Are Jews allowed to make stock market investments?

It has been a common conception that playing the stock market is a form of gambling. Gambling is usually considered unethical by some religions. While economists may argue that there is no connection between gambling and investing in the stock market since it is a constructive way to invest savings, the view is not unanimous. Renowned English economist John Maynard Keynes compared the stock exchange to a casino. However, this assumption may not entirely hold true when closely scrutinized.

The main objective of the Torah is to promote individual spiritual development and not the efficiency of the capital markets. According to the Talmud, there are two ethical problems posed by gambling. The Mishnah disqualifies a habitual gambler from giving testimony. The Talmud then goes to ask what wrong a gambler has done. In giving the answer, the wrong that a gambler does is that the winner takes advantage of the loser, who may not be fully aware of the adverse odds he faces. Thus, gamblers will have contempt for productive work because of the easy ways they get money. Therefore, the gambler is considered not to respect ethical and legal sanctions because to him, life is a game and a gamble. This is especially true in casinos where the environment can be considered as that of immorality and immodesty. However, can the same be said of the stock market?

It is true that there are some excesses in the stock market as evidenced when media exposes some under deals in securities trade. However, this problem should not be perceived as endemic since most business establishment also suffers their own problems. It is also true that some unscrupulous brokers will take undue advantage from unsuspecting investors. However, these cases are rare and most of the brokers will be well informed about the investments they make for their clients. It is also evident that those investing in stock markets are committed to social stability and are no different from other workers in other professions. About every profession faces ethical challenges, and workers, especially in the financial markets, need to exercise special care to escape the strong lure of greed.


What about the speculative activity?


The aim of speculators is to buy assets at low prices, hoping to profit by selling them when prices increase. While economists are of the opinion that speculators are vital to the economy, they are viewed with suspicion by popular opinion. However, while Jewish religion does not inherently condemn speculation as unethical, it does have genuine considerations for popular sentiment. Nonetheless, speculation is economically productive because it encourages efficient allocation of resources. For example, speculators may hoard commodities anticipating for a future shortage. When this happens, there will be adequate stockpiles when the shortage occurs. In addition, speculation contributes to the effective exploitation of scarce resources in modern competitive markets.

Nonetheless, when left unchecked, speculation may be harmful to the economy. There have been cases where speculators collude with the market to create an artificial shortage with the aim of inflating prices. This may be harmful since instead of alleviating hunger, it creates it. This is why speculation, when viewed from the perspective of human consequences, raises ethical issues. Talmud censures hoarding not because of the economic consequences, but the likelihood of humans suffering tragic consequence which may lead to the destruction of solidarity in the society. When speculators take this route, they are only concerned about enriching themselves. The end result is the exploitation of common hard working people who may not afford to meet their needs because of high prices, and thus end up facing abuse and enslavement.

It is therefore our duty to unify our economic and human interests so that we are not enticed to quench our greed and betray our ideals. For example, we may consider a player in a football team about to play a game. If his team wins, he earns a huge sum of money, but if they lose, his earning will decrease. According to economic theory, it would be more advisable to bet against his own team. This may be considered a betrayal of loyalty since it is like betting on a disaster. While Jewish law does not regulate most kind of speculations, it is the duty of an individual speculator to ensure they are “not betting against the home team.”







Opinion: Occupy Ideas

It’s May. The grunions are running and so are the members of Occupy L.A. They wriggle up from the cold and dark, plant their tushies on the warm ground and squirm about frantically, desperate to get something accomplished, until a massive tide sweeps them away.

And I’m not talking about the fish.

Grunions, at least, mate during their annual appearance. The Occupy movement, if it follows the same course as before, is destined just to beach itself and die.

Last year, when protesters camped from Wall Street to the lawn of Los Angeles’ City Hall, they made headlines and accomplished one significant feat: They focused national attention on the growing gap between the country’s rich and poor.

Why, some of our wealthier readers may ask, is that anyone’s problem? Because stable communities, and resilient nations, are built on a strong middle class. That’s a truism economists of all stripes and parties agree upon — though our political class, of all stripes, seems incapable of acting on it.

So the Occupy L.A. people put “We are the 99%” on poster boards and waved them in our faces, and for a while it worked. At least until they trashed the lawn outside City Hall and caused public safety employees to rack up endless hours of overtime, costing us middle-class taxpayers hundreds of thousands of dollars. 

But that was all so 2011. When the Occupiers reappeared on May 1, the news media yawned, and the organizers themselves seemed, literally, directionless. 

A West Los Angeles contingent set out to join the May Day protesters downtown. They rode their bicycles down Santa Monica Boulevard, past the Beverly Hilton Hotel, and stopped to regroup in the parkway along Little Santa Monica. A small contingent threw an impromptu protest in front of the Prada store on Rodeo Drive — no doubt confusing the Chinese and Russians who could actually afford the stuff inside.

Meanwhile, back at the Beverly Hilton Hotel, I was inside standing among a dozen men in suits shaking their heads in utter dismay as Occupiers rode past.

“They really are clueless,” one said. “There’s billions of dollars of capital in this hotel, and they’re going to Prada.”

That’s right, the men and women fighting for the 99 percent bypassed what may be the largest and most influential annual gathering of the 1 percent in the United States. 

How large? The annual Milken Global Conference brings together 3,000 attendees over four days to discuss finance, politics and the state of the world. The cost of entry starts at $6,000. How influential? One year, I ran into Warren Buffett, Rupert Murdoch and Alvin Toffler all in the same moment — in the men’s room. Those Occupiers need to fire their research department.

The Global Conference combines graduate-level seminars on everything from equity formation to international policy with upstairs deal making and ferocious hallway networking. The attendees tend to be asset managers, investors, venture capitalists, corporate chieftains. They’re mostly men, in suits, clutching iPhones and BlackBerries. While people shake your hand, their eyes never leave the nametag on your chest. After a while I knew how Dolly Parton must feel. 

