Studies of historical market returns have shown that stocks do tend to do best between Nov. 1 and April 30 of each year. That realization has generated the popular adage, a saying most investors probably have heard of.

It's not just a hunch. Stocks have, on average, risen 7.4% during the period of Nov. 1 through April 30 since 1950 based on the Dow Jones industrial average, says The Stock Trader's Almanac. In contrast, stocks have only risen by 0.4% during the corresponding time period between May 1 and October 31.

The adage gets even more aura since many of the worst six-month periods have occurred between May 1 and October 31. The 27.3% decline between May 1 and October 31, 2008 is a recent example of a big market crash you would have avoided had you sold in May. But there were similar downdrafts in 2002 and 2001 when stocks fell nearly 16% in those periods.

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There are many theories why the adage may hold. Some feel many companies slow down production during the summer months, causing productivity to fall. Others blame the poor performance after May on traders, who are more likely to be sitting at the beach than behind their desks during the warm months of the year. Lastly, others guess the markets benefit late in the year and early in the new year as retirement savings flow into IRAs.

But whatever the reason the adage has worked in the past, investors shouldn't assume it's a law of nature. For one thing, it doesn't always work. Stocks fell 12.4% and 8% between November 1 and April 30 in 2008 and 2007 respectively, says The Stock Trader's Almanac. That means escaping the market during those months doesn't protect you from all downside.

There's also the factor of dividends. If you're out of the market for six months of the year, you will also miss out on the dividend payments made by companies during those months.

Like most adages, sell in May and go away, is certainly based on some reality. But with a force as dynamic and constantly changing as the stock market, paying too much to the past may not be the best way to prepare for the future.

Matt Krantz is a financial markets reporter at USA TODAY and author of Investing Online for Dummies and Fundamental Analysis for Dummies. He answers a different reader question every weekday in his Ask Matt column at money.usatoday.com. To submit a question, e-mail Matt at mkrantz@usatoday.com. Follow Matt on Twitter at: twitter.com/mattkrantz

GOP presses Obama on spending Medicare

By ERICA WERNER
Associated Press

(AP:WASHINGTON) Face to face at the White House, GOP leaders complained to President Barack Obama on Wednesday that he had not produced a detailed plan of spending cuts and accused him of playing politics over Medicare as the nation careens toward a debt crisis.

House Speaker John Boehner said he was ready to negotiate personally with Obama if that would hurry things along.

The White House said Obama had in fact led on the issue and made clear that he had no intention of dropping what Democrats believe is a winning political issue: accusing the GOP of trying to destroy the popular health care program for seniors.

" He doesn't believe that we need to end Medicare as we know it," said press secretary Jay Carney.

Republicans said their plan would save Medicare, not end it, and they in turn accused Obama of failing to present any proposals to preserve Medicare or drive down deficits at all.

" Unfortunately what we did not hear from the president is a specific plan," said Rep. Jeb Hensarling, R-Texas, as Republicans commented outside the White House.

Later, Boehner told reporters at the Capitol he hoped deficit-reduction talks could be wrapped up within a month and " the president agreed."

Boehner said private talks being led by Vice President Joe Biden were making " some marginal progress. But at the rate that they're going we'll be right up against the deadline." That was a reference to an Aug. 2 deadline to raise the government's borrowing limit or risk an unprecedented credit default that the White House and even many Republicans say would be disastrous for the U.S. economy.

Asked what else could be done, Boehner said, " The president could engage himself. I'm willing. I'm ready. It's time to have a conversation. It's time to play large ball, not small ball."

The White House said Obama had directed Biden to lead the talks. " Both parties acknowledge that the group is making progress and talks are productive, and the president is closely monitoring and is being regularly briefed by the vice president and staff on the progress," White House spokeswoman Amy Brundage said in response to Boehner.

Republicans are refusing to approve the debt-limit increase without ordering spending cuts topping a trillion dollars at the same time. The White House is insisting that in addition to spending restraint the deficit trimming must include tax increases that Republicans say are off the table.

Obama's meeting with the huge assembly of House Republicans yielded no concrete progress, although both sides said it was productive simply in that both sides of a deeply divided government were able to have a candid discussion.

