Scholar Answers

Short Term Speculation (Day Trading)

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.Question:: Is there an area where buying and selling stock, even if it is acceptable stock, when itbecomes like gambling? Especially when it is short-term speculation. If it is, then where is thedividing line? And is day trading allowed by the Shari'ah in the qualifying stocks?Answer: There is a well known hadith of the Prophet, upon him be peace, which is also an important

Contents: 

Understanding Different Rulings

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.Question:: How does one goes about understanding the ruling of the different schools of thought (madhaahib) when so few people (in my world) know about the subject of finance?Answer: This is a very good question. In fact, there are very few people qualified to help out in these matters at the present time. This is why Islamic financial institutions, if they are serious about Shari`ah compliance, will be sure to appoint Shari`ah Supervisory Boards.

Contents: 

Shariah Board Scholars

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.Question:: Who are the scholars of the shari'ah board. What are their orientations, especially when it comes to interpreting the different schools of thought?Answer: The scholars of the Dow Jones Islamic Market Index Shari`ah Board are featured, withtheir bios, at the DJIMI website. Obviously, they are a group of very accomplished scholars.With regard to their legal orientation, the members of the Shari`ah Board represent nearly all

Contents: 

Contract Components

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.Question:: I asked previously and received no reply what are the essential components to a contract according to the different madhhabs? Also, some say that the offer and acceptance element of the contract is not present if you are a shareholder because you have a very limited say. is this accurate? Answer: The classical jurists are in agreement that every legal contract is composed of a pillar

Contents: 

Chance and the Almighty

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.Question:: First, Praise be to Allah for this course, the designers and instructors of it. I pray Allah continue to bless each of you. My question pertains to the interpretation of verses 3:130 and 3:132, not to be argumentative or dogmatic, but because the verses were used in the lessons. Since Allah leaves nothing to "chance," and with Him there is no such thing as "chance,"

Contents: 

Supermarkets and Leasing

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.Question:: You have detailed the screening process for investing in the equity market. What about Supermarkets Companies.... they do sell haram meat including pork and sell wine. Therefore would these be excluded or the profits be regarded as a small percentage of their income and therefore acceptable. Secondly, a slightly varied form of investment. Suppose I own a property, can I rent

Contents: 

Publishing Investment Criteria

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement. Question:: In the quiz for the lesson called What is Islamic Investment I have answered question number 8 as True, (a. true), and my answer was wrong (only one wrong in ten questions; I have answered the rest correctly.) Then I have reviewed my wrong answer,the explanation was that "Currently, funds claiming to be Islamic are not required toprove that they are Shari'ah compliant. Many do not employ the stringent criteria of

Contents: 

Shariah Screening

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.Note: The course referred to in the answers is available only via the Dow Jones University. Muslim-Investor.com does not have access to this course material. Please contact the Dow Jones University directly for more information. 

Contents: 

Voicing Muslim Concerns to Management

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.Question:: It has been stressed a number of times the that "the Muslim investor will be morally bound to inform management that s/he cannot approve of such transactions." How should a Muslim investor structure a letter to satisfy such a criteria andwhat kind of items and "arguments" should he put forward to the management/investorrelations of a company so that the letter satisfies the Islamic requirement and is

Contents: 

The Riba of Excess and Deferment

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.Question:: "Owing to this prohibition, then, one may not sell high quality wheat for a larger quantity of low quality wheat". What if the money value of the high qualitywheat and the larger quantity of lower quality wheat is similar or the same? Re: ribaof deferment. "Owing to this prohibition, then, one may not sell low quality wheat nowfor high quality wheat later". Am I to understand that the person who is bartering the

Contents: 

Understanding Riba and Gharar

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.Question:: In the topic of Gharar, could it be safe to say that investing in the stock market is Gharar? There is a certain amount of risk involved in investing in the stock market without any assured returns so does this qualify as Gharar?Answer: In section five of Lesson Two I wrote: "Obviously, if we equate gharar to uncertainty and risk, then these are things

Contents: 

Leasing from a Conventional Financial Institution

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.Question:: I would like to know if it is halal to lease from a kufar financialinstitution?Answer: If a lease can be structured in a way that conforms with Shari`ah principles (as in an ijarah contract), it will be lawful, regardless of whether the lease originates from a conventional financial institution or otherwise. Many Islamic banks, investors, and financial institutions participate in leasing operations that comply with Shari`ah principles and yet involve conventional financial institutions.

