Reflection on Islamic New Year

Khutba given on 1/19/2006 in Bellingham:

• If you think back to the time of ‘Umar ibn al-Khattab, I want you to imagine a discussion that he and the other companions were having: the creation of an Islamic Calendar; different companions might have been suggesting various dates to begin the calendar; precedents from other religions, like Christianity, said that they could start with the date of the Prophet’s birth; why not, it was the day that Allah illuminated the earth with a gift to mankind; others might have suggested the day revelation began; the day Allah opened up the heavens to begin a process of bringing down to earth his own words;
• There were so many important dates and events to choose from; so many turning points in history that if the didn’t happen or happened differently, the fate of all of them sitting around would have been changed, in this life and in the hereafter; but the companions sitting around that day chose for the beginning of the Islamic Calendar the most significant event in their lives, the Hijra, and as we are embarking on a new year on the Islamic calendar today or tomorrow, I thought it important in today’s khutba to reflect on that major event in the life of the Prophet (peace be upon him)
• As we all know, the Hijra is the migration that the Prophet and before him, his companions made from Mecca to Medina in the 13th year of Prophethood; many things were going on during this time; the year before was known as the year of sadness, where the Prophet witnessed the death of his beloved wife, Khadijah, and his closest uncle and protector, Abu Talib; the Muslims were still being persecuted in Mecca and it only grew stronger; and with all this happening around them, they were also getting an invitation from the people of Yathrib to come and live there in their city; and this marks the first lesson that we can derive from this story:
• That during the height of pain and suffering, trial and tribulation, Allah provides opportunities for believers to overcome them; however, this does not happen according to the sufferers plans, but according to Allah’s plan, so we have to be patient with Allah’s decree in relation to our affairs; that the things he puts us through are a cleansing process for a better tomorrow where we will be tested with blessings, rather than be tested with trials, and never forget that both are tests; in the trials, it is to see whether we will ask Allah for help; and in blessings, whether we are thankful; and Allah says in the Qur’an:

“did you not think that We would make you believers, and not test you?”

“…and we will test you in your wealth, your family, and yourselves”

• And so the Prophet, taking advantage of the opportunity that Allah had presented, asked his companions to leave Mecca, and he stayed behind with Ali and Abu Bakr; from this situation as described above, a wrong conclusion that people make is that the Prophet “fled” Mecca; this is not the case; he left when Allah gave him permission to leave; but in the meantime, he prepared for his departure:
o He found out the plan of Quresh to kill him
o He asked Abu Bakr to prepare the fastest camels
o He plotted a route so as to maximize on Quresh not finding him
o And he prayed to Allah for help in his journey
• So the lesson we draw from this can be about tawakkul; most think that it means relying on Allah; so some do things haphazardly and say they are relying on Allah, and others do nothing and say they are relying on Allah; neither of which is correct; as the Prophet is reported to have said, “tie your camel, and then rely on Allah” In this example and in many others, the Prophet came up with his best plan and prepared for it, and then relied on Allah for help; so in our own lives we have to do the same; in our own lives, when faced with choices, we should make assessment of the situation, come up with a plan of execution, make sure it is fool-proof to the best of our ability, and then we should rely on Allah for his help by asking him for a successful outcome; we should know that we can plan, but Allah is the best of planner
• Insha Allah in the next khutba I will go over some more lessons we can learn from this important during the life of the Prophet;

• As we are coming to the close of one Islamic year and starting a new one, I think it is important for us to reflect upon the importance of the event that begins the Islamic calendar some 1400 years ago and see what lessons we can draw from it from our own lives;
• And there are many we can draw; two I have mentioned above: the first being that during the height of trials and tribulations, Allah provides opportunities to overcome them and it is a combination of both the intellect and spiritual depth that allows a person to see these opportunities; with intellect, one can spot them and take advantage of them and with spiritual depth, one can carry them out knowing that it was not an opportunity created by us, but by Allah, and we should be humble and thankful; the second is that tawakkul or reliance on Allah means we prepare all aspects of a certain act, and then and only then rely on Allah
• As mentioned earlier, when speaking about the chain of events called the Hijra, we can take many examples too many to explain in this khutba; let me just mention one more before closing; as we know, when the Prophet left Mecca for Yathrib, he took a route south first, and then turned northward to try and throw off the people who would chase him; upon his departure, the Quresh elders promised 100 camels to the person who would capture the Prophet before he got to Medina; one of the people who took up the challenge was Suraqa ibnu Malik; he was an astute rider and tracker and knew he could catch up to Muhammed and Abu Bakr;
• As he began riding toward Medina, the Prophet and Abu Bakr were also riding toward Medina and with the Prophet in front, it was Abu Bakr who first saw Suraqa approaching and gaining on them; He kept looking back at him catching up and then forward to try and warn the Prophet, all the while getting anxious and nervous; the Prophet knew that Abu Bakr was restless, so in a calm voice he told him:

