Market Update: July 3, 2017

MarketUpdate_header

Last Week’s Market Activity

  • Stocks end first half with down week. Nasdaq lost ~2% on tech weakness, Dow -0.2%, S&P 500 Index -0.6%; Russell 2000 ended flat. Market weakness partly attributed to hawkish global central bank comments, which pushed yield on 10-year Treasuries up 15 basis points (0.15% to 2.30%), pressured the dollar. Favorable bank stress test results boosted financials, renewed focus on reflation trade into banks, energy.
  • Oil bounce continued, WTI crude oil +7%, bringing session winning streak to seven and price back above $46/bbl. Friday brought first weekly drop in rig count since January.
  • Strong first half despite recent choppiness. Nasdaq rallied 14%, its best first half since 2009, S&P 500 (+8%) produced its best first half since 2013 (Dow matched S&P’s first half gain).

Overnight & This Morning

  • S&P 500 higher by ~0.3%, following gains in Europe. Quiet session likely with early holiday close (1 p.m. ET).
  • Solid gains in Europe overnight– Euro Stoxx 50 +0.9%, German DAX 0.6%, France CAC 40 +1.0%. Solid purchasing managers’ survey data (June Markit PMI 57.4).
  • Asian markets closed mostly higher, but with minimal gains.
  • Crude oil up 0.4%, poised for eighth straight gain.
  • Treasuries little changed. 10-year yield at 2.29%. Early bond market close at 2 p.m. ET.
  • Japanese Tankan survey of business conditions suggested Japanese economy may have increased in the second quarter, manufacturing activity is at multi-year highs.
  • China’s Caixin manufacturing PMI, generally considered more reliable than official Chinese PMI, exceeded expectations with a 50.4 reading in June, up from 49.6 in May.
  • Today’s economic calendar includes key ISM manufacturing index, construction spending.

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Key Insights

  • Several key data points this week, despite the holiday-shortened week. Today brings the important Institute for Supply Management (ISM) Purchasing Managers’ Index (PMI), followed by minutes from the June 13-14 Federal Reserve (Fed) policy meeting on Wednesday and Friday’s employment report. Key overseas data includes services PMI surveys in Europe, China’s manufacturing PMI, and the Japanese Tankan sentiment survey (see below). Market participants will scrutinize this week’s data for clues as to the path of the Fed’s rate hike and balance sheet normalization timetables. Views are diverging again, though not as dramatically as in late 2015/early 2016.

Macro Notes

  • The first six months in the books. It was a solid start to the year, with the S&P 500 up 8.2%, the best start to a year since 2013. Yet, this year is going down in history as one of the least volatile starts to a year ever. For instance, the largest pullback has been only 2.8%–which is the second smallest first-half of the year pullback ever. Also, only four days have closed up or down 1% or more–the last time that happened was in 1972. Today, we will take a closer look at the first half of the year and what it could mean for the second half of the year.

MonitoringWeek_header

Monday

  • Markit Mfg. PMI (Jun)
  • ISM Mfg. (Jun)
  • Construction Spending (May)
  • Italy: Markit Italy Mfg. PMI (Jun)
  • France: Markit France Mfg. PMI (Jun)
  • Germany: Markit Germany Mfg. PMI (Jun)
  • Eurozone: Markit Eurozone Mfg. PMI (Jun)
  • UK: Markit UK Mfg. PMI (Jun)
  • Eurozone: Unemployment Rate (May)
  • Russia: GDP (Q1)
  • Japan: Vehicle Sales (Jun)

Tuesday

  • Happy July 4th Holiday!
  • Japan: Nikkei Japan Services PMI (Jun)
  • China: Caixin China Services PMI (Jun)

Wednesday

  • Factory Orders (May)
  • Durable Goods Orders (May)
  • Capital Goods Shipments and Orders (May)
  • FOMC Meeting Minutes for Jun 14
  • Italy: Markit Italy Services PMI (Jun)
  • France: Markit France Services PMI (Jun)
  • Germany: Markit Germany Services PMI (Jun)
  • Eurozone: Markit Eurozone Services PMI (Jun)
  • UK: Markit UK Services PMI (Jun)
  • Eurozone: Retail Sales (May)

Thursday

  • ADP Employment (Jun)
  • Initial Jobless Claims (Jul 1)
  • Trade Balance (May)
  • Germany: Factory Orders (May)
  • ECB: Account of the Monetary Policy Meeting
  • Mexico: Central Bank Monetary Policy Minutes
  • Japan: Labor Cash Earnings (May)

Friday

  • Change in Nonfarm, Private & Mfg. Payrolls (Jun)
  • Unemployment Rate (Jun)
  • Average Hourly Earnings (Jun)
  • Average Weekly Hours (Jun)
  • Labor Force Participation & Underemployment Rates(Jun)
  • Germany: Industrial Production (May)
  • France: Industrial Production (May)
  • Italy: Retail Sales (May)
  • UK: Industrial Production (May)
  • UK: Trade Balance (May)

 

 

 

Important Disclosures: Past performance is no guarantee of future results. The economic forecasts set forth in the presentation may not develop as predicted. The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual security. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly. Stock investing involves risk including loss of principal. Investing in foreign and emerging markets securities involves special additional risks. These risks include, but are not limited to, currency risk, political risk, and risk associated with varying accounting standards. Investing in emerging markets may accentuate these risks. Treasury Inflation-Protected Securities (TIPS) are subject to interest rate risk and opportunity risk. If interest rates rise, the value of your bond on the secondary market will likely fall. In periods of no or low inflation, other investments, including other Treasury bonds, may perform better. Bank loans are loans issued by below investment-grade companies for short-term funding purposes with higher yield than short-term debt and involve risk. Because of its narrow focus, sector investing will be subject to greater volatility than investing more broadly across many sectors and companies. Commodity-linked investments may be more volatile and less liquid than the underlying instruments or measures, and their value may be affected by the performance of the overall commodities baskets as well as weather, disease, and regulatory developments. Government bonds and Treasury bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate. Investing in foreign and emerging markets debt securities involves special additional risks. These risks include, but are not limited to, currency risk, geopolitical and regulatory risk, and risk associated with varying settlement standards. High-yield/junk bonds are not investment-grade securities, involve substantial risks, and generally should be part of the diversified portfolio of sophisticated investors. Municipal bonds are subject to availability, price, and to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rate rise. Interest income may be subject to the alternative minimum tax. Federally tax-free but other state and local taxes may apply. Investing in real estate/REITs involves special risks such as potential illiquidity and may not be suitable for all investors. There is no assurance that the investment objectives of this program will be attained. Currency risk is a form of risk that arises from the change in price of one currency against another. Whenever investors or companies have assets or business operations across national borders, they face currency risk if their positions are not hedged. This research material has been prepared by LPL Financial LLC.

