Is it time for a reckoning in stocks?

Is it time for stocks to sell off? In light of the 10th anniversary of the collapse of Lehman Brothers last month, we should remember that it’s a mistake to be complacent about what could happen in markets. Extreme economic and financial events are far more likely to occur than we like to believe. But the real lesson of Lehman is not so much that very bad things can occur — it’s that anything might. Investors should be mindful of the risk of further crises, but they should also keep in mind the possibility that things might turn out just fine. This is hard to do. It’s far easier to think of ways that things might soon go wrong. The U.S. stock market is the most expensive stock market in the world currently, according to renowned Yale economist Robert Schiller. The economy has enjoyed a long expansion — maybe too long. The S&P 500 hit its market bottom in March 2009, and since those lows, it has rallied 334 percent in the longest stretch on record since World War II without dipping into a bear market. Perhaps the Federal Reserve will tip it into recession. The trouble in emerging markets

October 8, 2018 No Comments

Fatima Iqbal: Reflecting on 10 years with Azzad

Ten years ago, Fatima Iqbal joined Azzad as a financial advisor and the company’s first CERTIFIED FINANCIAL PLANNER™. She joined while the Global Financial Crisis was unfolding, just a few weeks before Lehman Brothers declared bankruptcy and a couple of months before President Bush signed into law the Emergency Economic Stabilization Act of 2008, which included the $700 billion asset purchase program to bail out financial institutions. Markets bottomed out on March 6, 2009, but immediately began to bounce back, beginning the historically long bull market that we’re enjoying today. In 2010, the economy started adding jobs on a consistent basis. In fact, the U.S. hasn’t had a single month of job losses since October 2010 — the longest stretch of job gains on record, according to the Bureau of Labor Statistics. As we look back on the last 10 years, we asked Fatima to share her reflections on how Azzad responded to the financial crisis and how the company developed new products to meet the needs of American Muslim investors. I joined Azzad at the end of July 2008. At that time, the markets were volatile and investors were on edge. Some may think it was the worst time

September 10, 2018 No Comments

Lehman Brothers eight years later

Eight years ago this month, Lehman Brothers filed for Chapter 11 bankruptcy. With that, the Global Financial Crisis (GFC) kicked off in earnest, and millions of families lost their homes, savings, and jobs. Concepts from Islamic finance can offer simple yet effective guidelines to help us avoid the worst of financial crises. With the Lehman debacle squarely in the rear-view mirror, let’s take a look at some of those ideas and how they might help in the future. Avoid debt Lehman was highly leveraged near its end; in 2007, the firm’s ratio of assets to shareholder equity was 31. This made it increasingly sensitive to market turbulence. Islamic finance principles call for companies to avoid excessive debt. In tough times, companies with less debt are likely to do better because they have flexibility and fewer outstanding liabilities. Low debt keeps a company’s interest costs down and gives it more latitude to grow the business. Promote risk sharing Unlike Lehman, Islamic finance practitioners do not invest in interest-based loans generated by financial and insurance companies. Speculation and short-selling are also discouraged, in keeping with internationally accepted guidelines. Those excesses were at the heart of the GFC, when an unconstrained banking sector

September 21, 2016 No Comments