Laa tahzan, innallaha ma’na
Do not be nervous, Allah is with us

• Eventually, Suraqa did catch up to the Prophet and Abu Bakr and at one point, he had the Prophet on the ground with a sword on top of him; confident, Suraqa said: “So Muhammed, what do you say now”; again calm and composed, the Prophet responded: “Allah”; this confused Suraqa and within moments the tables were turned and now Suraqa was on the ground and the Prophet was on top him with a sword; so the Prophet asked Suraqa the same question: what do you say now? And Suraqa did not have an answer; the Prophet let him go and said “O Suraqa, what if I told you that one day you will be wearing the bracelets of Kisra in Persia if you become Muslim?”
• Suraqa did become Muslim and one can take many lessons from this about the Prophet’s kindness, forgiveness, etc. but the one I would like to focus on is how the Prophet made real to someone what was in store for him in the future; or in common language, he gave Suraqa, in this example and to all companions a vision of a greater future than they were currently living in; for people like Abu Bakr, the future they appreciated was in the hereafter, and for people like Suraqa, it was in this life, but in both cases, the Prophet was able to give his companions a vision of a better future that they could rally around;
• So whether you are a person leading a nation, a community, a family, or even individually, what you need to be able to do is to visualize a better future for yourself, your family, your community, your nation, and then work towards that goal; even in the worst of circumstances, one should keep this future in front of them, constantly reminding oneself of it so that it becomes a motivating factor in working toward that final goal;
• And different people have different things that motivate them, but this does not mean that they cannot help in achieving the same final objective; like with the examples of the companions, some had material goals of this life and others had spiritual goals of the hereafter; what we have to figure out is what motivates us to work for Allah and then do it; the spiritual goal might be the better and more noble goal, but this does not diminish the goal that some people might have for good in this life
• Just this last week, on Monday, we celebrated MLK day; in his famous, I have a dream speech, that is what he was doing; he was laying out a future for people in the US, the African Americans in the US that they could all rally around; in the same way, we need to make ourselves leaders in visualizing a goal and then working towards it; if your goal is pleasure of Allah and Jennah, then work towards it; if your goal is to become a doctor, visualize it and work towards; there will be ups and downs, but the visualization will help you to overcome;

"Die Before You Die"

This is my khutba delivered in Bellingham on January 12, 2007. The title is based on a hadith of the Prophet Muhammed, peace be upon him.


• As we are still in the first two weeks of the new year, and as students are coming back to University, going back to school, I thought it would be important to reflect upon one of the signs of the day of judgement; the Prophet is reported to have said that as you get closer to the Day, time will seem to get faster and faster

