At a recent lunch meeting for clients and members of Cougar Global Investments in Toronto, Les Williams, partner of the firm which manages Cougar’s Canadian equity mandate shared his thoughts on the economy and equity markets.

In a presentation prior to William’s discussion, Dr. James Breech, president and CEO of Cougar Global Investments, discussed Cougar’s outlook with the group. He says the firm’s outlook, updated every month, anticipates a normalization of interest rates, a modest rise in equities, and a drift, albeit a manageable one, in the bond market. Longer term, Breech anticipates downward pressure on the U.S. dollar, and the Canadian dollar to resume it’s bias towards weakness, in comparison with the U.S. greenback.

When it comes to selecting investment managers, Williams says he chooses managers that use a team approach, and have at least five years of proven experience.

Williams, of Morrison Williams Investment Management Ltd., discussed his investment strategies, his aversion to excessive bonusing, cronyism and nepotism, and his method of selecting securities.

Overall, Williams says the outlook is good for global economic growth. “Things look fine from our perspective. Things seem to be on track for another year.”

The recent inflation “hiccup” he says has a lot to do with rising energy prices, but the unit labour costs of oil are under tremendous control. Inflation, he says, is not a threat yet, and the Canadian dollar “seems to have wind at it’s back.” This positive interest rate differential should allow the Canadian dollar to firm up, but U.S. trade and budgetary problems could make the U.S. dollar vulnerable to continued weakness. “It’s a longer term problem,” he says. “Something needs to be done about trade deficits.”

Lately, Morrison Williams’s core portfolio has had an emphasis on financials and integrated oils. Williams says he recently added a position in Manulife Financial Corp., and expects financials will soon make up between 33-36% of his overall holdings.

Notably absent among financials stocks in his portfolio, however, is Bank of Montreal. Williams says the bank seems to have put itself in a position where it is not growing, but rather making itself more attractive for acquisition if political influences become more amenable to such a deal. If such a deal doesn’t come to pass, he says the institution could be stuck and in a way, all dressed up “with no one to come swing it around the dance floor.”