But in the heat of early June, August looked a long way away Wednesday and it seemed clear that plenty of political posturing lay ahead before deadline pressure would induce the parties to step up with real talks. Actual negotiations are being led in private by Biden involving a much smaller group of lawmakers who have recently expressed confidence they'll be able to identify at least $1 trillion in cuts over the next decade. Negotiators are considering reductions in student loan subsidies, farm payments and support for federal workers' pensions. The Biden group next meets June 9.

At the White House Wednesday, both sides got a chance to recite now familiar political points. A key topic was Medicare, the massive government health insurance program for Americans 65 and older.

A plan put forward by House Budget Committee Chairman Paul Ryan would not affect people over age 55, but future Medicare beneficiaries would instead be given government subsidies to purchase private health insurance. Independent analysts have concluded beneficiaries would end up paying more.

Democrats have turned that into a political weapon with what Republicans are decrying as " Mediscare" tactics, using it as the basis of attack ads against the GOP. A special election in New York last week turned into a referendum on Medicare, and the result was a Democratic victory in a Republican-heavy New York district. New Rep. Kathy Hochul was sworn in Wednesday.

That's led to unease among Republicans who voted for the plan, and elation among Democrats who intend to exploit the issue for all its worth as the 2012 presidential election approaches.

Ryan, R-Wis., said he urged Obama Wednesday to dial back the politics in the interest of finding the bipartisan deal on deficit reduction the president says he desires.

" We simply described to him precisely what it is we've been proposing, so that he hears from us how our proposal works, so that in the future, he won't mischaracterize it," Ryan told reporters after the 75-minute session with Obama in the East Room.

Ryan said he told Obama: " We got to get our debt under control, and if we try to demagogue each other's attempts to do that, then we're not applying the kind of political leadership we need."

The president brushed off allegations of demagoguery by reminding the Republicans he was the guy who " wasn't born in the U.S.," according to sources familiar with the talks who spoke anonymously to describe them. That was a reference to GOP questioning of his background.

Republican officials said Boehner and other leaders all pressed Obama on Medicare, contending he had not put forward any plan to save it from going bankrupt.

Carney said that Obama had already offered an extensive deficit-cutting plan, referring to an April proposal from Obama to cut an overall $4 trillion over 12 years through a combination of spending cuts, tax increases and other measures.

Included in that is $480 billion from Medicare and Medicaid. Obama's plan is short on details but would aim to limit payments for prescription drugs and empower an independent board to recommend policies to keep Medicare expenditures down.

Meanwhile, Carney refused to disavow liberal attack ads including one showing a Ryan look-alike shoving a senior in a wheelchair off a cliff.

" I don't know what ads he may or may not have seen," Carney said of the president. " What I will say is that the substantive differences over Medicare are real."

The session between Obama and House Republicans came on the heels of a symbolic and lopsided vote the day before against a GOP proposal to raise the cap on the debt by $2.4 trillion. The proposal, intended to prove that a bill to increase the borrowing limit with no spending cuts is dead on arrival, failed badly Tuesday on a 318-97 vote.

Democrats said the vote was aimed at giving tea party-backed Republicans an opportunity to broadcast a " nay" vote against the administration's position that any increase in U.S. borrowing authority should be done as a stand-alone measure uncomplicated by difficult spending cuts to programs like Medicare. A more painful vote to raise the debt ceiling looms for Republicans this summer.

Biden is leading talks on reaching spending cuts alongside the debt measure in advance of the August deadline set by the Treasury Department.

If no action is taken by then, Treasury Secretary Tim Geithner has warned, the government could default on its obligations and risk turmoil that might plunge the nation into another recession or even an economic depression.

The government already has reached the limit of its borrowing authority, $14.3 trillion, and the Treasury is using a series of extraordinary maneuvers to meet financial obligations. In an update on the debt status, the Treasury Department said Wednesday that recent spending and tax receipts had made no change in its previous estimate that the government will run out of maneuvering room to avoid an unprecedented default on the national debt on Aug. 2.

