Churchouse Letter
August 2014           by Peter Churchouse

London Calling. Answer It.

Earlier in the month I spent some time back in the U.K. It's a country I love in the summer, and right now it's leading Europe's charge back to growth out of the financial crisis of some half a decade ago.

Chances are, the majority of what you read about the U.K. focuses on one thing: real estate. Specifically, London Property.

But property is secondary here to the bigger economic growth story at play, and in this edition of the AHA Report we give our best recommendation of how to participate in it. It's not necessarily as straightforward as you might think.

Do we cover property as well? Of course. I arrived in London after traveling the length of Africa in 1975. In the late 70's I bought some real estate there, a property I have often talked about.

I no longer own that one but there has never been a time since then that I have not held real estate in London.

In this edition of the AHA Report:

  • We update our views on the U.K. and London property sectors (of course).
  • We give you an alternative if purchasing U.K. property isn't quite achievable for you.
  • But most importantly, we show you how to make gains from the U.K.'s fantastic growth prospects.

Enjoy the issue,


I recently had the good fortune to be in Britain for that wonderfully short event, the British summer. And in a particularly good spell, I was also lucky enough to be invited to a weekend in the country at a very pleasant estate. Normally, I would be looking forward to stimulating conversation with the house guests on the issues of the day – the Ukraine crisis suddenly and sorrowfully on everyone’s thoughts – when one of my conversations took a rather curious turn.

As a return visitor to these particular friends, I have known some of their staff for some time. The butler and I had enjoyed an acquaintance for several years. We got chatting again, as we often do, and I found out something startling.

Essentially, he wouldn’t have to be delivering drinks for all that long, unless he wanted to continue to do so. In fact, he was well on the way to complete financial freedom. There’s nothing quite more liberating than knowing you’re free to do what you enjoy, when you want, safe in the knowledge that your financial security will support you.

My aim through this newsletter is always to help you set yourself on that path. Maybe, like my butler friend, you’re essentially already there and wondering where to tread next. But read on, and I hope my advice, gleaned from decades in high finance more than garden-party chat, can help you there. Although wisdom gleaned from both finance and garden parties can lead to the same destination.

I want to share two central ideas with you on how to use my British experiences to build your wealth.

Part I: From Depression to Elation

In 1975, I landed on the shores of the United Kingdom with a couple of hundred pounds in the bank and about half a ton of ebony African Makonde sculptures from Tanzania. My wife and I had just driven the entire length of Africa. And I was going to make a killing selling these collectibles, agonizingly selected each and every one, in our “new” Old World.

There was a hitch. Every salesman needs a good patter. And he needs to be able to close the deal. I was confident about both.

But he also needs a market. And in 1970s Britain, there was none. Not for carefully carved works of art from the cradle of humanity. Not for the luxuries of life. Hell, barely for the bare necessities.

The U.K. was a deplorable mess. The country was essentially ruled by the coal miner’s union, led by Arthur Scargill. He and the unions had brought Britain to its knees. Prime Minister Harold Wilson wasn’t really in control. Some of our readers might remember the “three day week,” when the unions basically closed the country down. When I pitched up on the U.K.’s shores looking to offload curios, and oh by the way also looking for a job, things were very grim.

I still have the Makonde sculptures, and luckily the few hundred pounds in the bank has grown a bit. I treasure the sculptures a lot more than the money. Nothing can replace that raw experience in my life.

But as a son of the New World, this was my first experience of Europe, and it was shocking.

The United Kingdom was under an I.M.F. program. That meant the U.K. had little control over monetary or fiscal policy. Any Briton who wanted to skip across the Channel to France for a holiday had to get Bank of England permission to take more than fifty pounds sterling with him.

Can you imagine that? That’s what we expect from the Argentinas of the world. Not a country of real stature. A country that once could legitimately claim that “the sun never sets” on its empire ...

Over the following 30 years, as Margaret Thatcher and the Tory Party took over and dismantled much of the “culture of entitlement” that the Labour Party installed, the country recovered dramatically. The business cycles have waxed and waned but the U.K. has been at the vanguard of global liberalisation and integration of trade. It has also been at the leading edge of global financial-market expansion and deregulation. Americans generally think that is something Wall Street did, but I can assure you that British banks were touting their wares around the world well before their American brethren. American supremacy in banking came later, and was driven very much by the fact that they had deeper pockets than anyone else.

The U.K. economy remains a very well-regulated beast, with deep social and structural issues. But it punches above its weight internationally, certainly more so than its European neighbours. It is a freer economy than most in Europe, and in many ways more than the United States. It was absolutely right to stay out of the Euro, in my view. That move has allowed a degree of independence of policy that stands the country in good stead today.

But four or five years ago the U.K. was a depressing place to be, just like when I first arrived on its shores. The economy was in recession. Europe was falling apart. Unemployment was rising. They city of London was shedding staff in large numbers as the finance industry was in free-fall after the “Lehman moment”. At a personal level I knew a lot of people suddenly without jobs.

Well, a few years on, Britain has changed a great deal again. And very much for the better.

It deserves our attention...

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