have to work to make more money. So...any comments on the very concept of a stock market in relation to the above verse?
Noman Waseem
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zahida
The Stock Market
salaam
i am a finance student,,,so i was also thinking abt it...what i think ,,i may be wrong,,,but speculation[selling and buying on frequent basis,,can say daily] is more like a game of chance...how ever i know long term investments are different from speculations,,,also those investments which are undertaken after careful study,,,for a while an outside may think stocks are game of chance but to say that is not true,,,there is an always upward trend in stock market which can not be observed in months,,,also those who buy stocks undergo various analysis...like technical analysis and fundamental analysis,,,after all analysis regarding firm only then if some one is buying stock then in my view its unfair to equate it to chance..people even associate proability to chance but if u study probability u ll find that this field is based on knowledge that usually on long term which thing is happening more,,,its not chance,,,u can never gain from probaility in short term ,,,but it can be used for long term things like,,,e.g. checking how often earthquakes are occuring,,,how often cutomers are coming,,,these poor people also work quite hard to find these things,,,thirdly...stocks offered in primary markets(initial offerings by company) are an investment like u r contributing towards that business as all money goes to business so it is not even close to gambling....its just a partnership...and basis purpose for corporations is also to raise money for firm by selling ownership..
however the ones selling in stock markets are bit confusing,,,but they are translated as ur partnership in some firm which u sell to some other person.....
now i guess its ur intention which makes it game of chance or not,,,if u buy in chance that hoping it ll go up then u ll sell and move at side it is chance but if u r buying to let the company grow and get steady stream of income in form of dividends it should not be considered as chance...
also those who say stock and funds r easy money they r quite wrong,,,,ppl who r licensed to sell such funds now cant even give advice without under gng proper education and analysis :) its quite different to go to casino and win in 2 hrs,,,ask poor financial planners...
and yes quran promotes stability but there is chance or losing all money in trade and business too....dont confuse such chances with gambling chances...
your stock option thing is u canconvert it to stock when the stock price gets higher,,,its up to u ,,,if u dont work hard its never gng to go up :) and u ll never get it,,,but if u work hard it ll always go up ...its part of reward...just like e.g. i am a painter i dont work hard so my paintings wont sell for good price,,,but if i work hard i can sell them at higher price,,,but still there is always a chance of loss :) again it shud not be confused with gambling,,,same is for company stock,,,work harder sell more things get more revenue and u ll get more net income,,,u ll retain more and reinvest in business more it ll make ur stock price go up :)...now thing at other side stop working ,,,dont pay loans,,,get default and then u ll see ur stock value gng down..now where the chance goes here? :)...see its affected by ur hardwork...as long as u keep long term objectives..
i am a finance student,,,so i was also thinking abt it...what i think ,,i may be wrong,,,but speculation[selling and buying on frequent basis,,can say daily] is more like a game of chance...how ever i know long term investments are different from speculations,,,also those investments which are undertaken after careful study,,,for a while an outside may think stocks are game of chance but to say that is not true,,,there is an always upward trend in stock market which can not be observed in months,,,also those who buy stocks undergo various analysis...like technical analysis and fundamental analysis,,,after all analysis regarding firm only then if some one is buying stock then in my view its unfair to equate it to chance..people even associate proability to chance but if u study probability u ll find that this field is based on knowledge that usually on long term which thing is happening more,,,its not chance,,,u can never gain from probaility in short term ,,,but it can be used for long term things like,,,e.g. checking how often earthquakes are occuring,,,how often cutomers are coming,,,these poor people also work quite hard to find these things,,,thirdly...stocks offered in primary markets(initial offerings by company) are an investment like u r contributing towards that business as all money goes to business so it is not even close to gambling....its just a partnership...and basis purpose for corporations is also to raise money for firm by selling ownership..
however the ones selling in stock markets are bit confusing,,,but they are translated as ur partnership in some firm which u sell to some other person.....
now i guess its ur intention which makes it game of chance or not,,,if u buy in chance that hoping it ll go up then u ll sell and move at side it is chance but if u r buying to let the company grow and get steady stream of income in form of dividends it should not be considered as chance...