Market Update: May 8, 2017

MarketUpdate_header

  • Stocks in Asia were mostly higher with Nikkei & South Korea’s KOSPI surging +2.0% on positive vibes carrying over from U.S. jobs growth and Emmanuel Macron victory. South Korea’s election tomorrow looks to end a nine-year run for the ruling conservative party, which has been caught up in scandal. Hang Seng +0.4% while the Shanghai Composite slipped 0.8% to the lowest levels in more than six months amid Beijing’s efforts to rein in financial leverage.
  • European stocks are holding steady after opening down slightly and two strong weekly gains that essentially priced in the Macron victory. The broader Euro Stoxx 600 is up ~+9.0% YTD. The euro slipped -0.5% to 1.09, but note that the common currency has climbed in five of the past six days and has been trading near its highest levels of the past six months.
  • U.S. markets are slightly lower after the S&P 500 and Nasdaq closed Friday at record levels. The dollar is up +0.3% after four consecutive weekly declines. The 10-year yield is higher at 2.37%. Oil is holding on to $46/barrel and COMEX gold is up 0.3% after dropping more than 3% last week.

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French Elections

  • Macron victory essentially eliminates fears of worst-case scenarios: wave of populist victories threatening viability of currency and European Union (EU).
  • First election without either of two leading parties in Fifth Republic.
  • Still plenty of challenges–Macron must form alliances with Socialists, the party he left, to offset alt-right anger, potential lack of cooperation heading into parliamentary elections in June.
  • Euro-Stoxx 600 +2.0% last week and flat/down today.
  • Euro (~1.09) down 50 basis points today but stronger vs. dollar and other currencies past month.
  • Eurozone gross domestic product (GDP) and inflation both approaching +2.0% annual growth and this vote suggests trajectory can be maintained, accelerated with economic reforms in France.
  • European Central Bank (ECB) must remain accommodative near term, though, because Italy is the next challenge.

 Oil Prices

  • WTI fell -0.6% last week to $46/barrel as increased shale production in U.S. offsets Organization of the Petroleum Exporting Countries (OPEC) production cuts. To be sure, the announcement in November helped drive oil to ~$55, yet the increased profitability for higher cost producers in North America was evidently too good to pass up.
  • We expect OPEC to extend their production cuts at the next meeting in Vienna on May 25. Wall Street consensus is still bullish, projecting a range of $50-55/barrel over the next twelve months.
  • Recent sell-off largely technical in nature over supply concerns. WTI broke through 200-day moving average and failed to hold the new low for the year ($45) and a key Fibonacci retracement level. Frenzied trading in Asian markets ensued on Thursday, yet oil volatility was at its highest level in six months and relative strength (RSI) indicates oversold position.
  • “It’s different this time” – the U.S., not Saudi Arabia, is now the world’s swing producer and although OPEC has largely held on production cuts, U.S. rig counts are up.
  • We remain neutral on the energy sector as supply-demand adjustments still point toward a range of $50-$55 for WTI as OPEC cuts likely persist.

Earnings

  • Strong earnings season got even better last week. S&P 500 earnings for the first quarter rose more than 1% over the past week and are now tracking to a 14.7% year-over-year increase, compared with the 10.2% increase reflected in consensus estimates on April 1 (Thomson Reuters data). Both the earnings growth and beat rates (75%) are the best in more than five years. Excluding the rebounding energy sector, earnings are still on pace to grow a solid 10.5% year over year. About 40 S&P 500 companies will report results this week as earnings season winds down.

 

050817_earningsdashboard-01

  • Companies have delivered mostly upbeat guidance. Forward estimates inched fractionally higher last week and are down just 0.2% since earnings season began. Although the timetable for policy, particularly corporate tax reform, has been pushed out, we still see potential policy upside in 2018. The relatively bright outlook is helping support elevated valuations at an S&P 500 price-to-earnings ratio of 17.5 times.

Sell in May

  • Time to go away? The well-known “Sell in May and go away” period is upon us. Although this is one of the most widely known investment clichés out there, since 1950[1], historically the next six months are indeed the worst six months of the year for the S&P 500. So should you sell and wait to buy in November? We take a closer look at this cliché and show why it doesn’t always work and might not work this year.

Winning Streak

  • Up three weeks in a row. On Friday, the S&P 500 closed at its first all-time high since March 1 and in the process rose for the third consecutive week. It was also the first green Friday for the S&P 500 in nearly two months (March 10). This was the second three-week win streak of the year, with the earlier streak making it all the way to six weeks in a row (ending in early March). There hasn’t been a year with two separate six-week win streaks since 2013.

MonitoringWeek_header

Monday

  • Eurozone: Sentix Investor Confidence (May)
  • China: Foreign Direct Investment (Apr)
  • China: Trade Balance (Apr)

Tuesday

  • NFIB Small Business Optimism (Apr)
  • Germany: Industrial Production (Mar)
  • BOJ: Summary of Opinions at Apr 26-27 Meeting
  • China: New Loan Growth & Money Supply
  • China: Consumer Price Index (CPI) & Producer Price Index (PPI) (Apr)

Wednesday

  • Monthly Budget Statement (Apr)
  • ECB: Draghi Speaks

Thursday

  • Initial Jobless Claims (May 6)
  • PPI (Apr)
  • Eurozone: European Commission Economic Forecasts
  • UK: Bank of England Rate & Inflation Report
  • ECB: Publishes Economic Bulletin

Friday

  • CPI (Apr)
  • Retail Sales (Apr)
  • Germany: GDP (Q1 Prelim.)
  • Germany: CPI & PPI (Apr)
  • Eurozone: Industrial Production (Mar)

 

 

 

[1] Please note: The modern design of the S&P 500 stock index was first launched in 1957. Performance back to 1950 incorporates the performance of predecessor index, the S&P 90.  

