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Stocks vs. Commodities: Which Way to Go Now?

The Dow rose Monday after positive economic reports including manufacturing, construction and pending home sales. So what do these numbers mean for investors? Michael Cuggino, president and portfolio manager of Permanent Portfolio Funds, and Dan Fitzpatrick, president at Stockmarket Mentor, weighed in.

“[The dollar] is definitely playing a huge impact but it’s not the only thing out there,” Cuggino told CNBC.

“More and more, we’re getting more favorable economic news showing us the way out of the recession.”

Cuggino said liquidity is available in the markets, activity levels are up and earnings growth is going to be positive going forward. (Scroll down to see Cuggino's stock picks.)

“So it looks good for economic growth going forward,” he said. “The weaker dollar will help that in the short term, in respect to padding corporate earnings, especially companies that participate in worldwide growth.”

Cuggino said he doesn’t think the Federal Reserve will make any aggressive moves for a while.

“But the investment markets may take it as a positive if the Fed executes some exit strategy, or begins to,” he said.

“We’ve seen the talks already, the markets would love to see some action—even baby steps will go a long way towards bringing investor confidence back and possibly strengthening the dollar and offsetting the weakness in monetary policy.”

Fitzpatrick's Fear:

In the meantime, Fitzpatrick said he worries that the U.S. economy is heading toward Japan's situation.

Winterizing Your Portfolio - A CNBC Special Report
Winterizing Your Portfolio - A CNBC Special Report

“The type of scenario where we can’t afford to raise rates and they’re going to be low for a while, there’s going to be continued pressure on the dollar—it’s a crowded trade, but sometimes the crowd is right,” he said.

“People just want to own physical commodities, gold and metals.”

However, Fitzpatrick discouraged investors from shorting stocks.

Cuggino Likes:

FedEx

BHP Billiton

State Street

Air Products & Chem

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Disclosures:

No immediate information was available for Cuggino or Fitzpatrick.

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