By owning a company's stock, you own a piece of a business as a silentpartner (you do not participate in the day-to-day running of the business).
Investment in individual stocks means that you choose the companiesyou buy pieces of yourself (with the help of advice from the internet,TV programs, Newspaper articles, word of mouth from friends, ...etc.)
This is different from Mutual Funds, where the Fund Manager controls which companies to buy,in return for a percentage of the total value of the fund.
Historically, the best investment vehicle are stocks, since they provide the highest rate of return on investment for the long run.
Derivatives - Options / Shorting / Futures
These activites have been practiced by Institutional Investors a while ago,but have become increasingly popular in the last few years with individuals (especially Day Traders) with the explosion of Discount Brokers and InternetInvesting.
For the Islamic ruling on the above, please check our Prohibited Business Activitiessection for details.
From the practical point of view, these are very high risk investing,and more akin to gambling than investing.
Speculation on Stocks - Is it Islamically Correct?
A common question that Muslim investors have these days is: "Is it Islamicallyacceptable to engage in stock market speculation?". This topic has beendiscussed at some length on the Islamic Finance Network web site, Speculation Forum.
Bear in mind that these are individual opinions by people like you and me, and not scholarly studies, although some very useful references to scholar's opinions are stated. So, use your judgement.
Dr. Saad Al-Harran, an Islamic Scholar specializing in Finance and Banking has written a paper entitled The Islamic Stock Exchange. It discusses stock speculation and other aspects of the Stock Exchange.
Also, please check Dr. Muhammad Obaidullah in his paper on Ethics and Efficiency in Islamic Stock Markets, specifically, Section 3.2.4.
An article on Stocks and Shares on Islamic Halal Finance site.
Also check the Day Trading part in our Stocks section.
Zakat (Alms/Charity) on Stocks
On the Islam-Online web site,Dr. Yusuf Al Qaradawi has a fatwa on How to pay Zakat on Stocks?, in Arabic. He stated the same opinion on the televised program "Al Sahia Wa Al Hayat" on Al Jazira Satellite channel on Sunday 2 January 2000, making a distinction between "investing" and "trading", whereas the latter treats his stocks as liquid cash money, paying 2.5%, while investors pay only on their gains/appreciation, but at a rate of 10% (by analogy of gainsfrom agricultural land with no human irrigation (rain)).
Here are other sources of information on paying Zakat on Stocks:
- Al-Islam Individual Zakat Program in English and Arabic.
- Dallah Albarakah Economic Fatwa on which stock price to consider on paying Zakat? The issuing price or the current market price? (in Arabic).
- Islamic Development Bank Research Papers are available for a nominal fee including Stocks, Banking, Finance, and a whole lot more. in Arabic.
- IslamiQStocks page on Shares/Stocks Zakat
- Calculation of Zakat for a sleeping partner on the Understanding Islam web site.
- Dar Ul Uloom page on Zakat
- Another page on Stocks Zakat
- Yet another page on Zakat
We would like to have a page where visitors can rate stocks that they have researched from the Islamic point of view. You can add your rating and comments on the stocks that you know, and read what others have to say about it too.
Please visit our Rate-A-Stock® page.
Islamic analysis of the Dow Jones companies
You can read an Islamic analysis of the Dow Jones (DJIA) companies. Check it out and let us know what you think.
Islamic analysis of USA Industries
You can also read an Islamic analysis of the USA Industry classification. In the USA, each publically trading company is classified within an industry. This will help you screen companiesquickly and exclude those that engage in prohibited activities.
Dow Jones Islamic Market Index - DJIM
Due to the growth of demand for Islamic investment, and market indexes trackingthe Islamic portion of the market, Dow Jones, the well known financial research company, has invented the Dow Jones Islamic Market Index complete with an Islamic Scholars AdvisoryBoard of well known Scholars.
The International Investor - TII
This is a Kuwait based company offering investment services and the like. They have a London based advisor, The International Investor Advisory Group - TIIAG, which publishes several Islamic Indexes, including the following:
- TII Global Islamic Index - (TIIG)
- TII Europe Islamic Index - (TIIE)
- TII Americas Islamic Index - (TIIA)
- TII Pacific Basin Islamic Index - (TIIPB)
- TII South Africa Islamic Index - (TIISA)
- TII European SmallCap Index
- TII USA SmallCap Index
Stock Information, Quotes, Analysis and Research
There are hundreds of internet sites where you can get stock information.
We take a look at some of the most popular ones here.
|iHilal||Islamic Stock Screening and trading. Has a Sharia board|
|IslamiQStocks||Islamic Stock Screening. Trading (thru an affiliate). Has a Sharia board. No longer operating.|
|Quicken Investment||One of the most comprehensive sites offering many features, including Screen Stocks, Find Top Funds, IdeaCenter, Community Favorites and Basics.|
|Yahoo Finance||Lots of features, including the Yahoo Stock Screener|
|Smart Money||Also one of the well organized comprehensive sites offering investment advice, information and tools.|
|Motley Fool||A similar site is the which also offers very good tutorials on how to invest.|
|CNBC||A comprehensive site with all the standard features.|
|CNNfn||Another well respected site for investors, with all the standrad features.|
|Free Real Time||Another free site providing Real Time quotes is , but it requires registration (still free though).|
Arab Countries Stock Markets
|DLJ Direct / eUnion||Donaldson Lufkin and Jenrette (DLJ) and Capital Union (Bahrain) join up to be the first online brokerage for the Middle East and North African market.|
|Al Rajhi Corp. - Saudi Arabia||The site is in Arabic only. Offers daily updated stock quotes and research for the Saudi stock market.|
|Henry Azzam's on PlanetArabia||Henry Azzam is a reknown Economist in the Arab world. You can read his weekly reports on Arab Stock Market and Economies.|
|Egyptian Stock Market Index||Check the price, change and graph for Egypts Stock Market|
There are many free tools that will help you with your investing, starting fromselecting and screening stocks, to monitoring your protfolio and watching themarkets.
Here are some very useful tools that you can use...
|Quicken Stock Screening||Here is a very powerful tool where you can give it your criteria and it comes back with a set of companies that match those criteria|
|CNBC Stock Screener||Another very powerful tool for stock selection.|
|SmartMoney Tools||Many tools from SmarMoney again, including Your Portfolio, Map of the Market, Your Calendar, Economy Watch, Asset Allocator, Broker Meter, Dow Tracker, Sector Tracker, Chart Center, Watchlist, News Ticker, Stock Snapshots, and more.|
|The Insider's Guide To Message Boards||Money Magazine's list of the most popular online venues to discuss stocks and investing.|