Many of us must have watched a video in which a mother antelope is sacrificing herself when she saw a crocodile was approaching from behind her fawns.

Such incidences in the animal kingdom draw our attention to the innate feeling of compassion in humans and its effects on other emotions. A human whose feeling of compassion has dried up cannot show the sacrifice that the antelope has shown to her little fawns—not toward others, not even to their offspring. Studies in the field of psychology have established important facts about compassion and its effect on other emotions, especially forgiveness. When internalized, the feeling of affection plays a central role and positively influences other feelings. When this feeling dries up, a person becomes more susceptible to evil or cruel acts. American psychologist Kristin Neff gives the example of a battery when describing compassion toward our beloved ones and friends. She asserts that acquiring this emotion is a way of emotionally recharging our batteries and says that compassion strengthens our tendencies to forgive the wrongdoings of our friends.

It is striking that Ms. Neff considers forgiveness and compassion from the point of one’s close circle of friends. According to her, an internalized compassion makes forgiving easier and, to an extent, gives us the opportunity to heal the emotional wounds caused by others. However, by stressing that forgiving doesn’t mean giving up defending our rights, Neff also points out the need to keep balance between compassion, forgiveness, and justice [1]. When a criminal act is committed, a personal or public right is violated. People tried and found guilty by an independent, just, and impartial court must be penalized.

Source of bad intentions

Psychotherapist Beverly Engel, who has written books on emotions, draws attention to the complications that a lack of compassion can cause in human psychology. According to her, the source of every evil desire in individuals is a deficiency of compassion. Beverly Engel states that reinvigorating the feeling of compassion can help healing other emotions that have been damaged [2]. For Tara Brach, to be compassionate means to be courageous—to love ourselves, each other, and the whole world [3].

Norwegian Theologians Einar Berg and Oddbjørn Leirvik, who conduct research about Islam, investigate the religious grounds that compassion can blossom upon and link this feeling with the Holy Qur’an and its unequalled representative Prophet Muhammad (peace and blessings be upon him). Leirvik compares Prophet Muhammad’s forgiveness to Prophet Joseph (peace be upon him); just like Joseph forgave his brothers who had treated him cruelly, Leirvik reminds us that Prophet Muhammad forgave his enemies when he conquered Mecca [4]. According to Berg, compassion and forgiveness are what the Holy Qur’an often emphasizes [5]. Berg sheds light on the feeling of compassion by highlighting the following verse: “Inform My servants that I am the Forgiver, the Merciful” (Surah Hijr – The Rock- verse 49).

As also mentioned by Berg, in Islam a great emphasis is placed on compassion and forgiveness – for forgiveness is a manifestation of compassion. God introduces Himself to us with His divine names al-Rahman (the Gracious) and al-Raheem (the Merciful). Many verses of the Qur’an mention God’s blessed name, al-Rauf (the most Benevolent, most Compassionate) [6]. Manifestations of these divine names can be seen to the utmost level in Prophet Muhammad (peace and blessings be upon him), who is described as “the Sun of Compassion” and “the Prophet of Mercy.”

Al-Ragheb al-Isfahani and Al-Jawhari (two prominent Muslim scholars) state that compassion and mercy are the most significant attributes of our Prophet Muhammad (peace and blessings be upon him). They explain that the word “Rahma” in the verse, “We did not send you except as mercy to mankind” (Surah Anbiya -The Prophets- verse 107), means deep affection and kindness which require being tender-hearted, forgiving, and beneficent [7]. For this reason, Muslim scholars often refer to the following Hadith of Prophet Muhammad: “God the Gracious treats with mercy and kindness those who treat each other with feelings of mercy. (So) you act with mercy and kindness toward those on earth so that those in heavens shall show you mercy” [8].

Real chivalry

Fudayl bin Iyadh, too, addresses forgiveness relating to close friends and says that real chivalry is to forgive the faults of one’s companions. Wahb bin Munabbih mentions compassion together with benignity and states that, “Compassion is the twin sister of benignity” [9]. According to Imam Ghazali, one believer forgiving another believer’s mistakes is one of the rights of brotherhood [10].

In the teachings of Bediuzzaman Said Nursi, compassion has an important place. For him, compassion is one of the “fastest and safest” ways leading us to truth, and it is also one of the principles among the laws established in nature. He states that compassion has an all-comprehensive truth and acts as a mirror for the divine name al-Rahim (The Merciful). A person whose senses and emotions have gained integrity and wholeness, begins showing affection, not only to his or her own offspring but to all innocent beings. Bediuzzaman draws attention to the point that compassion is a sincere, pure, and gratuitous feeling that does not expect any return, and shows animals’ adorable and self-denying affection toward their little babies as evidence for this fact [11].

When we consider the mercy and compassion of Prophet Muhammad, peace and blessings be upon him, we see that correctly and properly fulfilling the duty of conveying and instructing the divine message is strongly linked with earnest compassion and tender mercy. No matter when they live, it is absolutely fundamental for the conveyors of this divine message to never deviate from this path [12]. Scholar Fethullah Gülen reminds that Islam advises forgiving by any means possible, not to surrender to the urges of grudge or hatred, and to never be possessed by the feeling of revenge [13].

