Commodity and stock-price movements are generally not in step with each other. That pattern didn't hold last year, however, because "fundamentals and economic analysis didn't matter," says Mihir Worah, manager of Pimco CommodityRealReturn Strategy (PCRDX). In that time of distress, virtually every asset class reacted similarly to events in the financial markets.
Worah says Pimco's view is that stimulus and liquidity will help pull the economy out of recession in 2010. Moreover, much of the stimulus is in natural-resource-intensive infrastructure spending. Add to that the growing economies of China and India (combined population 2.5 billion), plus the fact that many commodities -- such as crude oil and copper -- are trading at or below their cost of production, and the long-term picture for commodity prices, Worah says, looks quite favorable.
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