Contents: 

Losses in Mudarabah

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.Question:: If in mudarabah partnership, mudarib has had some losses and inanother transaction he reaps profit. This means that profit should be taken to offset thelosses first and the remaining profit, if any, can be distributed to all the parties according to the pre agreed proportion. My question is which losses should be offset? Losses in capital owned by robbul maal or loss in mudarib's effort?

Contents: 

Employee Stock Options

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.Question:: What is the Islamic view on employee stock options?Answer: This is one which many Muslims puzzle over, and with good reason. To begin with, the term "options" often leads to confusion because most Muslims recognize it as perhaps having to do with the options market; and the buying and selling of options is clearly prohibited owing to the element of uncertainty, or gharar, at the time of contracting. (For a detailed discussion of gharar, see: "Lesson Two, Riba and Gharar").

Contents: 

401K Plans for Muslims

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.Question:: What is the best way to invest in a 401(k) plan. Are we allowed to invest if Islamic Mutual Funds are not listed on the Mutual Funds list. How should we convince the Employer to have Islamic Mutuals Funds.Answer: We are not in the best position to answer the first part of your question as we lack the proper financial advisory credentials. If enough company employees request Shari'ah compliant investment vehicles (resulting in respectable amount of assets for Shari'ah permissible management), then the employer will at least take notice of the demands. The key issue is for Muslim employees to begin making these demands, and then to point to the direction of, say, the Dow Jones Islamic Market Index as a universe of Shari'ah

Contents: 

Using Interest Income to Pay Interest on Loans

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.Question:: Can riba money be used to pay off a riba loan? If so, would this be considered purification of wealth?Answer: It was explained in the section on Purification (Lesson Six, Section Six) thatincome from interest must be given away, and that? "as a general principle, sincethe money being distributed represents impure income, it must not be used in a way that

Contents: 

Zakah on Employee Stock Options

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.Question:: As a follow-up to Sarah's question on company granted stock options, I'd like to ask about the Zakat that is due on gains received via these options. In certain cases (as with some of the recent IPO's in the tech sector), the compensation achieved fromstock options can be huge -dwarfing the other benefits an employee receives (i.e.salary). According to at least one booklet I've read about Zakat calculation, the rate

Contents: 

The Second Edition of "Unlawful Gain"

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.Question:: In the second lesson, there is a reference to Nabil A. Saleh's Unlawful Gain and Legitimate Profit in Islam, London 1992. This is the second edition. Can you tell me whether it is substantially improved from or better than the first edition? I ask because I own a copy of the first edition. Thank you.Answer: The only copy I have is of the second edition and so I am unable to compare. Likewise, there is nothing in the Introduction to indicate any major changes or

Contents: 

"People of the Book" in the Dow Jones Islamic Index

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.Question:: What is the consensus about investing in Israeli companies, or companies that invest in Israel? Should those not be excluded by the Shari`ah screens like companies that deal with Alcohol, pork, banks, etc...? Salam R TarekAnswer: To our knowledge there is no Shari'ah dialogue involving investment prohibition against Israeli companies or companies that invest in Israel. The Shari'ah screens do not take political background/identity or religious affiliation into account. The Prophet himself, upon him be peace, is known to have transacted with people of other

Contents: 

Investing in non-compliant companies

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.Question:: My question is, even though certain companies, ie CitiBank, GE, AOL become un-investable in due to the Shariah screen, dont you think that if Muslims are going to change the way these companies do business, then they should become shareholders andhelp steer the direction of companies that do conduct Haraam activities. Also, don't youthink that by investing in companies like GE, and Disney etc etc, Muslims can help the

Contents: 

Pages

Subscribe to RSS - Scholar Answers