• And if I reflect upon this saying, it only seems like last week that 2006 was beginning and 2005 was ending, and we are already in 2007; That only last week Ramadan was beginning and not only is Eid Al-Fitr is gone, but so is Hajj and Eid Al-Adha;
• And this not an uncommon feeling in this age, as the Prophet mentioned; in fact it is not only us that are feeling this but the entire humanity; and we will continue to feel this way until the Day of Judgement is upon us; in fact, even on that day, our entire life on this earth 60, 70, 80 years will feel like “yawmun aw ba’da yawm” A day or part of a day
• So our goal in this life is not to try and do away with this feeling of speed, but rather to take advantage of the life we have in front of us: “carpe diem” or seize the day
• So as we sit here today, at the beginning of 2007, at the beginning of our semester in school, the year looks very long; 12 months, 52 weeks, 365 days; but I can guarantee you that sitting here towards its end, we will wonder where the time went
• So make a commitment that you will take advantage of every day that you have; make today the beginning of the rest of your life, or at least the rest of this year
• And the way to do this is remind ourselves of the hadith our beloved messenger where he mentions: mankind is asleep and they wake up when they die; so die before you die; what this means is that after we establish ourselves on a certain path, whether it be work, family, school, or any activity, we begin to do it monotonously, not even thinking about what we are doing; like when you drive your car: most people are not even thinking about driving, but everything else in their lives
• And so we begin to live our lives monotonously doing the same things day in day out, week in week out, year in year out; not realizing that an end is coming and it is fast approaching; like a driver when he gets into an accident says “that car came out of no where, so will the Angel of Death come out of no where if you continue life in this way;
• But when you die, then reality begins to set in; in the grave, six feet under, when the two angels come and ask you the three questions: who is your lord, who is your prophet, and what is your religion? You literally wake up to the reality of the eternal hereafter; so to wake up to the reality of the hereafter in this life is to die before you die; to be ever aware that we are living in a temporary world, and every second we do things without “dieing”, so to speak, we are wasting our time away; and if we waste our time, then on the day of judgment we will be of those that ask Allah to send us back to like, just for one day, so that we could do good
• But Allah has made it very simple for us to do mundane acts with consciousness; an act that you are sleeping through can become an act of worship if and only if we begin to do it with the intention of pleasing Allah; when we begin to have intention behind what we do, then it keeps us focused on the real reality;
• So from the minute you get up in the morning till the moment you go to sleep, in fact even sleep itself, can be an act of worship that you benefit from, rather than let it go to waste by not thinking about the act you are performing
• So when you wake up, you wake up by reciting a dua: Alhamdulillahilladhee ahyaana ba’da maa amaatana wa ilayhin nushoor; Praise be to Allah who gave us life after causing us to die, and to to him is the gathering;
• When you brush your teeth, you do it because ½ of religion is cleanliness; you eat because your body has a right upon you and you start with a dua and bismillah; you do this over and over again till you go to bed, and you do that with a du’aa as well; you go to school and learn because Allah encourage us to learn and have knowledge and the Prophet said that wisdom is the property of a Muslim; if he finds it somewhere, he should take it; even the work we do, whether it be directly or indirectly related to Islam, can become a worship because the Prophet has taught us to provide for our families;
• So you see, anything and everything we do, if we choose to do so, can become an act of worship, and when we do it with a sincere intention, and even better would be to recite a dua before we do it, then we will always be aware of our real purpose in life and with the knowledge of this real purpose, we will never do things for the sake of doing them, but do them knowing that we will be rewarded in the hereafter. As Allah says: “wa maa khalaqtal jinna wa insa illa liya’budoon”

• Bros and sisters, as with anything in life, we have a choice today; the Prophet reminds us that mankind is asleep and they wake up when they die; then he says “die before you die”
• And how do we do this? One way to do this is to have a sincere intention with everything we are doing, whether it be a true act of worship or a mundane task that we have to do on a daily basis and this is what I mentioned earlier
• And another way to “die before you die” is related to having a sincere intention, but has to do with having a direction in life; someone once asked Imam Al-Shafi’i who is the worst person, and he answered “a person who give up the akhira for his dunya”; and then he was asked, who is worse than that, and he said “a person who gives up his akhira for another person’s dunya”
• so the worst person is the one that aimlessly goes about life doing what other people want him to do, and not doing things that will benefit him; a better person (but still bad) in this life is a person who has a goal that he wants to achieve but it is a goal that is only for this life and has nothing to do with the hereafter
• And the best person who has a goal of the hereafter, and he knows that with this goal, his dunya will automatically be given to him; so we as Muslims, have to decide where we are going, in this life and the hereafter; that is why even Allah asks us this question in the Qur’an:

Fa ayna tadh-haboon? So where are you going?
In huwa illa dhikrul lil ‘aalameen Verily this is a message to the world

• And the answer is also given to us, that the message of Islam is where you should be heading; it has the answers; so if we find ourselves aimlessly wandering in this life, then we should know that the answer is in the message of the Qur’an; it is the one that will uplift you in your sadness and calm you in you anxiety, and give perspective to you happiness; so hold on to it, read it, recite it, and follow it to the best of your ability
• So in conclusion, with sincere intention and with having a clear definition of where we are going in this life, can we truly live up to the hadith of the prophet of “dieing before we die” and we we realize this hadith in our life, then time will not slow down for us, but at least it will be time well spent.

