Dr. Nooh Ali Salman, the Jordanian religious leader, has issued a Fatwa (edict) prohibiting the trading in global securities due to the harm and losses incurred by many Jordanians in the recent crack down on Securities' Brokers in the country. Dr. Salman likened trading in stocks with gambling. However, the Fatwa fails to acknowledge the stark differences between gambling and Investing/trading in the stock market.
Trading in Stocks is no different than the trading prophet Muhammad did for living. He basically bought low and sold high, such are the basis for every single trading transaction. However, what many Jordanians are doing is basically speculation and, out right, gambling. Trading done by most Jordanians is seldom based on fundamentals of industries', general macroeconomic conditions, and profound look into companies' operations, executives, nor competition. The mere hearsay of some development cooking is usually enough motivation to pour life-savings into the market. And therefore, it is Haram. But, to declare that all trading in securities, including those based on credible analysis and understanding of the market and its forces, is also Haram is flawed to say the least.
Thursday, October 02, 2008
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4 comments:
I have a quick question here. Why did you say "Jordanians"? Isn't this gambling with stocks based on speculation also practiced by the best of the best in Wall street and elsewhere?
Quite frankly, I disagree about considering this Haram. It's just like any form of trading. You buy low, you speculate that you can sell high. Just like any type of trading. Calling it Haram, is really Haram! Therefore, I respectfully disagree
Well, two points:
I said Jordanians only because of the Fatwa and the situation it was issued for. Both are only applicable to Jordanians. Others do employ speculation, but it is not Haram for them!
The second point: I, too, do not consider this Haram. Like I mentioned, the Prophet did it, why can't we? But, when the clueless jumps into the market without any concrete knowledge of its workings IS Gambling = Haram.
Many jump in after they're encouraged by everyone around them to do so.
Many learn this way, and start becoming successful, while others continue to follow trends and (by doing so) amplifying the negative (or positive) effects of a trend
I'm glad you cleared it up for me, I was a bit confused really on the point. Thanks
Assalamualaikum,
While I don't agree with the reason used to state that stock-trading is haram, I do agree that trading with stocks is haram.
The partnership contracts that the Prophet (saw) made lawful had certain pillars (arkan) that the partnerships in the form of share purchases do not have including:
1) No offer and acceptance-rather than there being an offer between 2 or more parties the share purchase is a unilateral agreement.
2) Equal say on the body-the stock-holder with the most shares has the most say whereas in Islam each partner has equal say
3) Partnership dissolves upon death - When 1 or more of the partners die than the remaining partners have to form a new partnership. In stocks this obviously does not happen.
4) Whatever the company is involved in each partner is liable for before Allah (swt). So whether the company is involved in Riba, sweatshops, bribery, etc each partner is involved in.
For more information please see The Economic System in Islam by Taqiuddin An-Nabahani
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