Stocks and Bonds

Is It Lawful for Clerics to Purchase and Sell Stocks and Bonds?—(a) If this conduct has the character of gambling or trading for profit, it is forbidden by Canon 138 or 142, as the case may be, and is gravely or venially sinful according to the circumstances. Thus, pure speculation or mere betting on the market is a game of chance, and the frequent purchase of stocks with the thought of quick sales and huge profits from sudden changes of the market is lucrative trading.

(b) If the gambling or trading element is absent, the conduct in question is not forbidden by Canon Law. It is generally admitted that bond investments are permissible, since they are only a loan of one’s money at interest. There are two views about stock dealings: the stricter view regards them as always containing the character of forbidden trading (since all the notes of strict negotiation are found in them), or at least as being a game of chance; the milder view, which is common, holds that they are no more an affair of chance than many other business undertakings, and that there is no strict negotiation, if the stockholder is not a member or director of the corporation, since the buying and selling is done neither directly nor indirectly by him. Buying of stocks, then, may be nothing more than a prudent investment of money in a deserving enterprise with the hope of a reasonable return, and selling out the stocks at a large profit may be nothing more than the disposal of superfluous goods which it would be inconvenient to retain. It must be remembered, though, that it is unlawful to cooperate with a company whose purpose is evil or suspect, or to have part in frauds, or to give disedification.