Wall St vs Reddit - The Showdown | Mufti Abu Layth

let's speak a bit about trade in the modern world people allah look at that people look at that wall street versus gamestop what did you guys catch the drama it's been crazy wow let me give you my a quick summary so what's been going on is basically you have these high-end wall street

wall street guys who you know have their tactic have their tactics sorry in in the way they trade and you know they they quite there's a lot of kind of snobbery about them and and they have of rightfully so i think a terrible reputation they were challenged recently by this um what you have wall street betting on reddit now this was basically a bunch of people it's it's it's a reddit thing that they've got with i think over they had over a million subscribers

who don't like the way the wall street kind of um hedge fund people are operating so they decided to do something about it and it was crazy so to understand how what what this is about you have to have a bit of a tiny amount of kind of knowledge of how trading whether it's with stocks and shares or in the crypto world how these things work with margin trade so margin trade is to where you put down a certain amount and the broker will leverage it

and meet it with whatever you put down times whatever so let's say you can do this in cryptocurrency as well if i put down i don't know 1 000 pounds i can only buy with 1 000 pounds worth so the profit i make is only from 1 000 pounds but if i trade by margin what that is is i put down 1 000 pounds now let's say the leverage is times three in you know common in let's say binance or cryptocurrency then i would have three thousand pounds worth of buying power so let's say i paid if in the normal sale i pay 1 000 pounds

i've got let's say i made a hundred pounds profit yeah let's say overnight or in two nights i made 100 pounds but if i had bought with 3 000 pounds it would have been exactly three times the amount so what you do is you leverage it you have greater profit and then you repay the leverage now obviously with this as well the risk of of the jump of for losses is equally great so but you don't actually end up owing the debt because what happens is as your margin amount that you put down starts to get eaten into

due to the losses the the broker will just liquidate whatever you've put there and be because they won't want to lose their amount so you don't actually lose more than what you put down and you can put stop losses and things like that into place but anyway that's important to understand for what actually happened because then you have this ability on margin trade to sell for sell short now what what does that mean so what that means is

you see in normal trade you you sell i mean it's it's it's for long traders in your buying yeah i mean you can sell something you have but you can't sell something you don't have in normal trade but in margin trade and in these kind of hedge fund uh kind of tactics you can so you sell short so what you do is normal buying is that i'm buying these shares of this company because it's going to profit it's going to go up and my shares will go up and then i can sell it but what you can also do with this kind of leveraging is you can sell short you can say i'm

buying this with the hope that this is going to drop in price it's going to plummet so what you do is you borrow the asset so you know you're borrowing let's say obviously these are shares and you know uh abstract entities but let's just say it was a phone so you don't need the phone to sell it like i wanna like i think this phone is gonna lose profit so this company is gonna lose profit so what i do is i say well ah okay

uh i would like to sell 100 of these phones right now so i want to loan 100 phones you get it like let's say i want to loan these shares particular ones not the money but these shares once i get these let's say these they say this phone is now 100 pounds and i've got a hundred i'm going to sell them so i've loaned them and i'm going to sell them but with the with the hope that this company is going to sink so i sell them 100 for a 100 i've got that this company sinks

to let's say by 50 now i buy back a hundred and repay the loan to you and i have 50 profit so this is called selling short now the the problem with this is you can actually cause companies to plummet because when these huge bankers and these wall street guys get behind this and they see because it's not just one person these people are like an alliance and they they kind of you know wield a lot of power because they will say things like okay

we're going to short sell we're going to sell short on this company like tesla they tried to you know sure tesla they said right and they announce it so people who have shares get worried and start to sell so it fulfills their prophecy and that company loses radical shares and and money and they tried it this is why elon musk obviously hates these people who short trade and and he uh because they tried it on him and this is why you know he's part of the saying that this is a crime except you know this is it's ridiculous that this is even possible

so what now okay you understand that now fast forward so what it is some of these wall street guys they said that they that we're going to short sell uh gamestop and this is like a bullying tactic because what happens is you could cause the company to almost crash so and yes you may make money in the process but the company goes you know can go bust so this is what they said now some of these guys on reddit this wbs this this kind of forum this group that they've got they've got

