The Long Trade

I’ve spent thirty-seven years on Wall Street, and if the business teaches you anything, it’s the difference between a trade and an investment. A trade is transactional. You’re in, you’re out, you count your money. An investment is a bet on character. You’re betting the thing is worth more tomorrow because of what it’s made of today.

Churchill understood that the relationship between America and Britain was an investment. He was basically its first portfolio manager. Almost eighty years after he coined the phrase “special relationship” in a gymnasium in Fulton, Missouri, of all places, we should remember what he actually meant by it. Especially right now, when the alliance feels a little stretched on both sides of the Atlantic.

Start with the man himself, because he was the merger before the merger existed. His mother, Jennie Jerome, was born in Brooklyn. Her father was a New York speculator who made and lost fortunes with a frequency that would make a crypto trader blush. So Churchill was literally half American, and he never let us forget it. He stood before Congress in December 1941, weeks after Pearl Harbor, and joked that if his father had been American and his mother British, he might have gotten there on his own. The room laughed. But the joke carried a thesis. These weren’t allies of convenience. This was family, with all the friction that implies.

Churchill knew America the way you only know a place where you’ve lost money. He got wiped out in the crash of 1929 like everybody else, then lectured his way across the country to rebuild his finances, selling his words the way immigrants of that era sold their labor. He understood something about us that a lot of foreign leaders never figure out. Americans respect people who get knocked down and get back up. His whole wilderness decade was one long comeback story, and there is nothing, nothing we love more than a comeback.

The wartime alliance wasn’t held together by sentiment, it was held together by the boldest structured deal of the twentieth century. Lend-Lease. In 1940, Britain was functionally insolvent. Fighting alone, burning through gold, burning through dollars. Churchill wrote Roosevelt what may be the greatest pitch letter in history, and America became the arsenal of democracy. Roughly $31 billion in materiel was extended to a borrower with no collateral, because the borrower’s character was the collateral. Britain made its final payment on that era’s debt in 2006. Show me another sixty-year loan that performed and I’ll show you another alliance worth keeping.

That’s the cornerstone of the special relationship. The returns compound over generations, not quarters. NATO. The intelligence sharing. The financial plumbing between London and New York that still runs underneath the whole global economy. All of it goes back to a bet that trust between free peoples was the most productive asset either nation held.

Is the relationship stretched right now? Sure it is. Alliances go through drawdowns, same as marriages, same as portfolios. Churchill never confused a bad quarter with a bad investment.

So picture him today, back in that same chamber where they laughed at his joke in 1941, addressing a joint session one more time. I think it goes something like this. Wake up, America. You did not become the arsenal of democracy to grow weary of the work. We are your oldest friends and your closest kin, bound not by treaty alone but by blood, by language, by the long habit of standing together when the storm comes. Our bond is not conditional. It does not rise and fall with the quarrels of the moment. When you are strong, we rejoice. When you stumble, we do not walk away; we take your arm. Do not doubt us, and do not doubt yourselves. The English-speaking peoples still hold the watch, and the watch is not over.

That’s not nostalgia. That’s a term sheet.

My grandfather came over from Italy and went down into the coal mines of Pennsylvania. My father operated a crane. Neither one of them could have found Chartwell on a map. But the world where a coal miner’s grandson could go from a middle-class house on Long Island to Harvard Law to founding his own firm, that was a world Churchill’s alliance made possible. That’s the dividend. It lands in the accounts of people who never read a word he wrote.

Churchill made the best long-term call in modern history. He went long on us before we went long on ourselves. The least we can do is hold the position.

Anthony Scaramucci is the founder and managing partner of SkyBridge Capital.