What is the ruling on buying and selling stocks?
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The questioner: ... As for the National Bank, most of its funds ... in the sense that you give a certain amount of money and place it with the bank in this branch.
The Shaykh: In this branch.
The questioner: That is, it is a matter of you buying stocks.
The Shaykh : How?
The questioner: You buy stocks.
The Shaykh: Yes, that is the end of the matter; as long as it is buying stocks, it is not permissible. I thought the transaction would be new!
The questioner: Now, if ... this money is placed, and this money is taken and, by chance, divided into several projects, a project in construction, a project in ..., a project in a restaurant, and so on; then some of this money is exposed to loss, and some is exposed to profit; because perhaps this money is placed in several projects, some of the projects lost, and some profited.
The Shaykh: It is not permissible to mix them; such that a specific percentage is given to all the partners, meaning the money that did not lose, and in reality it does not lose, and the other person's money profited many times over; so he profits a multiple, not many times over; because these multiples go to the owner of the money that lost; so this is gambling, it is not permissible. But if every money that profited is profited and every money that lost is lost; then it is a permissible profit-sharing partnership. But this mixing is not permissible. And therefore, the fixed percentage that some banks give under the name of profit-sharing, it appears that it comes from this type of transaction, and this is not permissible.
The questioner: ... it is not permissible, meaning ... if it is offered.
The Shaykh: I do not mean banks that are still money; I mean—pardon me—stocks that are still money; that is: this money has not yet been converted into a commercial or industrial project or the like. So these stocks rise and fall; yes, this is not permissible. But after it becomes trade—meaning the collected funds—has been converted into trade or a factory or a company or the like; then this is permissible with the known condition: that there is no dealing in usury or interest. Is the difference clear to you?
The questioner: It is clear.
The Shaykh : If Allah wills.
Please proceed.
The Shaykh: In this branch.
The questioner: That is, it is a matter of you buying stocks.
The Shaykh : How?
The questioner: You buy stocks.
The Shaykh: Yes, that is the end of the matter; as long as it is buying stocks, it is not permissible. I thought the transaction would be new!
The questioner: Now, if ... this money is placed, and this money is taken and, by chance, divided into several projects, a project in construction, a project in ..., a project in a restaurant, and so on; then some of this money is exposed to loss, and some is exposed to profit; because perhaps this money is placed in several projects, some of the projects lost, and some profited.
The Shaykh: It is not permissible to mix them; such that a specific percentage is given to all the partners, meaning the money that did not lose, and in reality it does not lose, and the other person's money profited many times over; so he profits a multiple, not many times over; because these multiples go to the owner of the money that lost; so this is gambling, it is not permissible. But if every money that profited is profited and every money that lost is lost; then it is a permissible profit-sharing partnership. But this mixing is not permissible. And therefore, the fixed percentage that some banks give under the name of profit-sharing, it appears that it comes from this type of transaction, and this is not permissible.
The questioner: ... it is not permissible, meaning ... if it is offered.
The Shaykh: I do not mean banks that are still money; I mean—pardon me—stocks that are still money; that is: this money has not yet been converted into a commercial or industrial project or the like. So these stocks rise and fall; yes, this is not permissible. But after it becomes trade—meaning the collected funds—has been converted into trade or a factory or a company or the like; then this is permissible with the known condition: that there is no dealing in usury or interest. Is the difference clear to you?
The questioner: It is clear.
The Shaykh : If Allah wills.
Please proceed.
Source
www.al-albany.com
The Arabic text is copied verbatim from the original source, without any edits.