Past performance is no guarantee of future results. The economic forecasts set forth in the presentation may not develop as predicted. The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual security. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly. Stock investing involves risk including loss of principal. Investing in foreign and emerging markets securities involves special additional risks. These risks include, but are not limited to, currency risk, political risk, and risk associated with varying accounting standards. Investing in emerging markets may accentuate these risks. Treasury Inflation-Protected Securities (TIPS) are subject to interest rate risk and opportunity risk. If interest rates rise, the value of your bond on the secondary market will likely fall. In periods of no or low inflation, other investments, including other Treasury bonds, may perform better. Bank loans are loans issued by below investment-grade companies for short-term funding purposes with higher yield than short-term debt and involve risk. Because of its narrow focus, sector investing will be subject to greater volatility than investing more broadly across many sectors and companies. Commodity-linked investments may be more volatile and less liquid than the underlying instruments or measures, and their value may be affected by the performance of the overall commodities baskets as well as weather, disease, and regulatory developments. Government bonds and Treasury bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate. Investing in foreign and emerging markets debt securities involves special additional risks. These risks include, but are not limited to, currency risk, geopolitical and regulatory risk, and risk associated with varying settlement standards. High-yield/junk bonds are not investment-grade securities, involve substantial risks, and generally should be part of the diversified portfolio of sophisticated investors. Municipal bonds are subject to availability, price, and to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rate rise. Interest income may be subject to the alternative minimum tax. Federally tax-free but other state and local taxes may apply. Investing in real estate/REITs involves special risks such as potential illiquidity and may not be suitable for all investors. There is no assurance that the investment objectives of this program will be attained. Currency risk is a form of risk that arises from the change in price of one currency against another. Whenever investors or companies have assets or business operations across national borders, they face currency risk if their positions are not hedged. This research material has been prepared by LPL Financial LLC.

Market Update: February 21, 2017

© Susan Walsh/AP Photo

MarketUpdate_header

  • Stock advance continues following record-setting week. U.S. stocks are moving higher in early trading as markets reopen following the Presidents’ Day holiday. All three major averages ended the prior week at record highs; the S&P 500 (+0.2%) advanced modestly as telecom (+0.9%) was the best performing sector. Equities in Asia closed mostly higher overnight amid a quiet session, though the Hang Seng lost 0.8%. European markets are seeing broad strength in afternoon trading (STOXX Europe 600 +0.5%) as investors sift through PMI data that came in mostly above expectations; the U.K.’s FTSE is the exception (-0.1%) as disappointing earnings in the banking sector drag it lower. Finally, Treasuries are losing ground as the yield on the 10-year note is up to 2.44%, WTI crude oil ($54.78/barrel) is up 1.9%, and COMEX gold ($1234/oz.) is slipping 0.4%.

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  • Treasury prices initially lower, then rebound late week. Last week began with Chinese consumer price index (CPI) and producer price index (PPI) data rising much more than analyst estimates, setting the tone for more inflationary pressure on U.S. Treasuries. On Tuesday, Federal Reserve Chair Yellen, in her semi-annual testimony before Congress, stated that it would be “unwise to wait too long to hike interest rates.” This moved the yield on the U.S. 10-year Treasury higher by 8 basis points (0.08%) to 2.52%, as investors began to price in a March rate hike. Thursday’s session saw a slight rebound in prices following a move lower in European yields as the Greek bond market stabilized. This week, investors will be watching the economic calendar for more evidence of inflation.
  • Inflation expectations edge up. The 10-year breakeven inflation rate finished last week slightly higher, moving from 2.01% to 2.02%. Importantly, the breakeven rate is above the Fed’s 2% inflation target. This week, we take a deeper look at Treasury Inflation-Protected Securities (TIPS) and why, despite solid performance relative to Treasuries in the second half of 2016, there may be further opportunity within the asset class for investors seeking credit and inflation protection.
  • Municipals supply lower on the week. Muni supply, as measured by the Bond Buyer 30-day visible supply data, remains below the 10-year average of approximately $11 billion, coming in at $7.5 billion last week. Supply is expected to remain light due to the holiday-shortened week. However, March and April supply is expected to grow as the Bloomberg fixed rate calendar supply data already shows an increase in supply from $6 billion on Thursday, February 16 to $7.6 billion today.
  • Investment-grade corporates spread breaches 1.2% level. As measured by the Bloomberg Barclays US Corporate Index, this level had provided resistance since late January. As equities made a decisive move higher over the last two weeks, investment-grade corporates have followed suit. Equity strength, investors’ demand for high-quality yield (above that of Treasuries), and increased prospects for corporate tax reform were all contributed to the spread contraction.
  • Earnings dipped last week but estimates still holding firm. Q4 2016 earnings for the S&P 500 are now tracking to a 7.5% year-over-year increase (as measured by Thomson), down about 1% over the past week on insurance industry declines. Financials and technology are still on course for solid double-digit earnings gains. While a 7.5% growth rate is certainly nothing to sneeze at, the better news may be that consensus 2017 estimates are down only 1.1% since earnings season began (and still up over 10% versus 2016), buoyed by flat or positive revisions to financials, energy and industrials estimates. Interestingly, these sectors are particularly policy sensitive, suggesting policy hopes are seeping into analyst and management team outlooks.

021717_earningsdashboard-01

  • Leading indicators rise. The Conference Board’s Leading Economic Index (LEI), an aggregate of indicators that tends to lead overall economic activity, rose a strong 0.6% month over month in January, beating the expected 0.4% increase and better than December’s also-strong 0.5% gain. The LEI is now up 2.5% year over year, a rate of change that historically has been accompanied by low risk of recession in the next year.
  • Domestic oil markets in focus. The addition to U.S. supply from shale deposits over the past decade is well known, but demand has changed as well, influenced heavily by our choice of vehicles as well as fuel efficiency standards. President Trump has signed a number of executive orders related to energy, most notably on the Keystone XL Pipeline. However, the administration has not weighed in on other issues, such as fuel economy standards. Any policy changes, as well as how they are enacted, could influence both U.S. supply and demand considerations.
  • European economic growth accelerates. A series of PMI data was released in Europe overnight, pointing to growth increasing at a faster rate than expected. Data from the two largest countries, France and Germany, were better than expected. The Eurozone composite reading (including services and manufacturing) registered 56, the highest reading in 70 months. Inflation in France remained contained at 1.3%, though many in Europe believe that the stronger economy will lead to higher inflation data in the near future.
  • More new highs. Equities staged a late-day rally on Friday to close at new record highs. In fact, the S&P 500 closed at its ninth record high for 2017. This is halfway to the 18 from 2016 and nearly to the 10 record highs made during 2015. Although no one knows how many more new highs will be made this year, it is important to note that they tend to happen in clusters potentially lasting decades. Going back to the Great Depression[1], there have been two long clusters of new highs – from 1954 to 1968 and from 1980 to 2000. The years in between were marked by secular bear markets and a lack of new highs. Could the current streak of new highs that started in 2013 last for many more years?
  • Four in a row. The S&P 500 gained 1.5% last week, closing higher for the fourth consecutive week for the first time since July 2016. The last time it made it to five weeks in a row was coming off of the February 2016 lows. Of the last 12 times the S&P 500 has been up four consecutive weeks, 10 of those times it has closed even higher two weeks later, so momentum can continue in the near term. The S&P 500 has been up only 3.5% in the current streak – the weakest four-week win streak in nearly five years. Going back to 1990, when the S&P 500 is up four weeks in a row, but with a total gain less than 4%, the average return the following two weeks is twice as strong (1.0% versus 0.5%) as the average return after all four-week win streaks.

