Saturday, July 19, 2008

Islam Bullish in a Bear Market

I read this Newsweek article that talks about faith-based mutual funds.

The writer starts out by commenting on how strange it is that such a thing exists. Remember the camel and the eye of the needle?

Anyways, these faith-based mutual funds work by screening out stocks that don't reflect their values, and apparently some faiths are doing better than others.

The big winners in faith funds (if you can be so crass) are the Islamic funds. They screen out "sin stocks"—and producers of pork products. The profitable difference is riba, or interest. The Qur'an strictly prohibits the borrowing or lending of money at interest: "Whatever you give as riba so that it might bring increase through the wealth of other people will bring you no increase with Allah," it says. Because of this prohibition, Islamic mutual funds, like those in the Amana group, don't invest in financial-services companies: they escaped the subprime mortgage debacle altogether.

The managers of the Christian funds say they're in the faith-based business not to help people get rich, but to help them save—for retirement, for college—with tools they can believe in. Arthur Ally founded the Timothy Plan 15 years ago. "There's nothing wrong with having money and making money," says Ally. "What's wrong is hoarding money."

This is a nice interpretation, but I'm not sure if Jesus made that distinction.

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