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Research report

Q4 2022 3D Report: We won’t get fooled again

Periods of mean reversion have always been a positive for the Global Allocation space. Read more about why we believe one such period is arriving and the opportunities we see in the global financial markets.

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February 6, 2023 | 17 minute read

“Yeah
Meet the new boss
Same as the old boss”
—The Who

Stories abound. I am struck by the consistency of the consensus in both narrative and positioning.

60/40 is dead…
Inflation is here to say…
Earnings are collapsing…
Europe will disband…
China is over…
Cash is a position…

We think the market will bottom in the first half of 2023, making lower lows—much lower lows, which will be bought for a big Fed pivot rally. Our quantitative work and fundamental behavioral observations suggest consensus is likely wrong in both timing and outcomes.

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This information is educational in nature and does not constitute a financial promotion, investment advice or an inducement or incitement to participate in any product, offering or investment. FS Investments is not adopting, making a recommendation for or endorsing any investment strategy or particular security. All views, opinions and positions expressed herein are that of the author and do not necessarily reflect the views, opinions or positions of FS Investments. All opinions are subject to change without notice, and you should always obtain current information and perform due diligence before participating in any investment. FS Investments does not provide legal or tax advice and the information herein should not be considered legal or tax advice. Tax laws and regulations are complex and subject to change, which can materially impact any investment result. FS Investments cannot guarantee that the information herein is accurate, complete, or timely. FS Investments makes no warranties with regard to such information or results obtained by its use, and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information.

Any projections, forecasts and estimates contained herein are based upon certain assumptions that the author considers reasonable. Projections are necessarily speculative in nature, and it can be expected that some or all of the assumptions underlying the projections will not materialize or will vary significantly from actual results. The inclusion of projections herein should not be regarded as a representation or guarantee regarding the reliability, accuracy or completeness of the information contained herein, and neither FS Investments nor the author are under any obligation to update or keep current such information.

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Andrew Korz, CFA

Executive Director, Investment Research
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Brian Cho, CFA

Managing Director, Head of Quantitative Research, FS Chiron Funds
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Ryan Caldwell

Managing Director, FS Investments
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