Article in Smart Money

The Path of the Profit

http://www.smartmoney.com/mag/index.cfm?story=february2007-path

By Nicole Bullock
January 10, 2007
ON AN AUTUMN morning in Bellingham, Wash., an eclectic audience of scholars, bankers and investors gathers in a conference room at Western Washington University. The topic is Islamic finance, and the sponsor is Saturna Capital, a Bellingham company whose Amana mutual funds have invested in accordance with Islamic law since 1989. Outside, the sun bathes the tree-lined campus, and inside, the mood among the conferees is relaxed and collegial — at least until Mahmoud Amin El-Gamal, the first speaker, starts shaking the foundations of their financial beliefs.

Some interpretations of Islamic law, or Shariah, impose strict limits on borrowing money and earning interest, putting America's Muslims at a disadvantage in everything from buying a house to saving for retirement. Many people in this room have designed financial products to try to ease this so-called Cost of Being Muslim. But El-Gamal, a professor of economics and statistics at Rice University, isn't satisfied with their results. By trying to apply Shariah to the complexities of the markets, he argues, these loans and funds wind up being inferior to the products they aim to replace. And when their architects present them as the only legitimate way to invest, they merely compound the problem. They imply that "you will fry in hell if you use conventional tools," says El-Gamal. "There is something very unseemly about using religion that way."

Such criticism isn't uncommon when mutual funds try to marry religion and investing. But the Amana funds can rebut it in a way that a lot of religious funds can't — with a remarkable track record. Indeed, while thousands of mutual funds scramble to show even ho-hum returns, Amana Trust Income and Amana Trust Growth have become two of the top-returning funds available, period. They've done so even though they have to shun companies that profit substantially from such industries as alcohol or pork processing, and even those that carry a lot of debt. Together, the rules put almost half of the stocks in the market off-limits. Nonetheless, over the past three years, each fund is the No. 1 performer in its style category, according to fund tracker Morningstar, with the growth fund and income fund posting annualized returns of 20 and 21%, respectively, over that span.

Curiously, the man behind these stellar returns has no Islamic beliefs whatsoever. (One clue: his impressive wine cellar, a no-no for any devout Muslim.) A career portfolio manager, Nicholas Kaiser brings a lot of ingenuity to the table; when Amana launched its funds 18 years ago, for example, Kaiser didn't like the record-keeping software on the market, so he wrote his own. As for matters of faith, Kaiser says that after being raised Episcopalian, he is "more of a skeptic" now. "It's what makes me a good investor."

To be sure, the funds struggle to satisfy some observers, especially Muslims who disagree with how the funds' mission incorporates the principles of the faith. Similar issues surround most religious funds, a small but growing niche these days with $16.4 billion in assets. The funds as a group have slightly underperformed their peers over the past one, three and five years; they often face higher trading and administrative costs than bigger funds, while religious screens rule out many good stocks. "It's the challenge of having one hand tied behind your back," says Morningstar analyst David Kathman. But in Amana's case, he adds, at least some religious values coincide with smart investing.

SATURNA CAPITAL OCCUPIES a small, gray building across the street from the food co-op in the center of Bellingham. Here, only the subtlest clues signal that the company differs from its secular peers. The receptionist's desk looks like every other receptionist's desk in America, but the woman behind it is reading a guide to Islamic investing. Seemingly unfurnished spaces double as rooms where observant employees adjourn for prayers — the paper kneeling mats are a tip-off. And in a frame above the door in Kaiser's office is a line of Arabic text. "It says buy low, sell high," Kaiser explains, very seriously. Then he laughs. "Actually, I have no idea what it says." Only later does a visitor learn that it's a quote from the Koran.

Yaqub Mirza, a physicist and prominent figure in the U.S. Muslim community, got the idea for the Amana funds while he was running an Islamic investing club in the 1980s. Mirza recruited Kaiser, who had proved himself as a capable value investor while running the Unified Management fund family. Kaiser embraced the opportunity, but he insists that the Islamic angle has little impact on his thinking: "I manage the portfolio — this is a business." While Kaiser takes care of the stock picking, Monem Salam focuses on religious compatibility. Salam, whose family moved to America from Pakistan when he was nine, used to manage money for wealthy Muslim clients of Morgan Stanley. He still plays that role at Saturna, but he also consults with clerics and members of the funds' board to figure out which companies are off-limits.

