Commodities including energy and metals were the stars of 2007. Will 2008 be another good year for this asset class and if so, should you
  consider investing in it?

  Commodities are the raw materials used to create the products consumers buy, from food to furniture. Commodities include energy products
  such as oil and gasoline, metals such as fold and silver, and agricultural products such as cattle sand soybeans. There are also soft commodities,
  which are commodities that cannot be stored for long periods of time, such as coffee and sugar?

  Investor interest in commodities has soared in recent years. To invest in commodities, one can invest in futures and options contracts on
  commodities, which are traded on exchanged around the world or, in the case of most investors, mutual funds than invest in the these
  futures and option contracts.

  One of the biggest attractions of investing in commodities is the potential for diversification. Commodities tend to react to changing economic
  fundamentals in ways that are different from stocks and bonds. As an example, consider what happens when inflation is rising.

  Stocks and bonds tend to perform badly. Rising inflation lowers the value of the future dollars received from stock and bond investments because   those future dollars will be able to buy fewer goods and services than they would today. On the other hand, commodities tend to benefit from   rising inflation, because as demand for goods services increases, the prices of those goods and services usually rises as well, as do the prices of   the commodities used to produce them.

  Commodities are particularly popular today because they have outperformed the general U.S. equity market in recent years, with the Dow Jones   AIG Commodities Index returning an average annual 16.23%, 12.92% and 14.26% over the one-, three- and five - year periods ending
  12/31/07. During the same periods, the S&P 500 Index, which is widely considered representative of the U.S. equity market in general, returned
  5.49%, 8.62% and 12.83%, respectively.

  Past performance is no guarantee of the future results, so it is hard to predict the direction of any market. It is possible that there still upside
  potential in commodities. Part of the reason for the asset class's solid performance increasing demand from China, India and other
  emerging-market countries that need oil, steel and other commodities to support manufacturing and infrastructure development is
  unlikely to change anytime soon.