As I understand it a stock is a little slip of paper that says you own part of the company that sold it to you. That company takes the money you paid for the stock and uses it to do whatever they do, then if the company does well, the value of that little slip of paper increases, and if they do poorly, the value of the paper decreases. YOU make money by selling your stock when it's worth more than you paid for it.
Now, there is some concern over whether investing in stocks is permissible in Islam. Some people think it's too close to gambling because the stock market is so volatile. In my humble opinion trading in stock is just fine because you get what you pay for and there is always a risk in any purchase. If you buy a dishwasher you pay $400 dollars and hope the thing works. If it does: huzzah, you got your moneys worth. If it doesn't, well that's just too bad, but that's the risk you have to take. In gambling, you pay, oh I don't know, $400 and hope to God above you get more back, the key word being HOPE. In the case of the dishwasher, sure it didn't work, but you did get a dishwasher, you were being guaranteed a dishwasher in exchange for $400, and nowadays most companies are nice enough to offer exchanges in the event it doesn't work, but in all normal cash transactions, you are getting something.
SO that being said I went to Google finance to play with some stocks.
In google finance all you can do is track stocks, just like a game. You can add fake money then buy and sell fake stocks and see how you do. Actually it's a real tool that you can use to track actual transactions with no money involved. I use it to track the stocks I ACTUALLY purchased through my bank because my banks website is awful at providing useful stock information.
So, if you want to try your hand just go to Google finance, set up a portfolio, add some cash and buy some stocks. I'm not going to go into details about how this works because the interface is quite straightforward.
The first stocks I bought were of my favorite companies: Apple, Nintendo, Sega...but then I stopped and realised something. I can't just put money into ANY company, because that company might be involved in a business that's not entirely religiously sound. So here's what I concluded should be avoided unless you know a company in these fields that is completely clean:
Food and Drink
- Would you believe Coca Cola, despite their tremendous list of family friendly drinks (Tropicana, Rockstar energy drink, bottled water) made an alcoholic drink in cooperation with Bacardi? I was pretty upset, they seemed like a good place to put money: I love coke!
- In general, it's hard to tell what products a company maks, think of Hostess: they make chips, cookies, biscuits, Twinkies, King-dons, the list goes on forever, but it's just too tedious to go and find every last product and make sure it's halal, so just avoid food and beverage companies
- When I started out, I took a stock (fake) of Disney. They seemed like a good company, doing well for themselves. Then I stopped and thought, no wait, they hire actors and actresses and write stories that, while family friendly for the most part, might not be all that great (think: Lizzy McGuire, Raven, The Jonas Brothers).
- Same goes for video games. I love Nintendo, they are my favorite company, but they also liscence M rated games for their consoles that might include violence, course language, adult situations, mild nudity and so on.
- Do you really want to be the guy who gives money to the people who make the machines and lead the soldiers that kill other people? Think about it, you are saying take my money and invest it in weapons of destruction.
- This area gets kind of complicated because a lot of bigger companies sometimes have hidden military divisions. Think of Lockheed Martin, sure they make planes, but they also develop guns, same with Toyota: they make consumer vehicles, but they also develop military vehicles. Sometimes you have to do a bit of digging. I will say this though, I don't mind companies that build defensive military technologies. For example, Irobot, the makers of Roomba and Scuba, the little household vacuums, have a military branch that develop scouting, sensing and detecting robots. They don't kill anyone, they seek out roadside bombs and investigate areas, in effect saving lives.....yes maybe the lives of the enemy, but at least they aren't killing anyone.
- banks charge interest, do you want a part of that?
Alright, so where CAN you put your money?? Here are a few suggestions:
- healthcare
- housing
- education
- textbooks
- materials (metals, glass)
- energy
- research
- household
- computer technologies
- fertilizer and farm product
3M: Innovators, makers of many household items including those little adhesive hooks.
Agrium Inc.: make agricultural products and services in the U.S and other countrie.
BioClinica Inc.: solutions for medical image management and data capture. Medical Technology.
Biofuel Energy Corp.: Sells ethanol, an up and coming form of clean fuel.
China Precision Steel: makes Steel in china.
Clean Harbors, Inc.: through its subsidiaries, provides environmental services and operation of non-nuclear hazardous waste treatment facilities in North America.
Emergency Medical Services: yeah, EMS, those guys that save people, bet you didn't know they
were part of a company!
Energizer holdings, inc.: Makers of batteries.
Enersis S.A. (ADR): An electric utility company for Chile, Argentina, Brazil, columbia and Peru.
EPCOR Power, L.P: An energy company. A big one.
Hanfeng Evergreen: makes fertilizers for china.
Hold-key Electric Wire and Cable Co Ltd.: makers of electric wire and cable.
Humana Inc: A health and suplemental benefits company.
Intuitive Surgical, Inc.: Makes the da Vinci surgical Systems, an huge, advanced medical robot.
Irobot: makers of robotic vacuum cleaners
Johnson & Johnson: Makers of household and consumer products.
Karuturi Global Limited: Get this, they deal with floriculture, processing foods-gherkins (something like a cucumber) and IT. It has subsidiaries in Ethiopia and Africa.
Meade Instruments Corp: makers of telescopes (the shares of these guys increased 3000% just a few days ago, too bad I didn't have any real money in them.)
Migao Corporation: makes potash based fertilizers.
Newell Rubbermaid: makers of household products (tubs and plastics mainly)
Nobel Learning Communities: A national network of nonsectarian private schools, including preschools, elementary, middle and specialtiy high schools in 15 states.
Panasonic Corporation: makers of electronics. They do have a military laptop and make military grade power adapters. :S
Potash Corp Saskatchewan: Fertilizer
Rangold Resources Ltd: Like buying gold bars really.
SPDR Gold Trust: more gold.
SXC Health Solutions Corp.: provider of pharmacy benefit management services and healthcare IT solutions.
Taiwan Glass Ind. Corp: Glass, fibreglass and tableware and kitchenware glass. Ships internationally.
The Black and Decker Corp.: Makes household tools and appliances.
The McGraw-Hill companies: If you've read a textbook, there's a 99% chance Mcgraw hill published it.
Tyco International Ltd.: make remote controlled things,and remote controllers.
United Parcel Service (UPS): deliver packages everywhere.
Whirlpool Corporation: makers of washing machines.
Xerox Corporation: audio visual solutions, electronics.
And there you have it! With this healthy mix of companies, I have, in theory, actually made money! Not a whole lot, since the shares in any company I have usually hang around $100 to $200 (that is $100 to $200 worth of shares in any one company) since the economy is so cruddy and all. But I've made (again, in theory) about $1,183 in about 7 months, not too bad for a first timer! Of course, I'm no day trader, and no one should be. Stocks are the kind of investment you keep for a few years before deciding to sell (unless something spectacular happens, like your 0.18 dollars/share company of which you have 10000 shares in (only 1800 dollars) jumps 3000% ($54000) then you sell, because chances are that won't be happening again for a long time.)
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