MonitoringWeek_header

Tuesday

  • Markit Mfg. PMI (Feb)
  • Harker (Hawk)
  • Kashkari (Dove)
  • Eurozone: Markit PMI (Feb)
  • China: Property Prices (Jan)

 Wednesday

  • Existing Home Sales (Jan)
  • FOMC Minutes
  • Germany: Ifo (Feb)
  • OPEC Technical Meeting in Vienna
  • Brazil: Central Bank Meeting (Rate Cut Expected)

 Friday

  • New Home Sales (Jan)

 

 

 

 

 

 

 

[1] Please note: The modern design of the S&P 500 stock index was first launched in 1957. Performance back to 1928 incorporates the performance of predecessor index, the S&P 90.

Important Disclosures: Past performance is no guarantee of future results. The economic forecasts set forth in the presentation may not develop as predicted. The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual security. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly. Stock investing involves risk including loss of principal. Investing in foreign and emerging markets securities involves special additional risks. These risks include, but are not limited to, currency risk, political risk, and risk associated with varying accounting standards. Investing in emerging markets may accentuate these risks. Treasury Inflation-Protected Securities (TIPS) are subject to interest rate risk and opportunity risk. If interest rates rise, the value of your bond on the secondary market will likely fall. In periods of no or low inflation, other investments, including other Treasury bonds, may perform better. Bank loans are loans issued by below investment-grade companies for short-term funding purposes with higher yield than short-term debt and involve risk. Because of its narrow focus, sector investing will be subject to greater volatility than investing more broadly across many sectors and companies. Commodity-linked investments may be more volatile and less liquid than the underlying instruments or measures, and their value may be affected by the performance of the overall commodities baskets as well as weather, disease, and regulatory developments. Government bonds and Treasury bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate. Investing in foreign and emerging markets debt securities involves special additional risks. These risks include, but are not limited to, currency risk, geopolitical and regulatory risk, and risk associated with varying settlement standards. High-yield/junk bonds are not investment-grade securities, involve substantial risks, and generally should be part of the diversified portfolio of sophisticated investors. Municipal bonds are subject to availability, price, and to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rate rise. Interest income may be subject to the alternative minimum tax. Federally tax-free but other state and local taxes may apply. Investing in real estate/REITs involves special risks such as potential illiquidity and may not be suitable for all investors. There is no assurance that the investment objectives of this program will be attained. Currency risk is a form of risk that arises from the change in price of one currency against another. Whenever investors or companies have assets or business operations across national borders, they face currency risk if their positions are not hedged. This research material has been prepared by LPL Financial LLC.

Should You Borrow from Your 401(k)?

The average credit card balance in June 2015 was $15,706, down from its peak of $18,600 in 2009.¹ With the average credit card annual percentage rate sitting at 14.9%, it represents an expensive way to fund spending.²

Which leads many individuals to ask, “Does it make sense to borrow from my 401(k) to pay off debt or to make a major purchase?”³

Borrowing from Your 401(k)

  • No Credit Check—If you have trouble getting credit, borrowing from a 401(k) requires no credit check; so as long as your 401(k) permits loans, you should be able to borrow.
  • More Convenient—Borrowing from your 401(k) usually requires less paperwork and is quicker than the alternative.
  • Competitive Interest Rates—While the rate you pay depends upon the terms your 401(k) sets out, the rate is typically lower than the rate you will pay on personal loans or through a credit card. Plus, the interest you pay will be to yourself rather than to a finance company.

Disadvantages of 401(k) Loans

  • Opportunity Cost—The money you borrow will not benefit from the potentially higher returns of your 401(k) investments. Additionally, many people who take loans also stop contributing. This means the further loss of potential earnings and any matching contributions.
  • Risk of Job Loss—A 401(k) loan not paid is deemed a distribution, subject to income taxes and a 10% penalty tax if you are under age 59½. Should you switch jobs or get laid off, your 401(k) loan becomes immediately due. If you do not have the cash to pay the balance, it will have tax consequences.
  • Red Flag Alert—Borrowing from retirement savings to fund current expenditures could be a red flag. It may be a sign of overspending. You may save money by paying off your high-interest credit-card balances, but if these balances get run up again, you will have done yourself more harm.

Most financial experts caution against borrowing from your 401(k), but they also concede that a loan may be a more appropriate alternative to an outright distribution, if the funds are absolutely needed.

 

 

 

 

  1. NerdWallet, June 25, 2015. Average for U.S. Households
  2. CreditCards.com, April 2015
  3. Distributions from 401(k) plans and most other employer-sponsored retirement plans are taxed as ordinary income and, if taken before age 59½, may be subject to a 10% federal income tax penalty. Generally, once you reach age 70½, you must begin taking required minimum distributions.

5 Tips for Securing a Small Business Loan

You have the greatest business idea, a no-fail plan, and a stellar team ready to help you execute your vision. With no capital, though, your entrepreneurial goals may remain just a dream.

The SBA reports startup companies typically encounter the most challengeswhen applying for a small-business loan. Here are five tips to keep in mind to secure the finances to power your small-business venture.

1. Find the Right Lender

There are many types of lenders you can approach for a small-business loan. Approaching the most appropriate one increases your chances of propelling your business. Lender choices include:

  • Large national financial institutions. You may approach your current bank for a traditional bank loan. Since you already have a built-in relationship, this lender may help point you in a better direction if they’re not able to help.
  • Alternative lenders. Alternative lenders bridge the gap between big banks and community lenders with moderate requirements. Alternative lenders such as SnapCap may help niche businesses secure fast business loans as they focus on potential growth versus business owners’ credit scores.
  • Community lenders and credit unions. Locally-owned banks or lenders with interest in the economic growth of a specific area may be a good fit for locally-focused businesses.

2. Do Your Homework

Businessman pushing button with dollar sign
Maxism-Fotolia.com

Find out what the lending institution requires in the approval process. You’ll typically need to:

  • Have a solid business plan. Loans are typically not granted to lending, speculating, or gambling ventures.
  • Have exceptional credit history. This includes both personal and business credit history, which should be verified by the three major credit bureaus.
  • Have strong personal and business assets. This proves to the lender you’ll be able to pay them back.
  • Have a positive relationship with the lender.Having a constructive relationship with the lender before you even apply for the loan may increase your chances of achieving it.

3. Sort Out the Details

The clearer you can present your business plan to the lender, the more they’ll be able to understand and trust in your venture; the more details you provide, the better. During the application process, you’ll want to communicate:

  • Why you need the money and what it will be used for. The more essential these factors are to the growth of your business, the more they’ll impact the lender. Bailing out business losses does not convey return of investment.
  • A detailed budget of how each portion of the loan will be spent. Use up-to-date financial documentation and cash flow projections researched by a qualified expert to support your claims. Be prepared to explain industry risk, based on government ratings.
  • The partners and suppliers you’ll be working with when spending loan money. Lenders will want to verify the businesses you’ll be spending your money with are credible, as well.