also those who say stock and funds r easy money they r quite wrong,,,,ppl who r licensed to sell such funds now cant even give advice without under gng proper education and analysis :) its quite different to go to casino and win in 2 hrs,,,ask poor financial planners...
and yes quran promotes stability but there is chance or losing all money in trade and business too....dont confuse such chances with gambling chances...
your stock option thing is u canconvert it to stock when the stock price gets higher,,,its up to u ,,,if u dont work hard its never gng to go up :) and u ll never get it,,,but if u work hard it ll always go up ...its part of reward...just like e.g. i am a painter i dont work hard so my paintings wont sell for good price,,,but if i work hard i can sell them at higher price,,,but still there is always a chance of loss :) again it shud not be confused with gambling,,,same is for company stock,,,work harder sell more things get more revenue and u ll get more net income,,,u ll retain more and reinvest in business more it ll make ur stock price go up :)...now thing at other side stop working ,,,dont pay loans,,,get default and then u ll see ur stock value gng down..now where the chance goes here? :)...see its affected by ur hardwork...as long as u keep long term objectives..
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zahida
The Stock Market
but thats what i think and it can be wrong,,i just wanted to clear that its not easy money...if taken in this context
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Arnold Yasin Mol
The Stock Market
Peace Zahida,
I believe your analysis is pretty good. The stockmarket is a sort of financial gambling, as it is again "loaning" money to a company they invest, and you always expect money back, while the Quran has specific rules about loaning.
But these are matters I'm not specialized in yet to give correct conclusions on.
One thing I do know, and that is as long as the financial market is not focussed on benefiting Mankind it is an illegal system as such which has no authority in God's Universe.
I believe your analysis is pretty good. The stockmarket is a sort of financial gambling, as it is again "loaning" money to a company they invest, and you always expect money back, while the Quran has specific rules about loaning.
But these are matters I'm not specialized in yet to give correct conclusions on.
One thing I do know, and that is as long as the financial market is not focussed on benefiting Mankind it is an illegal system as such which has no authority in God's Universe.
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shahalam66
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The Stock Market
Salaam everyone,
Money is an object of human fancy. We earn, save, spend, invest, borrow, lend, profit, trade, speculate, arbitrarge, hoard, steal, conceal, donate, gift and plan for our future with the money. The poor stock market is only a noun and not accountable for our fortune and misfortune.
Of all our money activities, making donations and spending on poor people are less fascinating than the extoled virtues of finances like ROAs and ROIs taught in junior classes.
Therefore a correct conclusion with the money matter is quite staight forward. We need to examine ourselves and our relations with the money. The way we aspire for, acquire and direct money, our money becomes our character.
Money is an object of human fancy. We earn, save, spend, invest, borrow, lend, profit, trade, speculate, arbitrarge, hoard, steal, conceal, donate, gift and plan for our future with the money. The poor stock market is only a noun and not accountable for our fortune and misfortune.
Of all our money activities, making donations and spending on poor people are less fascinating than the extoled virtues of finances like ROAs and ROIs taught in junior classes.
Therefore a correct conclusion with the money matter is quite staight forward. We need to examine ourselves and our relations with the money. The way we aspire for, acquire and direct money, our money becomes our character.
shahalam
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noman waseem
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- Joined: Sun Dec 24, 2006 5:19 pm
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The Stock Market
Salam,
I appreciate your well thought out post Zahida. You defintely make some good points.
As a general statement, I agree with you Shahalam. But I feel the details cannot be overlooked.
I appreciate your well thought out post Zahida. You defintely make some good points.
Therefore a correct conclusion with the money matter is quite staight forward. We need to examine ourselves and our relations with the money. The way we aspire for, acquire and direct money, our money becomes our character.
As a general statement, I agree with you Shahalam. But I feel the details cannot be overlooked.