Amana's recent success isn't due exclusively to religion; for example, the funds have outperformed the Dow Jones Islamic fund, which also uses Islamic screens, by at least eight percentage points a year over the past five years. Once the list of candidates is whittled down, Kaiser digs into the stock picking, and in recent years he has deftly spotted some market darlings. Once, on a ski lift at Whistler, B.C., he overheard a woman saying that her daughter had paid $3 for a head of organic lettuce. Kaiser already liked organic stores because their margins are higher than those of traditional grocers. Eventually, he bought Whole Foods for around $16; when he sold it three years later, it had soared into the $40s. Kaiser was also quick to recognize the user-friendly appeal of Apple computers, installing them in Amana's offices. He started buying Apple in 2000 at $25, and now, trading north of $90, it's his growth fund's largest holding. Kaiser is a buy-and-hold investor, and it's just as well: Under Islamic law, frequent trading is seen as a form of gambling. Not surprisingly, Amana funds give up little of their returns to taxes and trading costs. At the growth fund portfolio, turnover, a measure of how frequently the funds buy and sell stocks, hovers at an amazingly low 5%.

At least one of the fund's religious principles, the Islamic aversion to debt, translates into sound investing sense. "We buy companies that don't have a lot of debt," Salam says. "Warren Buffett does that." The Amana screen's limit on debt — it can equal no more than 33% of a company's market value — has also saved the funds from some painful losses. After all, Kaiser is a manager who sold Enron for a profit. "They piled on the debt before they piled on the lies," he says. Amana also sold AOL right after the Time Warner merger. "We had a lot of calls from shareholders concerned about the Internet and pornography," says Kaiser, "and I had to tell them: 'No, actually, the debt is the problem.'" That transaction wasn't nearly as painful as selling Target a few years ago. The retailer's fundamentals still looked great — but the stores started selling wine.

According to the Koran, loans are charity that will be repaid in the afterlife. That's why Amana funds avoid companies for whom interest is a primary source of earnings, a principle that rules out investing in conventional financial companies. This ban has hurt Amana in the past. In the years 1996 through 1998, when financial firms rallied, the Amana funds trailed the market by double digits. Kaiser acknowledges that markets are cyclical and down years could easily happen again — that's the drawback of a system that screens out an entire sector of the economy for religious reasons.

ON A RECENT FRIDAY at weekly prayers, Muzammil Siddiqi, an expert on the interpretation of Shariah for American Muslims, spoke with Saturna employees and board members about intention and action. "If you conduct your business with the right intentions," Siddiqi tells the group, "it is an act of worship." But later he warns the audience to avoid "the gray." "Boundaries," he says, "are where you can break the rules."

Amana does sometimes go gray when it comes to "sin stocks." For example, its screen filters out companies that derive more than 5% of revenue from businesses like pornography or pork processing. But if pork is haram — forbidden — then why is it acceptable to invest in a company that makes any money from hot dogs or ham sandwiches? Salam explains that Islam allows some minor involvement with something impermissible, as long as the greater objective — in this case, saving for the future — is worthy and necessary. "It is definitely not okay to sin a little bit," says Salam. "But if it can avoid a much bigger sin later, then shouldn't we allow it?"

Not all faith-based fund managers agree. The Catholic-oriented Ave Maria funds advocate an all-or-nothing stance; for example, they can't invest in companies that derive any revenue from providing abortions. Still, even such absolute bans can lead investors into murky areas. Manager George Schwartz admits that if he were considering buying a company that makes bar-code labels, he wouldn't drill down to find out if any labels were earmarked for bottles containing RU-486, the so-called abortion pill. "You wouldn't be able to live your life," he protests.

