By: Jeff Pollock
October 1
, 2017

Trust is a powerful concept. Psychologists say it requires confidence in someone or something after commitments have been consistently met. Since the financial crisis of 2008, trust has eroded in politicians, institutions, currencies, the labour force, and even the stock market. This had led many to beg the question whether we’re living in an echo of the 1930s.

Examples to highlight the loss of trust are noted below.



  • Following the fiscal stimulus in late 2008 and early 2009 to aid indebted homeowners, the populist Tea Party movement was born to advocate minimalist government intervention. The group was intent on protesting budgetary deficits while advocating lower debt and personal tax rates.
  • As the world witnessed last November, the unconventional Donald Trump won the majority of Electoral College votes to become the US President. While the stock market initially suffered steep losses the night of the election, it reversed direction after many believed Trump would adopt a collegial approach once arriving in Washington. However, since Trump’s references to the “forgotten men and women” during his inaugural address, his populist approach has defined his stay at the White House.
  • Today, the US Congress has a 16% approval rating. This compares to 42% in 1987, 41% in 1997, and 24% in 2007.


  • 9% of the ballots cast in the June 2016 UK referendum voted to exit the European Union, effective March 2019. While the economic implications of this decision will not be fully known for another two years, Bank of England Governor Mark Carney warned Britons three months before the vote that a Brexit would present the country with its largest risk to their future financial stability.
  • In early September 2017, a WSJ/NBC poll was published doubting the value of a university education. With student debt sitting at a record high while new grads struggle to find attractive jobs, 51% of young adults, men, and rural residents now believe that a university degree “isn’t worth its cost.” Four years ago, only 37% took this position.


  • In 2009, Bitcoin was released to the public and became the world’s first decentralized digital currency. There is no central repository or single administrator to this form of payment that 150,000 merchants now accept. According to Cambridge University, there are between 2.9 to 5.8 million people using a cryptocurrency wallet.

Labour Force

  • Despite the drop in the unemployment rate in Canada and the US, many of the new jobs added have been part-time in nature. In 2016, Canada added 214,100 net new jobs. However, 72% of these were part-time. Back in the 1970s, full-time jobs accounted for almost 88% of the workforce; today, it’s closer to 80%.
  • South of the border, the 6 million Americans that work part-time but want full-time employment is at its highest level in 30 years.


  • Many would agree that this has been the most distrusted bull market in history. Usage of the term “cautiously optimistic” to describe a money manager’s market outlook has been the favoured verbiage for almost a decade now.
  • As we’ve observed in recent quarters, the share price of any blue-chip company that missed the analyst earnings estimates suffered a bruising decline the next day. Increasingly, a greater number of market participants have migrated into quarter-to-quarter traders without much interest in a long-term investment horizon.


Collectively considered, many ask whether the loss of trust for politicians, institutions, currencies, the labour force, and the stock market represents a repeat of the 1930s. While the similarities are there, differences exist. Today, resentments from a world war previously fought are lacking; monetary policy has been highly accommodative; international law should limit aggressive foreign military conduct; and a protectionist wall of tariffs has not been created.

No two market cycles are exactly alike, but Vestcap’s investment committee has been defensive with client portfolios given the environment we’re in and the risks it presents. As we look for new investment ideas and monitor our existing holdings, careful analysis is paid to ensure that dividend payments are sustainable, debt ratios are reasonable, earnings expansion is probable, and cash flow generation will continue to grow.


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