Noman Waseem
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zahida
The Stock Market
salam and thanks everyone !
just one more point i remembered... problem is , stock market is not the culprit...we dont have any proper islamic economic system,,,if we had then no one would need to collect money for old age,,,so there would be no question of insurance, superannuation/ pension funds etc....but even in islamic society modern corporate world concepts can be implemented with some midifications...e.g. govt may need to make rule abt issuing num of shares,,,their price etc,,,also it should be issued to employees only , i guess...as i have some doubt on return on investments...even if its not loan,,,[stocks are not loan,,,legally they are company owners ,,and if company gets default they dont get anything unless all the debt is paid...so stocks are like if two partners start business and contribute money but only one manages and does all work,,but profit is distributed according to money contributed +manager gets the pay too,,in this case the income of second partner may be is riba i guess,,,,i am not sure ...is it so ? ]
these corporate concepts were introduced because ppl usualy dont have enough money to start business so they sell the ownership to get money and use that money for running business....i guess the concept is good if it is modified according to islamic economics..i plan to find how to do it in my semester breaks :D
and unless we get proper islamic economic system we cant hide,,,here in australia our employers contribute minimum 9 % superannuation contribution for us ,,,now even if someone doesnot want to invest, money is being contributed....and if they dont invest then what employees will do in old age to be honest ? as age pension is generally not enough and not every one can afford to get a business and manage to keep it till last age....some ppl dont even own houses here,,,govt is not gng to pay their rent,food,medical etc unless they invest in insurance and such funds.if u start saving urself then inflation lowers ur purchasing power,,,its 2.4% in aus now if some one saves and after 30 yrs ,,he manages to save 30,000,,,but due to inflation u can well imagine how much he ll be able to buy....problem is in the root......i dont say we should start eating up usury but at some places we are made part of it,,
anyway this is just my idea,,,i am trying to learn ... :roll:
just one more point i remembered... problem is , stock market is not the culprit...we dont have any proper islamic economic system,,,if we had then no one would need to collect money for old age,,,so there would be no question of insurance, superannuation/ pension funds etc....but even in islamic society modern corporate world concepts can be implemented with some midifications...e.g. govt may need to make rule abt issuing num of shares,,,their price etc,,,also it should be issued to employees only , i guess...as i have some doubt on return on investments...even if its not loan,,,[stocks are not loan,,,legally they are company owners ,,and if company gets default they dont get anything unless all the debt is paid...so stocks are like if two partners start business and contribute money but only one manages and does all work,,but profit is distributed according to money contributed +manager gets the pay too,,in this case the income of second partner may be is riba i guess,,,,i am not sure ...is it so ? ]
these corporate concepts were introduced because ppl usualy dont have enough money to start business so they sell the ownership to get money and use that money for running business....i guess the concept is good if it is modified according to islamic economics..i plan to find how to do it in my semester breaks :D
and unless we get proper islamic economic system we cant hide,,,here in australia our employers contribute minimum 9 % superannuation contribution for us ,,,now even if someone doesnot want to invest, money is being contributed....and if they dont invest then what employees will do in old age to be honest ? as age pension is generally not enough and not every one can afford to get a business and manage to keep it till last age....some ppl dont even own houses here,,,govt is not gng to pay their rent,food,medical etc unless they invest in insurance and such funds.if u start saving urself then inflation lowers ur purchasing power,,,its 2.4% in aus now if some one saves and after 30 yrs ,,he manages to save 30,000,,,but due to inflation u can well imagine how much he ll be able to buy....problem is in the root......i dont say we should start eating up usury but at some places we are made part of it,,
anyway this is just my idea,,,i am trying to learn ... :roll:
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zahida
The Stock Market
salam
i agree with you abdun...but problem is not with the name "stock market". its every where. if you get on to finding who is eating fruit of whose labour then i am sorry to say we all are equally involved.as an example i would say in pakistan a sweeper works 9-5 and he gets paid only 100$ per month by his rich houseowner...or lets say the wife of the owner who is a house wife pays her.she is not involved in any "apparent" usury but in my view she is involved in very terrible usury.
secondly we can not ignore those kinds of stocks which are given to employees.i dont know exactly abt these days employee rewards but lets assume some city where there is no such secondary market. people there are not rich . but they all want to establish some factory or farm etc whatever. they all pool in some small amounts. and establish that factory. now ownership/shares will be given to all those who are working. from sweeper to CEO , i shud say equal to the work that they do...now lets say there are many such firms in that city...every year state examines the performance and gives some title to the one which is performing best..that titles are presented in some kind of market where just like we see shares we can see performance titles...and there is competition to get the best title....we can still give it name of stock exchange..and in my view it ll not be usury..as every one wil e getting the fruitof only his/her hardwork.
