Kevin M. Wilson, ChFC, PhD President/CEO/CIO 1405 Medical Arts Building 324 W. Superior Street Duluth, MN 55802 Office: 218-464-4399 Toll Free: 877-327-5062.

Kevin M. Wilson, ChFC, PhD

President/CEO/CIO

1405 Medical Arts Building324 W. Superior StreetDuluth, MN 55802

Office: 218-464-4399 Toll Free: 877-327-5062

Fax: 218-464-4397Email: [email protected]

www.bluewatercapitaladvisors.com

Monthly Market Review

“Sell in May (or Maybe April) and Walk Away?”(An Exercise in Historical Analysis)

April 18, 2013 

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Ted A. Pavlovich, WMS

VP Wealth Management

INTRODUCTION

TED A. PAVLOVICH

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Will History Repeat, Or Just Rhyme This Year?

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SPRING MARKET WEATHER(STORM CLOUDS MAY HAVE A SILVER LINING)

TED A. PAVLOVICH

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There Are Seasonal Patterns in Many Markets, e.g., Gold & Silver

Average

This Week

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Long-Term Average for Stocks ShowsWeakness From May-October Annually

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More Recently the Seasonality Has Been More Pronounced

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“Sell in May (or April) & Go Away?”

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

WATCHES, WARNINGS, OR EMERGENCIES?

KEVIN M. WILSON

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

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

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

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

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Main Street and Wall Street Do Not Agree

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

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

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

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Market Speculation May Be Peaking

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

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

DOES THE FED PROVIDE SHELTER?

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KEVIN M. WILSON

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

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

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

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

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At The Same Time, Bond Prices Have Benefited From QE

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

SUMMARY/Q & A

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KEVIN M. WILSON

1) Seasonal trends in the markets are valid for investment purposes2) “Sell in May & Go Away” only makes sense if you can

predict the 2009 and 2012 outliers in advance, or ignore them3) 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

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.”

Disclaimer

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