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Kevin M. Wilson, ChFC , PhD President/CEO/CIO

Monthly Market Review “Sell in May (or Maybe April) and Walk Away?” (An Exercise in Historical Analysis) April 18, 2013. Kevin M. Wilson, ChFC , PhD President/CEO/CIO. Ted A. Pavlovich, WMS VP Wealth Management. Office: 218-464-4399 Toll Free: 877-327-5062 Fax: 218-464-4397

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Kevin M. Wilson, ChFC , PhD President/CEO/CIO

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  1. Monthly Market Review • “Sell in May (or Maybe April) and Walk Away?” • (An Exercise in Historical Analysis) April 18, 2013 Kevin M. Wilson, ChFC, PhD President/CEO/CIO Ted A. Pavlovich, WMS VP Wealth Management Office: 218-464-4399 Toll Free: 877-327-5062 Fax: 218-464-4397 Email: info@bluewater-cap.com www.bluewatercapitaladvisors.com 1405 Medical Arts Building 324 W. Superior Street Duluth, MN 55802 1

  2. IntroductionTed a. pavlovich 2

  3. Will History Repeat, Or Just Rhyme This Year? 3

  4. Spring Market Weather(Storm Clouds May Have A Silver Lining)Ted A. Pavlovich 4

  5. Average This Week There Are Seasonal Patterns in Many Markets, e.g., Gold & Silver

  6. Long-Term Average for Stocks Shows Weakness From May-October Annually

  7. More Recently the Seasonality Has Been More Pronounced

  8. “Sell in May (or April) & Go Away?”

  9. In Two Previous Years, High Yield Bonds Diverged From Trend in Advance of The Stock Market Sell-Off , And It’s Happening Again This Year

  10. Watches, warnings, or emergencies?kevin m. wilson 10

  11. To Put This Year’s Seasonal Trends in Context, We Should Note That The World Economy Appears To Be In Recession

  12. Yet There Is A Persistent Divergence Between The Economy and The Markets 12

  13. The Divergence Is Caused By Central Bank Money Printing, Which Boosts Risky Assets

  14. However In The U.S., The Economy is Weakening Faster Than The Markets Expected

  15. Main Street and Wall Street Do Not Agree

  16. Wall Street Is Cheering Recent Stock Buybacks, But They May Be Peaking

  17. Valuations Are High, Suggesting That Future Returns Will Be Low On Average

  18. There Are Long-Term Cycles In Earnings and Forward P/E Ratios That Are Peaking Now

  19. Market Speculation May Be Peaking

  20. Seasonal Down-Trends In Certain Sectors May Be Exacerbated By Other Market Factors

  21. Combining Record Highs With Seasonal Sell-Offs Could Lead To Unexpected Market Drops

  22. Does the fed provide shelter? KEVIN M. WILSON 22

  23. Each Spring The Economy Has Slowed Down And The Fed Has Printed More Money

  24. In Spite of At Least $14 Trillion Of New Liquidity, Global GDP Continues To Decline

  25. Each U.S. Market Dip Has Been Offset By The Surge Associated With Each New Wave Of Money Printing

  26. This Is Serial Bubble Blowing By Central Banks, As We’ve Seen Before

  27. At The Same Time, Bond Prices Have Benefited From QE

  28. In Fact, Bonds Have Nearly Matched The Stock Market Since 1973

  29. Seasonal trends in the markets are valid for investment purposes “Sell in May & Go Away” only makes sense if you can predict the 2009 and 2012 outliers in advance, or ignore them However, you can re-allocate in the springtime to take advantage of the seasonal bond rally when stocks sell off 4) A warning, but not yet an emergency Summary/q & a KEVIN M. WILSON 29

  30. Disclaimer This report is provided for informational purposes only and does not constitute an offer or solicitation to purchase or sell any security or commodity and is not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. Any opinions expressed herein are subject to change at any time without notice. Information has been obtained from sources believed to be reliable, for its accuracy and interpretation are not guaranteed. Investing in securities involves risk, including possible loss of principal. Past performance should not be taken as an indication of guarantee of future performance and no representation, express or implied, is made regarding future performance. The firm does not provide tax advice; clients should contact their attorney, accountant, or other tax adviser regarding tax matters. “BWCA is a state registered investment adviser in all states in which it is required to be registered. All Blue Water Capital Advisors’ customer assets are held in the customer name with Fidelity Institutional Services, clearing through National Financial Services (NFS), Member SIPC, a Fidelity Investments Company as Qualified Custodian.” 30

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