The “value pain trade”

August 2025

Why does value investing work? A key reason is psychological – when something is out of fashion, the easy option is for investors to throw in the towel and sell at any price, driving prices well below fundamentals.

Fellow Edinburgh investor Andrew Spence of Aspen calls this the “value pain trade” in a recent post on LinkedIn, using gold miners as an example. Hated a decade ago, they have slowly climbed back into investors’ favour on the back of the surging gold price – to the point where the miners have now outperformed even the mighty S&P over the last decade.

With value investing having been out of favour for an eternity now, there are many value pain trades out there. See the comments to Andrew’s post for a few ideas.

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