names do not matter...there are many examples where ppl charge more by using different names. problem is what is the solution ? for a simple person who works all day and he gets rewards in form of stocks? what he should do ? refuse that and let other eat that too ? to be honest i would not suggest that...its something that cant be fixed on individual level...and we never suggest solutions on broad levels.
i agree with you abdun...but problem is not with the name "stock market". its every where. if you get on to finding who is eating fruit of whose labour then i am sorry to say we all are equally involved.as an example i would say in pakistan a sweeper works 9-5 and he gets paid only 100$ per month by his rich houseowner...or lets say the wife of the owner who is a house wife pays her.she is not involved in any "apparent" usury but in my view she is involved in very terrible usury.
secondly we can not ignore those kinds of stocks which are given to employees.i dont know exactly abt these days employee rewards but lets assume some city where there is no such secondary market. people there are not rich . but they all want to establish some factory or farm etc whatever. they all pool in some small amounts. and establish that factory. now ownership/shares will be given to all those who are working. from sweeper to CEO , i shud say equal to the work that they do...now lets say there are many such firms in that city...every year state examines the performance and gives some title to the one which is performing best..that titles are presented in some kind of market where just like we see shares we can see performance titles...and there is competition to get the best title....we can still give it name of stock exchange..and in my view it ll not be usury..as every one wil e getting the fruitof only his/her hardwork.
names do not matter...there are many examples where ppl charge more by using different names. problem is what is the solution ? for a simple person who works all day and he gets rewards in form of stocks? what he should do ? refuse that and let other eat that too ? to be honest i would not suggest that...its something that cant be fixed on individual level...and we never suggest solutions on broad levels.
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zahida
The Stock Market
salaam abdun
we included people like you and me.
i understand present day stock market is usury concept as ppl are getting money on money not on their labour...we cant implement this exact phenomenon,,,,
what i meant was that establishment of corporations by pooling in money was basis of primary markets and then stock markets too...problem here is again ppl are getting money on money not on labour. i perhaps didnt make it clear. i wanted to say simply that if some how establish something that gives money on labour instead of money on money its not going to be usury by definition.
i would certainly like your view on how can we implement such system on independent level...
when i thing about it i can only think of one thing,,,NO surplus should be kept....it can not happen if every one is paying other full fruit of their labour..as i gave that sweeper example....this is the root cause ,,,,in my view....if initially no surpluses are kept and al wealth generated is distributed among ppl who worked for it and also reinvested in machinery etc for increasing functionality of enterprises then after some yrs an overall prosperity will be there....problem to tackle is not to first just close stock market,,,if we close stock markets from our country rich ll take all their money to foreign countries,,,i think we need to implement proper wage system first. i am talking in context of poor islamic countries like pakistan etc...this is what i can think of,,,,but i may be wrong......i dont have work experience all my ideas are based on knowledge that i am getting through my studies. so they may be impracticle.
so please describe the individual abilities and power for implementation of islamic financial system.
we included people like you and me.
i understand present day stock market is usury concept as ppl are getting money on money not on their labour...we cant implement this exact phenomenon,,,,
what i meant was that establishment of corporations by pooling in money was basis of primary markets and then stock markets too...problem here is again ppl are getting money on money not on labour. i perhaps didnt make it clear. i wanted to say simply that if some how establish something that gives money on labour instead of money on money its not going to be usury by definition.
i would certainly like your view on how can we implement such system on independent level...
when i thing about it i can only think of one thing,,,NO surplus should be kept....it can not happen if every one is paying other full fruit of their labour..as i gave that sweeper example....this is the root cause ,,,,in my view....if initially no surpluses are kept and al wealth generated is distributed among ppl who worked for it and also reinvested in machinery etc for increasing functionality of enterprises then after some yrs an overall prosperity will be there....problem to tackle is not to first just close stock market,,,if we close stock markets from our country rich ll take all their money to foreign countries,,,i think we need to implement proper wage system first. i am talking in context of poor islamic countries like pakistan etc...this is what i can think of,,,,but i may be wrong......i dont have work experience all my ideas are based on knowledge that i am getting through my studies. so they may be impracticle.
so please describe the individual abilities and power for implementation of islamic financial system.