Singapore a Buy UOB, DBS, OCBC

 

Singapore will have great bargains on offer today after dramatic falls in the USA overnight.

The Singapore is economy is sound and still growing powered mostly by the Countries South East Asian Neighbors including China.

Singapore’s manufacturing sector expanded for the eighth straight month in May, data from the Singapore Institute of Purchasing and Materials Management (SIPMM) showed on Wednesday.

However, the pace of expansion slowed from August as orders fell and manufacturers reduced output and inventory.

The Purchasing Managers’ Index (PMI) dropped 1.7 points to 50.8 in May, from 52.5 in April.

Some economists said the decline was larger than expected.

Song Seng Wun, a regional economist at CIMB in Singapore, said: “Consensus and we were expecting a small 0.5-point and 0.3-point dip respectively, to 52.0 and 52.2.”

SIPMM said that the on-month “decline in overall PMI was attributed to lower new orders and new export orders as well as lower levels of production output and inventory”.

The institute said stockholdings of finished goods and employment continued to expand, but posted lower readings.

Ms Janice Ong, executive director SIPMM, said that the May PMI readings indicated that the rate of expansion for the manufacturing economy had slowed.

However, she added “it is reassuring to note that the manufacturing economy continued to remain on the expansion track, a sign of positive business ambience.”

“Our latest survey reflected local manufacturers’ concern over the slowdown in the major foreign markets, in particular US and Japan. As indicated by the readings, overall new order intakes grew at a slower rate in both the domestic and overseas markets when compared with the previous month.

“However, a bright spot is that electronics new orders demand continued to expand and recorded a better growth in the overseas market, with increased demand for the semiconductor components from our export markets.”

The electronics sector recorded further expansion at 51.4, which was a decline of 1.6 points over the previous month.

Ms Ong said inflationary pressures and global uncertainties remained some of the key concerns for local manufacturers in their management of raw materials cost and supply.

Despite a slowdown in the second quarter of 2011, Mr Song said growth for 2011 is still on track.

A PMI reading of over 50 indicates the manufacturing economy is expanding, while a reading below 50 indicates a contracting economy.

Shayne Heffernan best buys are Banks and they stand out as the best buys in Singapore.

DBS Group Holdings Ltd is an investment holding company that operates through its main subsidiary, DBS Bank Ltd (the Bank).

The Bank is engaged in the provision of retail, small and medium-sized enterprise, corporate, and investment banking services.

The Company’s financial businesses are organized into five sectors: Consumer Banking, Institutional Banking, Global Financial Markets, Central Treasury Unit, and Central Operations.

OCBC are continuing their share buy back and the stock is responding well.

Oversea-Chinese Banking Corporation Limited is a Singapore-based bank. It operates in five segments: Global Consumer Financial Services, which comprises a range of products and services offered to individuals, including deposit products, consumer loans, credit cards and wealth management products Global Corporate Banking, which provides financial services to business customers Global Treasury, which engages in foreign exchange activities, money market operations and derivatives trading Insurance, which includes its fund management activities, and Others, which comprises P.T. Bank OCBC NISP Tbk, PacificMas Berhad, corporate finance, capital markets, property holding, stock brokerage and investment holding.

UOB-Kay Hian Holdings Limited is a Singapore-based company.

The principal activity of the Company is that of investment holding. Its subsidiaries are engaged in stockbroking, futures broking, investment trading, margin financing, investment holding and provision of nominee and research services.

The Company’s business divisions include Corporate advisory/finance, acquisition finance, retail and institutional sales, Internet broking and margin-based finance. It is organized on a geographical basis, namely Singapore, Hong Kong and other countries.

It provides securities and futures broking and other related services. The Company’s subsidiaries include PT UOB Kay Hian Securities, UOB Kay Hian Securities (Philippines), Inc., UOB Kay Hian Securities (Thailand) Public Company Limited, UOB Kay Hian (U.K.) Limited, UOB Kay Hian (U.S.) Inc., UOB Kay Hian Private Limited and UOB Kay Hian Trading Pte Ltd.

Shayne Heffernan

Shayne Heffernan oversees the management of funds for institutions and high net worth individuals.

Shayne Heffernan holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.

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