The principal figures at Amana face challenges beyond investing — some more serious than others. Not long after 9/11, cofounder Yaqub Mirza attracted scrutiny from federal investigators, after nonprofit organizations with which he was involved came under suspicion of links to terrorism. Mirza has since resigned from Amana's board; he has not been indicted and denies any wrongdoing. Salam has taken up his own post-9/11 challenge. He's trying to earn his pilot's license, a goal that raises eyebrows among his peers: "Every Muslim I asked and still ask thinks I'm crazy," says Salam. To raise awareness about American Muslims and the obstacles they now face, Salam is working on a documentary film about his licensing quest — directed by Kaiser's son, Max.

Back on the ground, Salam and his colleagues are laying the groundwork to keep the funds growing. Saturna aims to have $1.5 billion under management by 2010, up from $500 million today, and Salam is touring the country, marketing the Amana funds to potential investors at mosques and Islamic schools. Already, investors outside the Islamic community have woken up to their track record: Assets have grown more than tenfold since 2003. But Amana's future depends on the loyalty of core investors like Moazzam Ahmed, a Dallas software engineer. Since he started investing with Amana Growth three years ago, his stake has doubled. He used to put in hours of research to make sure that stocks he liked, such as Microsoft and Oracle, were in accord with his beliefs. Now, Ahmed says, he's relying on Amana: "They are doing the homework for me."

Featuring me in BusinessWeek

The February edition of BusinessWeek will have an article that features your truly as an American Muslim Executive. Below is the clip. It is taken from a book written by Paul Barrett who is editor at BusinessWeek and has just completed a recent book:
American Islam: The Struggle for the Soul of a Religion

Information on the book is below the excerpt. The address for the full BusinessWeek story is: http://www.businessweek.com/magazine/content/07_03/b4017074.htm

THE EXECUTIVE

Monem Salam aims for understatement: a charcoal-gray, buttoned-down look, soft voice, and modest demeanor. But when pressed, he admits he has achieved a pretty impressive formula for combining spiritual and material interests. The 34-year-old Pakistani immigrant oversees Islamic investing for Saturna Capital Corp., a Bellingham (Wash.) firm offering Muslims mutual funds that hew to the strictures of Shariah, or traditional Islamic law. With $400 million in client money, Saturna's two Islamic stock funds are tiny by industry standards. But historically they have reported solid results. For 2006, the more conservative stock fund reported a 22% return; the more aggressive growth fund, 15%. And the mere existence of the funds and a handful of rivals are a source of pride among American Muslims, including many who don't always observe the Shariah's prohibitions.

Salam moved to Saturna in 2003, leaving behind a money manager's job in Dallas with Morgan Stanley (MS ). Nowadays he and his wife and three young children live in Bellingham, the picturesque harbor town where Saturna has its 25-person office. Salam says he is "more at peace, doing something to help Muslims and doing it in a way [with which] God would be happy."

With guidance from Islamic scholars, Salam helps shape a portfolio that excludes companies that deal primarily in alcohol, pork, or pornography. There are no gambling stocks and, most challenging, no equity in banks, because Islamic law bans the imposition or payment of interest as a form of usury. Small impurities are permitted: The funds can own airline stocks, even though flight attendants serve liquor. Lately the funds have favored technology and telecommunications. The fact that companies borrow money doesn't preclude Salam from buying their shares, but he monitors the ratio of debt to market capitalization and avoids corporations that leverage to the hilt. "You have to allow some leeway, or you can't do anything," he tells audiences at Muslim investing seminars around the country. Only a small minority of American Muslims, perhaps 15% by Salam's estimate, even attempt to follow Shariah restrictions in all of their financial dealings. His goal is to make that percentage grow.

In his spare time, Salam takes flying lessons. His father, a retired commercial pilot, flew Boeing 747s for airlines based in Pakistan and Saudi Arabia. Salam knows that after 9/11 a Muslim showing up at an American flight school could suggest something ominous to some people. That's part of the reason he's doing it: to show that Muslims can fly planes as innocuously as other Americans. Even as he sells mutual funds with an Islamic twist, he hopes his life demonstrates that "being an American Muslim is not an oxymoron." So far his flight training has gone smoothly, and Salam, whose surname means "peace" in Arabic, expects to get his pilot's license in the spring.

American Islam: The Struggle for the Soul of a Religion, by Paul M. Barrett, published on Jan. 2, 2007, by Farrar, Straus & Giroux. Copyright 2007 by Paul M. Barrett