Taking stock of your portfolio.

Here's how to sort out the winners from the losers

The typical investment club has a buy-and-hold strategy. The reason is simple: A club minimizes risks and maximizes capital gains when it purchases shares it intends to hold on to for as long as the business operates successfully. So, what tactics do members use to find stocks that are expected to outperform the market over the long term?

For starters, many clubs rely on some homespun research. That is, they invest in companies they are familiar with instead of chasing hot tips. "The question on everyone's mind when we started out was `How do you know when and what to buy?'" says Carolyn Robinson, assistant treasurer of Investors 2000 Plus in Richmond, Virginia. "I told [members] to research something that they have an interest in or a product that they use."

Today, the club has holdings in 12 companies including Wal-Mart (NYSE: WMT), Hershey Foods (NYSE: HSY), Intel (Nasdaq: INTC), Disney (NYSE: DIS), Pfizer (NYSE: PFE), and AFLAC (NYSE: AFL). Their investments have lost some value, as with most investors. Still, their annual return last year was 25.61%. Year-to-date, they've gained 22.21%, and the club's portfolio is valued at $53,000. Robinson says the club has tried to stay well diversified in such sectors as insurance, entertainment, retail, consumer goods, food and beverage, and pharmaceuticals.

"We have gotten away from this (but will go back to it), and that is having each member track an industry. The idea was for that person to become an expert in that industry," she adds.

Every member is required to give quarterly updates on companies that they originally recommended. "Individual investors tend to buy something and then tuck it away and never look at it," says Robinson. "If an investor had been vigilant about Lucent Technologies and followed the balance sheet, [he or she] may have caught something strange [before the stock plummeted in price]."

Since its start-up, Investors 2000 Plus has sold only two stocks, Novell (Nasdaq: NOVL) and Heilig-Meyers (OTCBB: HMYRQ.OB), which failed to live up to expectations. Wendy's is currently a candidate to be sold. "We bought it at roughly $21 in November 1995. It is trading at $24; it has not performed to our expectations," says Robinson.

The club adheres to the investment philosophy of the National Association of Investors Corp. (NAIC), the Madison Heights, Michigan nonprofit group that represents 36,000 clubs and 48,000 individuals. According to the NAIC, a club's goals ought to be to attain an average growth in prices and dividend income of 14.9% compounded annually. At that rate, the club would double the value of its holdings every five years. Equally, the club should realize a 4% to 6% yield over time on an investment from dividend income.

Investors 2000 Plus is investing more aggressively based on what it's learned, but Robinson and other financial gurus advise against club members trading in and out of the market. Investors who chase after a stock's momentum may be buying good stocks but not investing in good companies. They could end up wasting or losing their money all in a day. Studying the fundamentals of companies in industries in which you work or about which you have some knowledge increases the likelihood of investment success.

TOP PICKS OF INVESTORS 2000 PLUS

Company         Exchange/Symbol   Portfolio Weighting

Intel           (Nasdaq: INTC)           31.0%
Wal-Mart        (NYSE: WMT)              13.0
Hershey Foods   (NYSE: HSY)              10.0
AFLAC           (NYSE: AFL)               8.0
Pfizer          (NYSE: PFE)               5.5