But here’s a greater irony: If the Occupy movement was clueless about what was happening inside the Hilton, the conference itself dedicated substantial time and attention to exploring the concerns of the 99 percent. This isn’t new or surprising: investor and philanthropist Michael Milken, who created the Global Conference in 1998, is driven by the idea that capital creates innovation and social change; that wealth, used in creative and aggressive ways, spreads wealth.

So the vast majority of the sessions focused on how investments in innovative medicine, food, technology, education and communication can help solve the challenges the world faces in those fields, even as they increase returns. One entire track looked at how free-market innovations in Israel and the Arab world can increase political stability throughout the Middle East (more on that next week).

At a luncheon debate titled, “What’s Happened to the American Dream?” historian Niall Ferguson and investor (and “car czar”) Steven Rattner agreed that rising wealth disparity and economic immobility hampers growth. They also disagreed loudly and brilliantly over what to do about it. Ferguson said we must focus on cutting back entitlement programs to prevent the growth of a motivation-sucking “transfer state,” where wealth is just given to those who don’t work. Rattner argued that the issue has to be tackled along with greater public investment and fairer tax codes. 

Not surprisingly, the one-percenters sided more with Ferguson, but at another panel titled, “Easy Money: Consequences of the Global Liquidity Glut,” it became clear that in Milken’s world, it’s just as big a shanda for capital as for people to be lying around doing nothing.

The day the bike riders blithely rode past, I attended a morning session called, “Community Development: Investing in the 99 Percent.” Panelists examined innovative ways for investors, NGOs and government to work together to solve poverty.

“There are 100 different interventions that work to prevent poverty,” said John Belluomini, founder and CEO of the Center for the Greater Good. “The number one killer in the country is poverty.”

One possible approach is the Social Impact Bond, an experiment promoted by the “father of venture capitalism,” Sir Ronald Cohen — he was at the conference, too — to allow private business to invest in solutions to prison recidivism and chronic homelessness.

“For a mainstream conference like Milken to focus on social impact investment underscores its importance in the marketplace,” panelist Sean Greene of the Small Business Administration said.

Yet another discussion, “New Strategies for Financing Social Innovation,” featured Jonathan Greenblatt, director of Social Innovation in the Obama White House. The discussion focused on the need to change current regulations to allow foundations to count program-related investments as part of their disbursements — in one fell swoop this could free up billions of dollars.

“You can go negative or go positive,” said Greenblatt, a co-founder of Ethos Water. “The fact that this conversation has infiltrated the mainstream shows the worthiness of these ideas. Capital holds promise to create the kind of communities we care about.”

The Occupy movement may have served a purpose, but it appears to be out of ideas. The good ones were at the Beverly Hilton.

Investing in Teachers

Jews have long understood the importance of study both as a religious activity and as the passageway to a shared culture. American Jews are waking up to how important it is to give their children a solid Jewish education so that they can choose the part they will play in the future of our people. The problem is that our educational systems are having a hard time keeping up, basically because we don’t have enough good teachers for our day schools or for our congregational schools, where the majority of our children are formally trained in our heritage.

The problem is hardly new. Jewish schools can’t count on ethnicity to attract the best teachers, because Jews have long been able to find jobs in public schools or, in the case of the congregational part-timers, in the general sector. But the problem is getting worse, ironically, because the national commitment to Jewish education is boosting enrollments faster than we can attract quality people to become teachers.

However, the Jewish community is not powerless to address this issue. There are a number of very specific steps that philanthropists, community organizations and individuals can start taking right now.

Nationally, we are failing to draw our best young people into teaching careers. The percentage of young Jews who choose to work in our day schools is pitifully small. To address that problem, we should create a national Jewish Teachers Superfund, with an initial endowment of $50 million. The fund would provide either reimbursement for college tuition or repayment of student loans for any new day school teacher or full-time congregational teacher under the age of 30.

Even more proactively, the fund could provide scholarship assistance or low-cost loans for college students who are committed to entering Jewish education. It should also be used to fund experiments in broadening outreach by congregational schools, so they can tap sources, such as teachers colleges, or provide training for older people who are returning to the job market. The program can draw inspiration from the work of the Wexner Foundation, which has been paying full college tuition

plus healthy stipends for

rabbis as well as Jewish educators and social workers for more than a decade. Until the initial goal of $50 million is met, private foundations should commit $5 million a year immediately.

Working largely through federations across the nation, our community leadership has risen to the challenge of improving both day and congregational schools, investing energy and money in the task. These local initiatives have produced some notable successes that could be more widely emulated.

At the end of the day, however, successful Jewish education will depend on keeping good teachers in the classrooms. That means paying them better and showing them the respect they deserve.

Synagogues, federations and other local agencies must resolve to put more in the paychecks. They can increase per capita payments to the schools and raise both the number and the size of scholarships they give to needy students. And they ought to find creative ways to show teachers that they are admired outside of the classroom. The Cleveland-based Mandel Foundation has done a fine job of training the leaders of Jewish schools and raising the standards for the job. That work now has to be broadened to embrace the classroom leaders.

We will get good teachers if we as individuals start showing that we truly value what they do and who they are. A few simple steps, such as volunteering to help with a congregational class project, for example, or seeking out a classroom teacher for praise might help. Far more important in the long run will be a shift in attitude; we need to encourage our children to pursue careers in education as vigorously as we steer them to becoming doctors, lawyers or businesspeople.

Keeping good people teaching in our Jewish schools requires salary dollars. But it’s also important that we as parents and community members respect the people to whom we entrust our most precious resource — our children.