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

Monthly Market Review “Jelly Donuts, Marshmallows, Elections, And Cliff Diving” November 15, 2012. Kevin M. Wilson, ChFC , PhD President/CEO/CIO. Dheenu Sivalingam, MBA AVP/CCO/Senior Analyst. Ted A. Pavlovich, WMS VP Wealth Management. Office: 218-464-4399 Toll Free: 877-327-5062

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

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  1. Monthly Market Review • “Jelly Donuts, Marshmallows, Elections, • And Cliff Diving” November 15, 2012 Kevin M. Wilson, ChFC, PhD President/CEO/CIO Dheenu Sivalingam, MBA AVP/CCO/Senior Analyst 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. QE3 and the Jelly Donut AnalogyKevin m. wilson 3

  4. Debt is the Problem

  5. Collapse Ruined Banks

  6. Corporations Saving Too Much

  7. Households Also Deleveraging

  8. Unemployment Stubborn, Wages Falling, Middle Class Getting Squeezed

  9. GDP Fading, Deflation Cycle Scares the Fed

  10. Fed’s Solution is QE, Operation Twist, etc., With Mixed Results

  11. Fed’s Balance Sheet is Nearing $3 T, But No Joy

  12. Bond Yields Still Falling In Spite of QE, etc. 2000

  13. Debt Scares Investors Into Gold

  14. Devaluation of Currencies Has A Very Long and Very Bad History

  15. WW I Reparations Led to Money Printing In Weimar Republic, Hyperinflation, Rise Of Radical Left

  16. The Real Solution is Increased Savings to Finance Deleveraging… …But the Opposite is Happening

  17. Hurricane Sandy, Markets, and the Marshmallow AnalogyFor Human BehaviorTed pavlovich 17

  18. Psychology of Patience Very Important

  19. Preparation for Troubles Requires Planning ?

  20. The Way to Profit from the election resultsKevin M. Wilson 20

  21. We Know A Few Things… ?

  22. …Markets Also Know Some Things, But Some Trends Seem to be Changing ? ?

  23. ObamaCare Will Probably Go Operational, Changing 16% of the Economy to Government Control (But There Will Be Some Winners)

  24. Energy and Its Impact on Inflation May Change A Lot

  25. Certain Industries and Sectors Will Prosper

  26. Europe, china, and the fiscal cliff: opportunities DHEENU V. SIVALINGAM 26

  27. Opportunities: The Fiscal Cliff • Sectors to focus on: 1) Healthcare (Long term structural change) 2) Financial (More clarity about regulations, and we will start to see big banks make major shifts in how they do business) 3) Consumer Goods (People need to eat even in a recession!) 27

  28. Opportunities: Europe • European Companies Are Looking For Cheaper Options (Companies are dropping high cost advertising companies and looking for major online advertisers like Google as an alternative) • It's More Economical To Do Business in Europe (Weaker Euro allows US firms to buy with US Dollars, giving them an advantage) 28

  29. Opportunities: Europe (Cont.)… • European Products Will Cost You Less (Especially luxury products from Europe are seeing sales increase) • European large cap stocks (Large European companies that also do business in countries outside Europe. There are many companies who are domiciled in Europe but do majority of their business outside of Europe) 29

  30. Opportunities: China • Leadership change gives clarity, unlike most other developed countries the leadership will stay in power for next 10 years. • As China rebalances its economy towards being more domestically-driven rather than export oriented, there are going to be a lot of new winners who are more focused on domestic Chinese markets 30

  31. Opportunities: China (Cont.)… • Low inflation allows the Chinese leadership to do more monetary easing if needed or more than the need if they decide to bring the momentum back into the economy. 31

  32. We Will Soon Regress to the Mean Q & A KEVIN M. WILSON 32

  33. 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.” 33

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