What Sounds Most Right about Stocks, Bonds and Mutual Funds May Not Be So Right
By Saghir A. Aslam
Rawalpindi, Pakistan

(The following information is provided solely to educate the Muslim community about investing and financial planning. It is hoped that the Ummah will benefit from this effort through greater financial empowerment, enabling the community to live in security and dignity and fulfill their religious and moral obligations towards charitable activities).

Sometimes it’s not the crazy investing ideas that we need to avoid – it’s the ones that seem most sane. Many widely held belief about stocks, bonds and other investments sounsd like reasonable guidelines for where to put your money on Wall Street. But through my work in the financial industry, I’ve seen how these oft-repeated truisms can be the catalyst for financial disaster. So be on your guard against these misleading beliefs, and pay attention to the real truths instead.

I have shared with you repeating about investing that it’s not as simple as some people think. It requires good amount of time to research, particularly knowledge. Proper planning is the key. If you don’t plan, you are not going to be successful for sure. You can plan for yourself. You also need to plan for your retirement. Emergencies that may cause don’t plan, start planning either. And it can save you big amount of money. Allah SWT gives us a lot…we just need to understand and learn. If you want to learn more, talk to people who are already doing this as they can give you great amount of valuable information.

In the big markets sell off in 1987, I have gone through more than 5 rupees very deep sell of the stock market many people started to dump stocks like crazy. Many people thought this is the end and they are going to lose a lot of money. People were selling left and right. I have written again and again that investing in the stock market should always be for long term. You must be very calm; you must do your homework, you must think with an open mind, that’s the only way to be successful investing in the stock market.

Let me share with you that I have shared with you more than once when the market tumbles and it really has a big drop some of the people who don’t understand investing in the market to go selling, and selling some more, that’s what causes these big market selloffs, they think that’s the end, and lots of people want to take out the money out of the stock market and try to go somewhere else. 

That’s not the answer. To start with the big, sell off that’s how it happens because people just panic and just say sel,l sell, sell one after another and that’s a big reason of the big drop. They don’t use common sense and most of them end up losers. I, on the other hand, use common sense, stay calm, and plan what to do next. After this type of panic, I’m a big buyer naturally cautiously after I have done my homework completely and thoroughly.

The latest example is the biggest drop in the stock market September 13th 2022 when the Dow Jones dropped over 1,000 points, to be exact, Dow Jones industrial dropped 1,276 points which turns out to be a nearly 4% drop in just one day, to be exact, it was 3.9% the same day. Standard & Poor’s was down 4.3%. Let’s take a look at the NASDAQ that was the worst of all, 5.3%. Next morning, I called my Stock Brokers and asked them what should be our next strategy, what should be our next move? Each one of them has their own opinion. Towards the end each one of them I requested said let’s make a list of stocks of different strategies such as make a list of the best dividend-paying stocks that have paid dividends year after year at least over a decade. That will be our list number one.  Number two make another list such as covered calls, you buy a stock that pays good premium on writing calls it’s like you’re collecting rent, it’s called collecting premium for easy understanding. I use the term rent: you’re going to rent your stock but there is a condition and there is price and this is one strategy that works well. Another strategy that works very well is the rolling stocks in addition to that there are different other strategies so I asked each one of my Stock Brokers to come up with a list of stocks in each category and then the next day or so we will sit down together and decide where we want to invest, and let me repeat again, invest for the long term, that’s the best way and the only way to make money in the stock market. I will write more on this later.

This article has been written in collaboration with Walt Hommerding senior vice-

president investment of Wells Fargo .

(Saghir A. Aslam only explains strategies and formulas that he has been using. He is merely providing information, and NO ADVICE is given. Mr Aslam does not endorse or recommend any broker, brokerage firm, or any investment at all, nor does he suggest that anyone will earn a profit when or if they purchase stocks, bonds or any other investments. All stocks or investment vehicles mentioned are for illustrative purposes only. Mr Aslam is not an attorney, accountant, real estate broker, stockbroker, investment advisor, or certified financial planner. Mr Aslam does not have anything for sale.)

(To be continued)