a reasonable following as well of over a million people they said you know what a big fu to these wall street bunch of you know stuck up whatever they are let's start buying shares in gamestop everybody buys shares in gamestop so we can inflate the value because you see what's interesting pause this for a moment go back to what i was telling you about short selling you see when you buy long like normal trade you see i i put down a thousand pounds and buy some shares in tesla let's say now i'm

hoping this is going to go up and my profit is unlimited as long as it can go up i keep profiting if it goes down the maximum i can lose let's say worst case the whole company collapses never happens but let's say can happen in some cases i will lose my 1 000 so my loss still is finite but my profit is potentially undetermined selling short has the opposite you see your profit is limited like as in it's i mean it's sure it's good like it's but

you know there's a number but if that company starts making profit you will start becoming in debt in like without a limit so now you come back to this thing so these guys said look let's start buying shares buy shares everyone because what's going to happen is the price gets inflated and these guys all these kind of fi wall street guys that you know i've got the head up the royal end they will fall into loss and because they're going to get indebted they have to buy back the shares because you remember you've loaned i've loaned 100 of these and sold them already

so i need to buy back a hundred to sell them back but now the price has gone much more before what i bought it so this is what started and then you get obviously so many people just jumped on it so the price of gamestop just rocketed taking it into the top 500 companies of the world it became you know like a huge it became a unicorn company so you've got and these people these bullies they obviously in turn got bullied the whole thing got collapsed uh because they you know they lost

millions and millions and it really backfired and on the back of that as well you've got a dodge coin overnight just rocketed because they said all of a sudden because there was this spur people said let's buy dodge coin and dodge coin was originally a crypto coin that was made as a joke it was it didn't represent anything it was a meme and overnight it just rocketed and elon musk you know it's amazing he made one tweet he just said two words

by dodge and wow the power everybody that night was a roller coaster i'm telling you those of you that were awake that night uh on crypto it was just wow it was seriously it was so gripping the whole thing you could see it was i mean the crypto world isn't normally like that but that that's not a normal night on but it was just going and whoa you put money in but my oh it's people made millions people i mean that were made them i don't i'm not saying regular people but people made loads of

money people made thousands regular people made thousands and thousands overnight but certain people would have made millions millions and the interesting thing is this is all being made on the back of let's say dodge coin which represents nothing so for once like we are witnessing money being made out of nothing representing nothing i mean it's just wow you know but yet it's made so many people much richer than they were before it

and that's just wow you know when you think about it it blows the mind honestly it's it reminds me i shared this with some people as well i said it reminds me of the quote from this from that netflix documentary on india's billionaire bad boys we're one of the guys who trades in diamonds and he says you know he asks the question he says what's the price he says what's the value of a diamond what is the value of what value would you give what is the value of a diamond and he's and he gives the answer he says it's the price the last person

who bought it was prepared to pay and and that's in essence how value is created now i say this because the the the the fatawa of ulama is so out of sync with this world you know they have not caught up it's they've not even caught up with you know this is money 4.0 we're almost at you know this kind of cyber money they're still talking about battery the fake books are still talking about

bartering you know i trade this sack of corn for that sack of you know they're not even they haven't even reached up properly to to money let alone digitalization let alone this crypto phenomenon they haven't even this is way beyond and so people those our tradition when it comes to transactions needs to be kind of uh bumped up and updated um but i thought i'd share that it's incredibly fascinating to show how the concept of money has changed

because in the prophet's time money was based on just hard assets now hard assets are incredibly finite and it's almost like a zero-sum game that you there's only so much gold in this whole vicinity now unless we raid another area and bring in more gold this gold is stuck so it's only gonna rotate among certain people whereas we are now in an age where money is being made literally out of thin air you see the whole narrative has changed

so those rulings can't apply you see that was for where a time where it was only hard assets that were financial tradables that was fiat or that was equity or that was today it is abstract and it is literally being created in front of us out of meaningless nothing meaningless abstract concepts like dodge coin so yeah that's some food for thought i do believe all of this is permissible obviously there's regulations but this

