FORECASTS A PROCESS OF MAYBE : STOCK ANALYSTS PICK RIGHTLY AND NOT SO.

Byline: Chet Currier Associated Press 

As they get ready to make their financial forecasts for 1997, many Wall Street analysts are chastened by the memory of how badly they missed the mark in 1996.

A year ago at this time, the theme was almost universal: Whatever happened in 1996, it was clearly unreasonable to expect another boom year for stocks like 1995.

A flat year was one popular prediction, or perhaps a modest gain on top of the '95 rise of more than 30 percent in many of the stock price averages. Quite a few observers talked about a market decline.

Last December, one top investment strategist at a Wall Street brokerage firm foresaw ``a more difficult year ahead.'' Added the chief investment officer at a New York bank, ``Do not expect the dramatic returns of 1995 to be repeated in 1996.''

The chairman of a big mutual fund management company was on record with a forecast of a ``correction'' of 10 percent or more for the Dow Jones industrial average during the first half of the year. By year-end 1996, he projected, stock prices would have recovered to a little above where they stood in late 1995.

The names of these people have been omitted because there is no point in singling them out. Just about everybody saw things the same way, with plenty of sensible-sounding reasons to back up their conclusions.

But as events have unfolded, the big three stock-market indicators - the Dow Jones industrial average, the Standard & Poor's 500-stock composite index and the Nasdaq composite of what used to be called over-the-counter stocks - headed into late November with gains of better than 20 percent for the year to date.

Actually, the fund executive wasn't completely off base. Stocks did suffer a setback in early summer, by various measures approaching 10 percent or more. But the market's rise in the latter stages of the year far outstripped his projection.

Also last December, many leading authorities on mutual funds argued that it was time to ``think international.'' Even if stock funds did manage to post a gain in 1996, said one, foreign funds were likely to have a better year than U.S. stock funds. After two subpar years, the foreign markets were said to be due for a turn in the spotlight.

Well, foreign equity funds have had a pretty decent year, but they haven't lived up to those advance notices.

None of the errant prognostications cited above were wild guesses, or interpretations of the leaf patterns in some hallucinogenic tea. They were the carefully considered projections of respected commentators who enjoy wide followings as financial analysts.

The experience of this year dramatizes how skeptically you may take all forecasts of something as unpredictable as the stock market - even from people who know what they are talking about.