For those looking for the hottest new investment deal there are now Sharia compliant ETFs on the market to meet your investing needs. Javelin Exchange Traded Shares launched its first fund at the beginning of July catering to the Islamic market.
The Dow Jones Islamic Market International Index Fund (JVS) seeks performance that corresponds to a benchmark index that measures investment return on “Shari’ah compliant securities. JETS notes that certain businesses are incompatible with Islamic law and therefore excluded from the fund. These sectors include alcohol, conventional financial services (banking, insurance, etc.), casinos, firearms, and pork-related products.
That last part doesn’t sound very fun. To many people investing is not fun, so let’s get down to basics. The JVS fund opened up on July 1, 2009. The opening price per share was $399.99. In less than a week the fund as fallen down to $38.85 per share. Sharia doesn’t appear to be a good investment.
The stock market works through good old supply and demand. Let’s take a look at the JVS fund in depth and see what it looks like.
This looks very pitiful. There were only 100 shares of the Sharia fund traded today. It’s not that popular compared to other picks. Let’s take a look at the Level II screen to see how many shares are for sale. A Level II Quote lets you see all the buyers and sellers along with their prices.
The Ask price is what a seller wants to get rid of his shares. If you’re a buyer you typically buy from a seller at the Ask price. Here we have someone with 800 shares of the Sharia fund and they are Asking $399.99 for each share. If you want to buy 1000 shares, you’re out of luck because there are only 800 shares for sale right now.
The Bid or Offer price is what a Buyer is offering to take the stock off someone’s hands. There is a buyer out there and he’s wanting to buy 800 share of the Sharia fund, but he’s only willing to pay $0.15 for each share. He obviously doesn’t think these things are worth that much.
What this means is, if you want to buy some Sharia fund shares you can put an order in to buy at the Ask price of $399.99 per share. You could set your Bid price lower than the Ask price to see if the seller will lower his price. If you Bid price is higher than the currently listed $0.15 your order will appear above the one pictured. This goes on and on until both parties enter the same price for the stock if you don’t offer the Ask price up front. But it gets even better folks. Let’s say that you bought 800 shares of the Sharia fund for $399.99 and now you decide you don’t want them. There’s a buyer out there offering $0.15 per share. You can either lose $399.84 per share and take him up on his offer price, or you can name your price and it will appear in the Ask column. Then you hope and pray to Allah that someone will buy those shares at your Ask price.
Now let’s look at a more exciting example, the Direxion 3x Daily Financial Bear (FAZ)
This fund also has a good example in it to illustrate price moves with a volume of over 185 Million shares traded today. There are a total of 22400 shares for sale between the NASDAQ and PACX at 5.07. What happens if someone buys all those shares from these two sellers? The price next price listed is 5.08 with 3500 shares. That is what happens behind the scenes when a stock price goes up. Unfortunately the Sharia fund is unlikely to go up since it only has one seller who will probably never close a deal at $399.99.
This fund (FAZ) is not Sharia compliant. This is a fund that performs opposite to the traditional financial sector we all know and love to hate (Citigroup, AIG, Bank of America, etc). This is a 3x short fund so it basically means when the stock market goes down, this thing goes up at 3x the rate. If the banking sector is down 5%, this fund goes up 15%. And that’s how you make money when the market is going down. Unlike the Sharia fund. This puppy has had over 185 million shares traded today. The Sharia fund on the other hand only traded 100 shares today. Finance is hot, Sharia is not.
If you aren’t feeling very Sharia, then the Vice Fund (VICEX) might be worth taking a look at. It is a traditional mutual fund and not an ETF. The fund managers invest in tobacco, alcohol, and casino companies. In a recession vice companies tend to do better than regular companies . I don’t own any VICEX shares, but it may be something worth researching if you don’t find the Sharia funds to be that profitable or fun.