4. Come With the Right Team

Your business practices aren’t the only deciding factors in whether or not you’ll get a small-business loan. Lenders will also want to:

  • Know your leadership. The executive members of your business should have exemplary credit and business history.
  • Know your other investors. You’ll want to disclose who else is putting faith in your company and what their relationships are to you and your business.
  • Know you have equity in the company. If you are not personally invested in the business in some way, this decreases the trust the lender will have when considering distribution of the loan. You’ll want to convey passion when communicating to the lender about your business and provide examples of how you see your company growing, whether it’s through distribution partnerships or new product plans.

5. Get Free Help

Navigating the small-business loan process, especially for a business that is new to the ins and outs, can be tricky and overwhelming. Thankfully, there are free sources of support that can help you along the way:

  • SBAThis government organization is designed to help small businesses like yours succeed. You can find at least one branch office in every state. The SBA also represents a national network of about 100 women’s business centerstargeted to female entrepreneurs.
  • SCORESCORE provides a network of free business mentors, so you can find an expert directly related to your field and learn from their successes.
  • Small Business Development CentersSmall Business Development Centers (SBDCs) offer free business resources and assistance from professionals and professors. There are more than 900 centers across the country.

By taking the time to prepare for the small-business loan application process, creating a detailed business plan that addresses any concerns you may encounter, finding the ideal lender for your type of small business, surrounding yourself with colleagues and investors as driven as you are, and using free resources for help, you’ll be able to procure a small-business loan that could be the key driving force in your business future.

Written by Miguel Salcido of AllBusiness.com

(Source: MSN)

You Can Now Be Approved for a Mortgage in 8 Minutes

A look at adjustable rates from Rocket Mortgage once you’ve been approved for a loan.
Provided by Money

Ever hear of an eight-minute workout? How about an eight-minute mortgage?

Quicken Loans, the third-largest mortgage lender by marketshare, launched a new website called “Rocket Mortgage” last week that allows users to refinance or purchase a home in as little as eight minutes.

The service cuts out the conversation between loan officer and consumer, as the consumer inputs his or her financial information directly into Quicken’s database. Then, the website crunches the numbers like an underwriter would, and offers customizable, real-time rates to the site’s user.

Traditionally, it would take one week to several months to be approved for a housing loan, all of that, of course, after you’ve spent weeks shopping for that loan in the first place. But with Rocket Mortgage, shopping for a loan and applying for it is a process that requires little in the way of time and effort. (California homebuyers also have a speedy mortgage option via the new service Google Compare: Mortgage.)

Since the 2008 real estate bust, traditional lenders have had to compete with techies in Silicon Valley who wanted in on the housing recovery, as start-ups like Sindeo and Lenda — which claims that its clients save an average $8,000 in closing costs when they refinance with their service — try to streamline the residential mortgage process. Other websites and online tools have popped up to create more transparency for home shoppers and refinancers, and nearly anyone can crunch the numbers on a virtual mortgage rate calculator.

Though it only takes a few keystrokes to search for and use a mortgage calculator online or find a startup that’ll connect you with a lender, Rocket Mortgage Product Lead Regis Hadiaris says that nothing is as comprehensive as Quicken’s new service. Calculators use all kinds of assumptions about a consumer that may not hold true, and startups and other non-bank lending platforms don’t have the kind of reach that Quicken does, according to Hadiaris

“We can customize solutions based on income, assets, property, our products and pricing, interest rates, and underwriting guidelines,” Hadiaris says. “The system figures out the very best option for each client. No more assumptions. It’s true clarity in the process.”

Speed is Rocket Mortgage’s biggest selling point. But that doesn’t mean the eight minute-mortgage approval is the end of the home-buying road for consumers. The loan can close in a week, but is “only as fast as the slowest vendor, such as local municipalities and insurance companies,” TechCrunchreports.

Keith Gumbinger, vice president of mortgage and consumer lending information site HSH.com, isn’t convinced that a service like Rocket Mortgage will speed up the home buying process at all for inexperienced and first-time shoppers who may have questions that slow down the process.

“How much more quickly do you actually need to get a mortgage? In the case of a purchase, few borrowers are ready to go, pack up and move in as little as eight minutes, let alone two hours or two weeks,” Gumbinger says. “Having your financing in place more quickly may be of some benefit but may not change the timeframe.”

Rocket Mortgage’s website says that the platform has bank-level encryption and 24/7 security monitoring, but Gumbinger also worries that volunteering personal financial information to a third party creates new ways for a buyer’s financial and personal data to be compromised.

“To just allow some outside party to go through, traipsing through your personal finances, just to get a rate on a mortgage, there’s that and the concern of not necessarily knowing what you’re getting yourself into,” he says.

Of course, you’re not committing to anything through the service unless you reach the end of the process and choose to lock in your rate (after you’ve been approved). And you can call a Quicken Loans representative to help you through the easy-to-use program if you’re confused about the kind of information that’s required. Of course, a step like this will slow down the process–not that that’s necessarily a bad thing.

Written by Alexandra Mondalek of Time

(Source: Time)

A Wal-Mart Heir Is $27 Billion Poorer Than Everyone Thought

Provided by Bloomberg
Provided by Bloomberg

Ever since Wal-Mart heir John T. Walton died 10 years ago in a plane crash, it’s been widely assumed that he passed the bulk of his vast estate to his widow, Christy.

Turns out that was very wrong.

In what’s been a closely guarded family secret, Walton gave half of his then-$17 billion estimated fortune to charitable trusts and a third to their only child, Lukas Walton, now 29, an analysis of court documents reveals. Christy got the rest.

The filings, unsealed by a Wyoming court at Bloomberg News’s request, mean that Christy’s fortune as previously calculated has taken a big hit — from $32 billion before the court records were unsealed to about $5 billion now. She’s unlikely to ever again reach her former designation as America’s richest woman, which she held until last month.

But her loss is Lukas’s gain. Though little-known outside of a few scattered social media posts, he becomes the 103rd-richest person in the world, with about $11 billion — and as much as $25 billion if certain trusts are included, according to the Bloomberg Billionaires Index.

That makes the grandson of Wal-Mart founder Sam Walton $5.5 billion richer than his 66-year-old mother,  and the fourth-wealthiest member of the Walton family. His net worth is higher than the likes of Google executive Eric Schmidt and money manager John Paulson.

The Waltons declined to comment for this article. “Lukas Walton is an entrepreneur involved in a variety of investment and philanthropic activities,” Kiki McLean, a spokeswoman for the Walton family, said in an e-mail.