References

1. 1. Kristin Neff, Self-Compassion: The Proven Power of Being Kind to Yourself, 2011.
2. Beverly Engel, It Wasn’t Your Fault, New Harbinger Publications. 2015.
3. Tara Brach, Radical Compassion, New York: Viking, 2019.
4. Oddbjørn Leirvik, Islams Etikk, Universitetsforlaget, 2002, p. 45.
5. Einar Berg, Islam: Fra konfilikt til dialog, Universitetsforlaget, 1982.
6. Nur 24:20; Nahl 16:47; Tawbah 9:128.
7. ar-Ragib al-Isfahani, al-Mufradat, p. 191; al-Jawhari, as-Sihah, V, 1929; al-Munjid, “rhm,” p. 253. Bukhari, Janaiz 32, Ayman 9, Tawhid 25; Muslim, Janaiz 9, 11; Abu Dawud, Janaiz 24.
8. Tirmidhi, Birr 16; Abu Dawud, Adab 58.
9. Imam Ghazali, Ihya-i Ulumi’d-Din, Edited by: Dr. Mehmet Yavuz Şeker, Işık Yayınları. 2015.
10. Ibid.
11. Bediuzzaman Said Nursi, Mektubat, Istanbul: Şahdamar Yayınları, 2014, p. 29.
12. www.herkul.org/kirik-testi/sefkatle-acilan-kapilar/
13. M. Fethullah Gülen, “İnanmış İnsanın Nitelikleri”, Çağlayan, Ağustos 2020.

“And the king said one day: ‘I saw in a dream seven fat cows being devoured by seven lean ones, and seven green spikes of grain and another (seven) dry.’” (Qur’an: 12:43)

In perfect capital markets, all relevant information is incorporated into stock prices immediately. If a technology company announces a new product today, then its stock price immediately changes and reflects the effect of the new product on the firm’s value. Therefore, the new product has no additional effect on tomorrow’s stock price. Thus, investors cannot predict future stock prices based on current movements in stock returns, and there should be no correlations or trends between current and future stock prices in perfect capital markets. However, we live in a world that is far from perfect. The imperfections in financial markets lead to predictability in future stock prices. In this article, I study the predictability in stock returns in the context of the story of Joseph, peace be upon him, who predicted future changes in crop production and in response dramatically changed his government’s economic policies.

Earnings do not only determine the level of wealth, but also affect people’s risk aversion, which reflects the level of risk tolerance. That is, people with low income are more hesitant to undertake risky investments whereas wealthy individuals are more willing to undertake risky projects, as failures in these projects do not affect their livelihoods as much. For example, a $10,000 loss may devastate the financial wellbeing of an individual who is making $30,000 a year, whereas such a loss may have little or no impact on the consumption of an investor with a net worth of $10,000,000. Therefore, the seasonality in crop production that is mentioned in the story of Joseph, peace be upon him, did not only influence the people’s wealth – considering that the majority of people earned their living by agriculture – but might also have generated variation in the risk aversion of people, which reflected the level of risk tolerance of the society as a whole.

A society’s willingness to undertake risk plays a very important role in returns to assets. Typically, people prefer safe assets to risky assets. Thus, prices of risky assets are lower than those of safe assets with similar cash flows. In a society of high risk aversion, there is an even higher demand for safe assets, and, thereby, the spread in prices between safe and risky assets gets even bigger. Consequently, an increase in risk aversion in society generates higher prices of safe assets while lowering the values of risky assets. This suggests that if you have the information that people will get more risk averse, you can successfully predict the future increase in values of safe assets relative to risky assets. As changes in asset prices determine the returns of investments, the increases in the values of safe assets and the corresponding decrease in the values of risky assets consequently generate predictability in returns.

Robert J. Shiller, Nobel Laureate in Economics in 2013, also argues stock return predictability, in part due to longer-run swings in the risk appetite of investors. Thus, long-run changes in wealth, which affect risk aversion, may generate asset-return predictability. As changes in crop productions in the story of Joseph, peace be upon him, occurred over a long period, so do the variations in risk aversion, which in turn may generate predictability in stock prices in the long run. Thus, the miraculous Qur’an with the above verse, does not only suggest seasonality in commodities (e.g., crops), but may also suggest variation in risk aversion of people in response to changes in their wealth over the long term. This in turn suggests that the changes in risk aversion over a long period may generate predictable variation in asset returns.

The Qur’an also suggests economic fundamentals of the variation in prices. At the time of Prophet Joseph, peace be upon him, a crop was not an end product, but rather was a commodity, a vital input for final products. In contemporary financial markets, input markets play a very important role in the values of financial assets. For example, the recent drop in crop production generated a steep increase in food markets in general and the financial well-being of investors in particular. In addition to drawing attention to the importance of commodities in human life, the Qur’an in this verse suggests the important role of commodities in the formation of commodity prices in particular and financial asset values in general.

The Qur’an also uses the word “spikes” in describing the periods of fluctuations in crop production. This may suggest that the fundamentals for variation in asset prices may last over long periods and consequent trends in stock prices occur only over the long term; this enables stock price predictability in the long run, rather than in the short run. This is also consistent with the findings of Eugene Fama and Robert J. Shiller. Professor Fama shows that it’s difficult to predict price movements in the short run while Professor Shiller argues that long term stock prices are predictable.

In response to the economic crisis, Prophet Joseph, peace be upon him, actively took actions to reduce the effect of crisis on his society. This also suggests that free markets may be inadequate in addressing an economic crisis which calls for the timely intervention of government. In the modern financial world, governments have continued to intervene during crises. For example, the U.S. government established the Troubled Asset Relief Program (TARP) to strengthen the financial sector by purchasing assets from financial institutions in 2008. The need for government intervention is even more pronounced for less-developed countries. By suggesting the moderating role of governments in financial and economic markets, the Qur’an encourages governments to be pro-active against a crisis by establishing agencies and gathering resources to purchase and to allocate commodities that are vital for society. As government intervention influences asset prices, anticipating government intervention may also lead to predictable asset prices in the long run.  

Collectively, the story of Joseph suggests the predictability of prices in the long run. To the extent that the prices are predictable, one can forecast times of crisis in financial markets. Thus, the Holy Qur’an calls for the advanced preparation of societies for upcoming economic and financial crises through institutionalization and government intervention in economic and financial markets.