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Shedy View Profile View Forum Posts.

Are Muslims allowed to buy and sell shares on the Stock Market?

We all know stock market have crash with all those numbers going up and down What does Islam say about Stock Markets? Fitnah Bolice View Profile View Forum Posts. As long as you refrain from investing in companies that deal in haram, i. An important question which Muslim economists face in these times is the status of the stock exchange. Is trading on the stock exchange haram? Is it really gambling as some people say? The stock exchange is a market place where shares are bought and sold.

By buying the shares of a company, you, in fact, share in the business.

Is it Halal to trade in stocks / Shares. i.e buy - Encyclopedia of searchable Islamic Q & A - Islamhelpline

Therefore, if there is nothing against Islam in the nature of the business, there is nothing wrong in being the shareholder of that business or in getting dividends on those shares. Similarly, if you sell the shares at any point of time owing to some reason and get capital gains thereby, the transaction and the profit are not wrong from the Islamic point of view. There are however situations when the activity in the stock exchange is clearly against good sense and the norms of ethics.

There are certain transactions which are or can be detrimental to the interests of either party by causing damage or deception. That is why there is a principle of Islamic jurists that any transaction which causes or might cause darar or gharar damage or deception to either party should be prohibited by law.

Where the law of the land does not deal with such transactions, it is up to the individual to decide whether or not the transaction will or may cause damage or deception to the other party. In case he is certain of such damage or deception, he should certainly avoid undertaking the transaction.

Even in the case where there is a sufficient probability of darar or gharar, it is best to avoid the transaction as a Muslim knows that he will be held accountable on the Day of Judgement if his actions deceive someone or cause him damage.

Ideally, the market price of a share should be related to the performance of the company. But the speculators euphemistically called investors manipulate the prices by artificially stimulating the demand and the supply of shares. Forward contracts are made and further contracts are derived financial derivatives on that basis.

The result is that the whole market activity is based on speculation rather than being based on entrepreneurship.

Error (Forbidden)

The share price of a company doing perfectly well suddenly falls and that of a company in trouble suddenly rises. A person earns millions and loses millions in a day in this game. Obviously, such fluctuations have a negative impact on the economy, which is usually borne by the not-so-affluent sections of the society. One of the worst cases of such speculation was when on Oct. Billions are lost in a day in such crashes. Since shares are sometimes bought and sold even before they have been actually bought and sold and, quite frequently, are bought primarily on the basis of borrowed capital as in the case of the famous Australian investor Alan Bond , stakes are high and the slightest fear can start a chain reaction, which may result in a major catastrophe.

The reason for such timorousness is nothing except that the whole economic activity in these exchanges is based on speculation and interest based borrowing rather than on entrepreneurship and equity participation.

When such a large area of economic activity is based on speculation and interest based borrowing, the spirit of entrepreneurship suffers and moral corruption pervades the society. Economic activity should be based on entrepreneurship, hard work, creativity, moral principles and concern for others, whereas speculation is often detrimental to these values.

An individual should also keep in mind the effect of his personal decisions on the whole society, and as its responsible member and as a good Muslim try to be part of the solution instead of being part of the problem. It has been seen that involvement in speculation often leads to greed and avarice, which come in the way of ethics and concern for society1, whereas a Muslim prefers sticking to nobler values even if they afford him less material benefit.

Even in the absence of specific Divine injunctions or enacted laws, a Muslim should ask his own self whether his involvement in such activities is leading him away from God and inclining him towards the violation of moral values and ethics. And this is a question which an individual must answer himself. The rule here is sal nafsak ask your soul. Losing these values for material benefit is a trade that a good Muslim never likes to make.

Qiyas View Profile View Forum Posts. I still don't understand what the difference is between this and gambling? Aren't you buying shares because you're gambling that they'll make some profit rather than loss? They plot and plan, and Allah too plans; but the best of planners is Allah. Al-Nasser View Profile View Forum Posts. Originally Posted by Qiyas. My toughest fight was with my first wife. Originally Posted by Al-Nasser. No, offense, but that didn't do a lot of people any good the last few weeks, did it Aakhi?

I'm sort of remembering something that I read a while back, could some one please verify: Shares are a form of investment in a company, and in Islaam we are encouraged ok maybe not encourages, but it is good to invest in the businesses of our Brothers, as without our investment there businesses may not be able to run. Islaam therefore, looks at these types of shares as investment in a business to help them flourish, as opposed to gambling.

But, we are taught to research the company so that we know what we are investing in i. My hope was they would go further high when i would sell them However, i just didn't sell them as i felt no need to sell them at that time I was planning to invest in long term Now if I was greedy or gambling But now the overall value of my portfolio But I dont think I was greedy or was gambling because I did not sell only because i didnt feel the need to sell them.

Originally Posted by truepath. Originally Posted by mrumi Don't people gamble when they invest in the real estate market and other business.

S this is a fatal mistake for many traders! So, should we only invest buy shares in Islamic businesses?

There are many conditions when it comes to trading in stocks, day trading for example is likened to gambling as your intention is as soon as the price of stocks appreciates you will sell the same day if not a couple of hours later and make a profit, but this goes against one of the shuroot's of business transactions; Milk al-Ma'qood 'Alayhe ownership of item being traded , where the seller must own the shares outright before selling them due to the saying of Nabi "Do not sell what you do not have.

Originally Posted by Fitnah Bolice. Ata View Profile View Forum Posts Visit Homepage. AhadAhad View Profile View Forum Posts. Is IS a gamble.

You win make money if you are in it for the short term.

Those who invest in the long run end up loosing money. Most pension schemes invest for long term and are in deficit. Very few are in surplus that includes DB and DC schemes.

Only people who make money are the hedge funds and investment managers that 'play' the market. No one can predict the future.

Stock market rises and falls are artificial. It is affected not only by market but also consumer confidence which can be manipulated with the media and significant shareholders. Also, those who buy shares do own a part of that company but, as far as i am aware, the dividend they receive is far lower than the proportion of profits they are entitled to.

The company takes shareholders money and pays them small payout but pays is executives massive. Which makes the distribution of wealth unfair and a form of interest. Personally, i would never enter the stock market. I do not believe it to be islamic. MWarrior View Profile View Forum Posts. Last edited by MWarrior; at Just to add here, you must do your own research before hitting the buy button. Sadly, too many people just see a stock, a bit of blue ticking up and buy.

They might get "lucky" a few times but in the long term will lose alot too. Nothing is certain obviously but it's all about minimising the risk of losing and maximising the chance of making a profit. And one way this is done is by doing proper research before buying and then keeping a tab on it once you have.

If you do none of that then chances of you making a loss is very high. Bookmarks Bookmarks Digg del. All times are GMT. The time now is User Alert System provided by Advanced User Tagging v3.