Adam Eagleston

Adam Eagleston approaches portfolio management like a soccer coach , fitting, given his background in the sport. As co-CIO of Formidable Asset Management and portfolio manager of FORH, he describes the fund's positioning in athletic terms: "Right now, we've got a few more defenders on the field, and then you think about the hedges as being like the goalie." It's an analogy that captures how FORH balances offensive exposure with structural downside protection in a way that most risk-managed ETFs don't attempt.

Seven Indicators, One Regime Framework

FORH's investment process centers on determining the current economic regime and positioning accordingly. Adam and co-CIO Will serve as the ultimate decision-makers, backed by an investment committee of "really bright people" at the firm.

They evaluate seven categories across both absolute levels and rates of change: inflation, GDP growth, Fed policy, interest rates, credit spreads, stock multiples, and earnings growth. Each goes on a continuum from "more negative" to "more positive." When most indicators cluster in the negative camp , as they did during the conversation , the portfolio shifts defensive. "That really helped us in 2022 as we managed that environment," Adam notes. "And clearly in 2023, it has worked as well."

The framework echoes risk parity concepts but with active overlay. Rather than passively balancing risk across asset classes, they're making active judgments about the macro regime and then building the portfolio accordingly , more defenders when risks are elevated, more attackers when the environment favors risk-on positioning.

Dynamic Hedging: Belt and Suspenders

What distinguishes FORH from many risk-aware strategies is the explicit hedging program. Adam prefers mathematical certainty over relying on historical correlations between asset classes. "You think about the historical correlation among asset classes , you could very easily make the case for bonds as a hedge. Which is why we prefer to use hedges, because those are mathematically a more assured way to do it."

The hedging toolkit is specific: puts on HYG (high-yield corporate bonds), where implied volatility is much lower than on equity indices but the correlation to risk-off events is high. In a very risk-off environment, they add a "belt-and-suspenders approach" with put spreads on IWM (the Russell 2000 small-cap ETF). The combination provides downside protection at a lower cost than simply buying equity index puts.

Risk-On vs. Risk-Off Positioning

When the regime framework shifts toward risk-on, FORH amplifies exposure to higher-beta portions of the portfolio , companies that benefit from inflation, metals and mining, commodity stocks. In risk-off mode, the portfolio structures defensively and activates hedges. The transition between regimes is managed by the investment committee rather than automated rules, giving them flexibility to interpret the signals while maintaining process discipline.

Brad draws a connection to a prior episode with Michael Gayed, who described a similar experience: his indicators correctly signaled risk-off in 2022, but his rotation into long bonds proved to be the wrong escape valve in a rising-rate environment. Adam acknowledges the point , it's exactly why Formidable uses puts and hedges rather than relying solely on asset-class correlations that can break down in unprecedented environments.

Navigating Animal Spirits

One of the candid moments in the conversation comes when Adam admits the challenge of maintaining defensive positioning when markets are rallying on animal spirits. Most of their indicators have been in the "more negative" camp, which served them well in 2022 but creates tracking pain when markets surge anyway. "You want to be confident in the process, and we remain convicted that over the long term, we're going to be more right than wrong. But there are times when animal spirits take hold."

That honesty is refreshing in an industry where most managers only talk about their wins. Formidable's approach will look brilliant in drawdowns and frustrating in momentum-driven rallies. The question for advisors isn't whether the strategy works , it's whether they and their clients have the patience to stick with a risk-managed approach through the periods when the market rewards recklessness.

FORH offers something specific and valuable: active macro regime assessment combined with defined hedging strategies. It's not a set-it-and-forget-it allocation , it's a dynamic portfolio that adjusts its offensive and defensive posture based on where the seven indicators point. For advisors looking to add genuine downside protection without sacrificing all upside, the soccer analogy holds: you need both strikers and a goalie.

The timing of this conversation adds context: Formidable's indicators had been defensive through both 2022 and 2023. In 2022, that was vindicated , "it really helped us manage that environment." In 2023, with markets rallying despite deteriorating indicators, the defensive posture created tracking friction. Adam's willingness to sit in this discomfort , maintaining process conviction even when short-term results test patience , is the behavioral discipline that separates genuinely systematic managers from those who abandon their framework at the first sign of underperformance. The seven-indicator regime framework either works over full cycles or it doesn't, and Formidable is betting their business that it does.

Key Takeaways

• Adam Eagleston approaches portfolio management like a soccer coach , fitting, given his background in the sport.
• Each goes on a continuum from "more negative" to "more positive." When most indicators cluster in the negative camp , as they did during the conversation , the portfolio shifts defensive.
• "That really helped us in 2022 as we managed that environment," Adam notes.
• "And clearly in 2023, it has worked as well." The framework echoes risk parity concepts but with active overlay.

Listen to the full conversation on Spotify, Apple Podcasts, or YouTube.