Bloomberg

John Walton, the second of four children of Sam and Helen Walton, left an estate that included gold bars, a catamaran and $100 million in cash, according to the documents. Most valuable was his 20 percent interest in Walton Enterprises LLC, the family’s main investment entity.

Key Vote

As a result of that holding, Lukas may wield a key vote in the closely held entity, which together with another family trust controls a 50.2 percent stake in Wal-Mart Stores Inc. At more than $100 billion, the Waltons — siblings Jim, Rob and Alice, as well as Lukas and Christy — can claim one of the world’s largest family fortunes, according to the index.

“There’s no other public company of this size that I am aware of where a family has such a big stake,” said Brian Yarbrough, a consumer research analyst at Edward Jones in St. Louis.

Lukas has proved adept at keeping a low profile. He grew up in National City in San Diego County and Jackson, Wyoming.

“They were just one of the neighbors, just one of the very rich neighbors,” said Ron Morrison, mayor of National City, who was a regular visitor to the area where the family lived from 1986 to 2005.

As a young child, Lukas was diagnosed with cancer. His mother attributes his survival to an organic food diet, according to an interview she gave to the San Diego Union-Tribune in 2008.

Colorado College

Lukas graduated with a bachelor’s degree in environmentally sustainable business from Colorado College, according to a letter from his high school. His college directory lists his graduation year as 2010 and his work history as an unspecified position at the Walton Family Foundation. He has worked for True North Venture Partners, a firm that traces its roots to his father’s venture capital activities, according to local press coverage of the commencement speech he gave at his high school in 2011.

The fate of his father John’s stake was unknown ever since a judge in Teton County, Wyoming, sealed the estate in September 2005 at the request of the family. Walton had died three months before, at age 58, when the ultra-light aircraft he was piloting crashed shortly after taking off from Jackson Hole Airport.

The documents reveal the painstaking seven-year-long legal undertaking to distribute the estate and underline the family’s extensive use of trust structures to minimize the amount of tax they pay.

Voting Right

His father’s will directed that Lukas be given the right to vote the estate’s general and limited partner units in Walton Enterprises. That could make him one of the first of the family’s third generation to be a voting shareholder in the controlling entity, if he decides to exercise his voting power.

That structure is in keeping with Sam Walton’s vision to minimize estate taxes while keeping the family’s control of the company unified. In 1953, he put his stock in a trust that gave each of his children a 20 percent stake in the business, leaving the remainder for himself and his wife.

“The principle behind this is simple: the best way to reduce paying estate taxes is to give your assets away before they appreciate,” Sam Walton explained in his autobiography.

When John married Christy Tallant, he had a net worth of about $195 million, according to a 1982 premarital agreement that was unsealed this month by the Wyoming court.

Tax Avoidance

John Walton’s own bequest appeared to take advantage of several tools to reduce taxes on the estate. The estate was appraised at $6.6 billion, according to the documents.

Yet, the Wal-Mart shares controlled by John Walton’s estate would have had a market value of $17 billion at the time of his death if he hadn’t given any of his holdings away during his lifetime, according to data compiled by Bloomberg. That discount in part reflects the holding structure the family has established for their shares, according to John Anzivino, head of the estates and trust division at Miami-based accountants Kaufman Rossin.

“The LLC may have all kinds of restrictions, such as profit allocations and lack of control, which reduce its value from the market value of the stock itself,” he said. In Bloomberg’s analysis, the net worth of Christy and Lukas is calculated using the retailer’s stock price.

Appraised Value

This structure saw the estate estimate its tax liability to be about $1.4 billion, only 21 percent of the appraised value. The top federal estate tax rate was 47 percent in 2005, according to Anzivino. This is the rate on the portion passing to the child subject to estate tax in excess of the exemption of $1.5 million. Christy, as the surviving spouse, gets her share estate tax-free and the gift to the charitable trusts are estate tax-free.

John Walton’s will split the estate into two parts.

Half of the estate was placed into tax-friendly vehicles known as charitable lead annuity trusts, or CLATs, of which Lukas is the only beneficiary.

For the other half, Walton directed that two-thirds was to be held in trust for Lukas. The remainder went to his widow.

The charitable trusts make annual non-taxable payments under IRS guidelines to the Walton Family Foundation charitable arm until 2036. If its investments outperform certain benchmarks, whatever is left at the end goes to Lukas without any tax bill.

Future Performance

In Bloomberg’s calculation, Lukas isn’t credited with the portion of the estate held by the charitable trusts. If he were, his net worth would be as high as $25 billion, according to the Bloomberg Billionaires Index.

Depending on future performance, Lukas may not receive anything from these CLATs, according to an adviser for the family who asked not to be named as the details are private. It was John Walton’s intent to leave half his estate to charity, the adviser said.

Currently the trusts are accumulating assets faster than they’re giving them away, according to an analysis by Bloomberg based on the fair market value of these trusts as reported in annual IRS filings. That suggests the underlying assets could ultimately pass to Lukas in 21 years.

Christy’s Share

Christy’s share of her husband’s estate — about 17 percent, according to the unsealed will — includes 500,000 Wal-Mart shares, personal effects, interest in various ranches and other sundries. A philanthropist, she donated the Victorian house in National City, California, where she had lived with John and Lukas, to charity in 2006.

“The Waltons were always very good at being very philanthropic to youth programs, but they always did it anonymously,” National City’s Morrison said.

The documents unsealed by the court reinforce how close the family remains in business, more than two decades after Sam Walton’s death. They show loans to the estate from Sam’s three surviving children that enabled it to meet its obligations and prevent any loss of control at the family retailer.

It’s a setup not likely to be lost upon the youngest Wal-Mart billionaire. If Lukas is ever tempted to break the tradition of family rule, his grandfather left some stern advice for his offspring.

“If you start any of that foolishness, I’ll come back and haunt you,” Sam Walton warned in his book. “So don’t even think about it.”

Written by David De Jong and Tom Metcalf of Bloomberg

(Source: Bloomberg)

3 Reasons Investors Worry Too Much About China

This week, we saw China’s gross domestic product grow less than 7 percent in a quarter for the first time since 2009. Meanwhile, the country’s stock market has been a proverbial bounce house, moving up and down faster than President Xi Jinping can devalue the currency or pump extra funds into the economy.

All this has had a screeching effect on the U.S., with the Standard & Poor’s 500 index down 3.5 percent since the beginning of August, and reports of gloom are filling the headlines.

But while analysts and investors want to blame China’s woes for the U.S. market’s latest hiccup, there are reasons to believe that Beijing’s slowdown not only has little impact on U.S. companies, but can actually prove bountiful for certain industries and investments.