kind of trading whether it's cfds and stocks or shares or whether it's going to be um forex or whether it's going to be crypto whether it's going to be margin trade isolated cross margin i i believe all of these things are permissible but obviously one needs to know as well be sensible and learn and have you know you you've got to have your kind of um an assessment of your losses have stop losses i mean there's all these things are in place they're already there that you can have a risk management you can and a loss you know damage control that look i'm

prepared to lose like in business you're prepared to lose people say oh it's like a gamble but yes but you know risk was not why things were made haram in islam you see very few things were made harambees of risk that risk was not the thing mukha in arabic was not why gambling was made haram gambling was made haram because of the other harms that it was doing socially to people not because of risk just as rebar was not haram because of risk but because of the level of exploitation unfettered exploitation that was around it

because otherwise trade has risk all these things have risk right so it was never it was in the sharia i was so in the thick books they always say that which leads to um aggressive disputation potentially bloodshed as in fighting would be made haram but in a day and age where there's regulations in place and there's rules and this and you can do damage control a person like a shop you could say look i'll tell you what i'm going to open this worst case it's not going to work i need six months rent beforehand you know you do a risk assessment you say yeah well you know what i okay if i lose it i lose it you know if

i don't make anything i don't make anything but i'll i'll you know i'll give it a shot it's the same thing here you know you you put down certain things for trade you take whether it's margins or whatever you you place or whether it's regular trade you place a stop loss say you know what if it hits this much i can take that loss it's okay but this is i hope it i make this profit this is what i'll go for and you know the rest is shall i say luck right or whatever is in your nasib but i hope that makes some sense some people had asked me about these topics but i definitely thought this is very relevant this whole robin hood phenomenon because

robin hood was obviously the platform they were using to to to do the trades so which was aligning itself with wall street and then you've got reddit and this kind of a particular subreddit kind of uh forum or platform where these nerds or whatever but but these young people managed to you know cause manage to to kind of overturn [Laughter] the plotting and planning of wall street and caused them to suffer in

millions literally millions and millions overnight that's what that's what they what they did says that those who at sunrise were you know people who sat on thrones by nightfall became criminals as in by sunset just within the turn of a day that he says

in moments we've seen people's fortune flip to right people let's all right let's move on but there are wars now on currency and trade i mean there will always be wars on money as in people are fighting always for more assets but people who are trading are not warring with each other

so in the past if you went to the their markets and did something in which could lead to a it could lead to an altercation this was deemed haram because in the past the person in the market stall carried a sword and you carried a sword and when he said i think you know blah blah blah blah blah and and there is no regulatory board there's no government there's no council there's no laws in place like that this yeah this tribal kind of loose overarching uh rules but that's it he would just take out his sword and say

well okay well there's one way to determine this oh you thought i was going to pick up the calculator the sword so this kind of stuff doesn't happen you know you're trading you're on your app you're on your pc your trade nobody's gonna come knock on your door with the sword to kind of kill you because you brought some bitcoin and it profited so these kind of things are not haram as far as the world is concerned yes ultimately there will be certain you know there will be certain people who are always playing some games and doing

things that's just the way of the world right so let's uh let's move on people let's move on alright so that's i did want to cover gin possession people gin possession but were there any quick questions to take before i move on to that stop banning me and my wife kali auntie please gore chacha and kali auntie

sallow right let me check what the facebook people are up to facebook what awesome right so yep uh supporter replying said it's not because a large number of people are buying the stock is that they're buying it and holding it yeah but buying it obviously if you buy

it and you don't sell it it is obviously [Laughter] have to buy the shares they shorted back obviously that's what i was giving the example when i was saying look if i sell this now then i have to buy them back remember that's what i was saying and obviously if the price is hyper inflated then i'm at a loss because if i have to buy it back to repaid and you know i could lose millions because you don't understand the the hedge funds that that are involved i mean this is then they're not trading at a low level this

is