Contrarian’s Revenge: How Dead Sectors Come Back to Life

What type of investor are you?

Do contrarian ideas make you excited, or do they make you feel sick?

Buying something that everyone hates is brave, and that’s because odds are these stocks will probably continue to fall.

And that’s where the value investor steps in…

Often, they don’t care.

If a company stacks up in terms of its cash flow yields, book value, or some other value metric, they’ll happily ride the company through its extreme phase of volatility.

There’s nothing easy about investing or trading in markets.

And that’s just as true for the value investor as it is for those focused on momentum.

That’s because when markets fall, investors who have focused on growth or high-momentum plays are often the most exposed.

So, what’s the answer? Is there any magic formula for making cash in the markets?

Well, think of it like this: there are MANY ways to skin a cat in this game… Value investors stand out when markets sink or normalise.

Momentum chasers look like whizzes when markets surge higher.

It’s all relative and depends on what the broader market is doing at the time.

And given that indices across the West are all surging to new all-time highs, value investors are having a hard time of it right now!

But it would be a mistake to dismiss value investing.

When investment legends like Warren Buffett peg their success to this strategy, only a fool would think value investing is dead.

But what if there was a way to have your cake and eat it too?

A strategy that combines elements from the trader’s handbook alongside the value investor’s mindset.

That’s the closest thing that resembles the method I’m developing for my paid readership group.

Where we try to uncover the golden turning point in markets.

When VALUE shifts to MOMENTUM

Right now, value investors are caught in a drought.

Opportunities to find stocks with fundamental metrics, like low book values or high cash flow yields, are scarce. It’s a situation that’s cornering these types of investors.

Should they abandon their strategy and chase this market higher?

Or continue to hunt for the small pocket of value opportunities while sitting on a horde of cash?

But as threats of inflation loom and the value of cash declines, there’s undoubtedly a pressing need to do something.

And that’s the issue that many value-focused investors face in this market.

And a reason why I suspect more investors will start to abandon their strategy and begin to align with the momentum-buying crowd.

However, the key thing to remember here is that value often shifts to momentum.

Stocks that were once cheap can respond dramatically when sentiment changes.

That’s what we’ve seen across our portfolio at my paid advisory, Diggers & Drillers.

You see, for several years, mining stocks have traded around multi-year lows. They were hated and unloved by investors.

Mining stocks were contrarian plays in a market obsessed with crypto and tech.

But with one eye on value, and the other on the next phase of momentum in the market, we watched our mining positions soar in 2025.

Over half of the D&D positions are now sitting on substantial triple-digit gains.

But at the time we bought these stocks, no one was interested!

Today, the reverse is true… Our stocks are being pursued by traders, short-term investors, and momentum-driven investors.

That means we can sit back and watch these positions swell as more investors try to claim their share.

It’s why I’m glad we bought when we did—an example of taking a value or contrarian mindset, and waiting for sentiment to shift.

But not waiting forever!

Most of us don’t have unlimited capital.

That’s why adopting a more proactive approach to value investing can be beneficial.

In terms of my strategy, I aim to identify the sweet spot where value still exists, but signs of recovery are emerging.

There are signals that I look for in the markets. And it’s the sweet spot I try to uncover for my paid readership group.

So, where are we looking next?

Stay tuned for more, and I’ll provide some details for you next week!

Until then.