Part of the reason for the upheaval is due to China’s decision to transition from a manufacturing-focused economy to one geared around the consumer. If the country can pull off the evolution – which there are signs that it might – then it could prove valuable to many U.S. companies as well.

1. U.S. companies aren’t worried.

  

© Tyrone Siu/Reuters   

Contrary to many reports, the U.S. doesn’t have a large stake in the growth of China. Research firm FactSet pegs that about only 10 percent of sales for S&P 500 companies come from the Asia-Pacific region. China and Japan make up a large proportion of those sales.

Of course, some companies have a strong exposure. For example, Yum! Brands (ticker: YUM), the parent company of KFC, Pizza Hut and Taco Bell, generates nearly 60 percent of revenues from China. Yum says it will spin off its China division into a separate organization, in part because of struggles circumventing the country’s changing economic landscape while under the control of the parent company.

But Yum is the outlier. For the most part, it’s likely “more companies in the S&P 500 have currency exposure than China exposure,” says John Butters, senior earnings analyst at FactSet. It’s the strong U.S. dollar, near five-year highs, that companies more often blame for dragging down sales.

Early in this quarter’s earnings season, FactSet measured the number of times S&P 500 companies mentioned China in a negative instance. While only about 5 percent of the companies had reported when FactSet took the measure, a mere 13 percent of companies had stated China’s economy was an issue. On the contrary, 78 percent say the strength of the U.S. dollar led to weaker sales.

2. Opportunities are out there.

A woman holding an umbrella walks past signage for Wal-Mart Stores Inc. in Beijing, China, on Monday, Sept. 8, 2014. China is scheduled to release figures on consumer and producer prices on Sept. 11. Photographer: Brent Lewin/Bloomberg

© Brent Lewin/Bloomberg 

Ever since President George W. Bush’s administration, the U.S. has urged China to move to a more consumer-focused economy. When President Xi took the helm, it appeared as if he agreed and would take steps to encourage this transition.

“The growth opportunities is in services and the advanced technology sector,” says Robert A. Kapp, a Washington state-based independent China consultant and former president of the U.S-China Business Council. As more opportunities open in the services sector, and jobs grow, it’s “congruent where U.S. companies has the most to offer.”

Areas such as high-tech and medical services, in particular, could become in far greater demand as the growing middle class in the region demands better tools and care. These are areas where the U.S. has strength and where companies could profit. It depends, however, on how open China will be with allowing U.S. companies to conduct business within its borders, and “under what conditions,” Kapp says.

IBM Corp. (IBM) is shining some light onto those stipulations. The Wall Street Journal reported that IBM is allowing Chinese government officials to look at the company’s source code. This is the blueprint in which IBM’s software runs, and it irks U.S. government officials and technology companies over fear of espionage and intellectual property theft.

There’s no doubt that China will make sure the stakes to play in the country are high. Still, others will likely follow IBM’s lead for a piece of the growing service pie.

3. China bonds show signs of strength.

  

© Aly Song/Reuters   

One tactic Beijing is using to stem an all-out crisis is encouraging lending. By reducing interest rates and easing certain requirements to provide loans, China’s leaders hope to keep money flowing.

“One of the sectors benefiting from this would be real estate development, with strong policy support in terms of easing onshore bond issuance requirements and lowering mortgage rules,” says Christopher Yip, S&P’s director of corporate bond ratings.

These efforts have also pushed down yields on Chinese bonds. Bond yields move inversely to price, which means bonds are now expensive. Another factor leading to the increased interest in bonds is it’s a safer haven than the stock market right now. Investors are using bonds to increase exposure to China while waiting to see where stocks eventually go. This has pressed down yields in the country by over 50 basis points this year, creating a 3.1 percent yield on a 10-year government bond.

Meanwhile, the S&P China Bond Index, which measures performance of Chinese corporate bonds, has risen 6 percent in 2015. “The bond market’s expansion also demonstrates the ample liquidity onshore,” Yip says. All this allows more money available for investments locally.

Since bonds are long-term investments, it may also signal the belief by many investors that China’s efforts to transition from a manufacturing economy to a consumer-focused one will eventually take hold.

If U.S. companies can get a seat at that table, then today’s China struggles could turn into tomorrow’s gains. Instead of a gloom-and-doom approach to China, maybe it’s more of a wait-and-see.

Written by Ryan Derousseau of U.S. News & World Report

(Source: U.S. News & World Report)

Oprah Faces Long Odds in Rescuing Debt-Laden Weight Watchers

Provided by Wikipedia
Provided by Wikipedia

(Bloomberg) — It will take a lot more than the Oprah effect to revive Weight Watchers.

Shares of Weight Watchers International Inc. more than doubled Monday after Oprah Winfrey pledged to take a 10 percent stake and join its board, but the media magnate is hitching her fortunes to a debt-laden company that’s been shedding customers for years.

Weight Watchers carries a heavy burden: $2.2 billion of obligations. Its net leverage ratio, a measure of how much debt it has relative to earnings, doubled in the five years through 2014 to about 6.4 times. While it’s bringing in one of the world’s most trusted celebrities, that may not be enough to revive a weight-loss company that’s been struggling to lure customers who can avail themselves of free online options to reach their goals.

“The landscape for weight management has changed — there’s more competition from calorie-counting apps and fitness trackers,” said RJ Hottovy, an analyst at Morningstar Inc. in Chicago. While the company says Winfrey will help steer its offerings toward a more holistic approach, “it’s not clear how you integrate health and wellness into the overall platform,” he said.

Outdated Brand

Yet that’s exactly what Weight Watchers needs to do, said Marlene Morris Towns, a teaching professor of marketing at Georgetown University. The brand is outdated, she said, and it may even behoove the company to start a new one rather than proceed with an identity that is more evocative of the last century. Weight Watchers, which offers a line of licensed food products and weight-loss services, should also focus on natural ingredients and transparent labeling that consumers are seeking, she said.

The 52-year-old company grew out of the gatherings started by self-described “overweight housewife” Jean Nidetch to discuss dieting strategies. She died in April at 91.

Weight Watchers is under strain in the debt markets, with a $2.05 billion loan trading at lower levels than nearly every other one that’s larger than $1 billion with similar ratings and maturities, according to data compiled by Bloomberg. Only a second-lien obligation of oil and gas producer Fieldwood Energy LLC struggling with collapsed commodity prices is quoted lower by traders, the data shows.

Weight Watcher’s $2.05 billion term loan recorded its biggest gain ever on Monday, jumping 18.1 cents to about 75 cents on the dollar, according to prices compiled by Bloomberg. It rose to 76.06 cents Wednesday, the data show.

April Maturity

The weight-control company is running out of time before it must either try to refinance or pay off what remains on a smaller loan before the debt matures in early April. While Weight Watchers retired about half of what was a $300 million obligation with cash payments through June, it still owes $143.6 million.

