If the past few months haven't caused you to question your entire approach to investing, then you haven't been paying attention.

Our financial system is in chaos. On average, investors have lost nearly half of their portfolios' value. Is it any wonder that many Americans are taking a second look at some of their long-held beliefs about investing?

Thanks, but no thanks
Wealthy investors, in particular, appear to be making one move that may have broader implications for the future of the investment industry.

According to InvestmentNews, high-net-worth investors are reacting to the ongoing crisis by shunning financial advisors. Previously, wealthy clients often relied on advisors for everything from asset allocation to investment selection and estate planning. Now, after having endured a crushing bear market and stories of outright fraud a la Bernie Madoff, many well-to-do investors are taking on the risk of going it alone.

But can investors do a better job on their own than the Wall Street elite?

Going it alone
After all, we're in the midst of an unprecedented financial shake-up. Industry stalwarts like Citigroup (NYSE:C) and General Electric (NYSE:GE) have lost 88% and 71% of their value, respectively, in the last year, and the former is teetering on the brink of insolvency. Mass layoffs are coming in fast and furious from all corners of the market, including blue-chip companies like Microsoft (NASDAQ:MSFT), Home Depot (NYSE:HD), and Caterpillar (NYSE:CAT).

Given the economic uncertainty, figuring out which companies are poised to outperform is more challenging than ever.

But we here at The Motley Fool have long championed the individual investor's ability to beat the market -- and the experts. That means that even in the midst of tough times, there's no reason you can't succeed -- provided you follow a few important guidelines as you search out winning stocks.

Taking charge
First, make sure your portfolio accurately reflects your time horizon and risk tolerance. As you get closer to retirement, more of your assets should be in fixed-income investments like bonds. But no matter how close you are to retirement, a portion of your portfolio should be in stocks -- and to do that well, you need to know how comfortable you are with risk.

Investors with low tolerances for risk should stay away from higher-risk companies that have significant debt loads, high prices relative to future earnings, or potentially uncertain future income streams -- even if they're touted as the "next big thing." Instead, these risk-averse folks should stick to more established, potentially slower-growing companies with strong cash flows, solid earnings, and reasonable valuations, like McDonald's (NYSE:MCD) or Philip Morris (NYSE:PM).

Just remember -- you don't get something for nothing. The possibility of higher returns means you have to take on greater risk, so don't shoot for the stars if you can't deal with occasionally missing the mark in the short run.

Second, remember that diversification is not dead. While this downturn has left few unaffected, a well-diversified portfolio is still your best defense against eating cat food during your retirement. That's because it ensures that even if one company, industry, or country takes a hit, your portfolio is balancing those investments with ones outside the affected area.

Make sure you hold stocks from a range of market capitalizations, from small to large, as well as from a range of industries. Include at least a handful of stocks that are based abroad. Be sure to include both growth- and value-oriented stocks in your portfolio as well. Don't load up on any one sector of the market -- that defeats the whole purpose of diversification!

Third, don't be afraid to ask for a little help in your investment journey. There is a wealth of opportunities out there, including investing seminars, countless books on the subject, daily news sources, and of course, investment communities like the Fool! They can help you learn more about individual companies, share ideas, and evaluate investment strategies.

Solo efforts
It may not be clear sailing right now, but there's no reason why you can't take charge of your own investment future and succeed. It just takes some time, some attention, and some perseverance.

And don't forget, there's nothing wrong with supplementing your individual stock-hunting efforts with some advice from the top names in the business. A handful of well-managed mutual funds can be an excellent complement for any investor going it alone in this market. That's what we specialize in at Motley Fool Champion Funds -- and you can see what we're recommending right now with a free 30-day trial. Just click here to get started. There's no obligation to subscribe.

This article was originally published on Feb. 25, 2009. It has been updated.

Amanda Kish heads up the Fool's Champion Funds newsletter service. At the time of publication, she did not own any of the companies mentioned herein. Microsoft and Home Depot are Motley Fool Inside Value choices. Click here to find out more about the Fool's disclosure policy.