Chief Financial Officer Nicholas Hotchkin said on a February conference call with analysts and again in May that the company would seek to pay down the loan with cash, according to transcripts of the calls. He said the company would do that without borrowing on a $50 million short-term revolving loan.

Nicole Nichols, a spokeswoman for Winfrey, declined to comment. Weight Watchers said it has strong liquidity, low capital expenditures and ample time to refinance.

“We are in the process of a multiyear transformation that includes reimagining our core offering,” Chief Executive Officer Jim Chambers said in a statement. “Our plans were in place to launch later this year a comprehensive program innovation as we expand our purpose from weight loss alone to more broadly helping people lead healthier, happier lives. This partnership with Oprah Winfrey is not in place of, but rather is a force in accelerating, the transformation that is already under way.”

Stock Surge

Companies that issue speculative-grade debt and plan to refinance usually attempt to do so at least a year before the obligations come due. Many companies have been finding the leveraged-loan market a tricky place to sell new debt this month, with loan investors demanding the strictest terms for first-lien loans since 2011, according to data compiled by Bloomberg.

Winfrey’s announcement of a stake in the New York-based company sent its shares up 105 percent on Monday and an additional 31 percent on Tuesday. The stock retreated 16 percent on Wednesday, closing at $15.40 in New York. Before the announcement, the shares had fallen 73 percent this year. NutriSystem Inc., which sells meal plans for weight loss, gained 6.1 percent in the same period.

Customers can identify with Winfrey’s own struggle to lose weight, Chief Scientific Officer Gary Foster said in a statement.

“She’s a great representative for the brand because she speaks honestly about her own experiences that are based in reality rather than perfection,” he said.

Towns, the Georgetown professor, said she wasn’t so sure Winfrey would be an effective endorser, despite the strength of her brand.

“I don’t think she’s a good poster person for weight loss,” she said. “She’s definitely an expert on weight loss, but she yo-yos.”

Written by Lauren Coleman-Lochner and Laura J. Keller of Bloomberg

(Source: Bloomberg)

These Wildly Successful Entrepreneurs Once Were Homeless

Rags-to-riches stories have been popular throughout history, proving that you don’t have to be privileged or have things handed to you to be a success. These Fortune 500 success stories encapsulate the idea that hard work, determination, and a positive spirit are the necessary ingredients to bootstrap your way out of poverty, off the streets and into the realm of millionaire and even billionaire.

Chris Gardner

© Provided by Entrepreneur Media, Inc

Before he became known as an entrepreneur, motivational speaker, CEO and author, Chris Gardner and his son were living on the street after his wife left him and he was trying to subsist on very little money. His background was not much prettier, having grown up in the midst of domestic violence, poverty, alcoholism and more barriers.

While he could have given into these barriers and followed that same path, Gardner wanted something completely different for himself and son. Now, he runs Gardner Rich LLC with offices around the country, is a multi-millionaire and even had a movie made from one of his books that starred Will Smith called “The Pursuit of Happyness.”

Linda Singh

© Provided by Entrepreneur Media, Inc

Although she is a high-school dropout and runaway who spent time as a homeless youth and experienced poverty and sexual abuse, Linda Singh completely transformed her life. Even when she was struggling to stay off the streets, she still attended high school as long as she could and pulled good grades before having to give it up. She has become a model of female leadership in careers that often don’t see women in these roles.

She has previously served as a managing director at Accenture and as a Major General in the U.S. Army. Now, she is a Major General, leading Maryland’s National Guard through some very tough situations, including the Baltimore riots after the funeral of Freddie Gray. Her time on the streets and in Afghanistan have served as the proving ground for a woman who is not afraid to take on dangerous situations and high-pressure conflicts. Like many other leaders, Singh has proven that a successful leader often has come from tough roots and overcome significant adversity. She may not be valued in the millions, but her success story is priceless and has garnered her recognition and high-powered positions.

Manny Khoshbin

© Provided by Entrepreneur Media, Inc

Iranian-born Manny Khoshbin overcome hard times to become wildly successful. His family arrived in America when he was a teenager and he quickly saw the opportunities to work hard and create wealth.

However, it took many failed ventures and sleeping in his car for a time while out of work before he found the venture that aligned with his skill set. Khoshbin got his real estate license and became a loan officer, then started a realty and mortgage company focused on distressed and bank-owned properties. Now, he oversees multiple companies that focus on commercial real estate. He continues to seek new opportunities for his entrepreneurial spirit. Once having nothing, Khoshbin is now valued in the multi-millions.

Dani Johnson

© Provided by Entrepreneur Media, Inc

Being successful doesn’t come from college degrees. Destiny Global CEO Dani Johnson proves a great idea and hard work is enough to go from a broke, homeless cocktail waitress to a millionaire in just a couple of years.

Since her initial foray into entrepreneurship with a weight loss company, Johnson has expanded her empire to include other services related to helping people improve their relationships, finances. and lives. She has authored multiple bestselling books and offered her expertise on numerous television shows and media outlets. Becoming a millionaire many times over, she now gives away over a million dollars each month to help children in need around the world to remind herself where she has come from and what more she can accomplish.

The Graduates of TechShop

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While there are many profiles to be shared, one of the most interesting is the idea of a company that is speaking directly to currently homeless individuals with talents and big ideas but lacking the opportunity to prove themselves. Many success stories have come from TechShop, a company that offers all the equipment, tools, mentoring and even financing to help all types of individuals reach their goals.

For some, this assistance has led to getting off the streets, receiving funding and starting companies that are on their way to growth. As chairman and founder Jim Newton noted, “Everybody has creative abilities but people just don’t express them. I mean, I see people come in here that are afraid to try anything. We give them some classes and some encouragement. And they have some success with their projects. And you see them just change. You see them light up. You see them say, ‘Wow, I really can do this.’ This is stunning. They’re stunned.”

A VentureBeat article showcased some of the homeless who have capitalized on this opportunity to turn their ideas into viable businesses. Now, they are off the streets and leading their own companies, generating wealth and creating jobs for others. Many are finding ways to return the favor by opening the door to opportunity for those that have simply hit hard times.

In addition to these turnaround stories, many other famous faces have been homeless early on in their lives, including Jim Carrey, Daniel Craig, Dr. Phil, Suze Orman and more. Others had hard times but surpassed these to become wildly successful, such as Steve Jobs, Larry Ellison, and J.K. Rowling just to name a few.

It just goes to show that no barrier is insurmountable to those who work toward success without becoming discouraged by setbacks or initial failures. The lesson here is you can’t focus on being down but must, in the face of any and all adversity, look forward and never give up.

Written by John Rampton of Entrepreneur

(Source: Entrepreneur)