Higher interest rates got you down; don't worry, there are still bargains if you know where to look.

Each of the four times this year that the Federal Reserve Bank hiked shortterm interest rates, consumers shuddered as another spike was driven into their motivation to borrow and invest.

After 1/4 point raises in February, March, April and again in May, investment holdings were walloped as the financial markets saw major indices plummet as much as 50 points in a day. Consumers were blinded by flashing red lights that signaled sell. The Fed explained that the move was a necessary guard against inflation. Wait a minute! Inflation is what we get when there is too much cash and credit and not enough goods and services, so prices go up. In the end, it would appear that despite contradictory reports of a growing economy and industry consolidation (which means mergers and acquisitions and layoffs), the Fed's theory is that you, the people, have too much cash and access to credit to be good for you.

Yet consumers are the ones who have been fueling the so-called Reagan-Bush economic recovery by borrowing more and spending luxuriously. And they can now expect to pay more for borrowing (which in turn will make them less likely to borrow; which in turn will curb spending; which in turn yields an abundance of goods but not enough money to buy them with).

The effect on consumers is clearly evident through statistics that track buyers' borrowing costs--from personal loans to auto financing to home equity loans and refinancing of mortgages.

By July, according to the Bank Rate Monitor, an industry newsletter that follows consumer borrowing, interest on auto loans had risen to 8.41% from 7.89% in February. Unsecured personal loans rose to 15.47% from 15.26% during the same time period.

For people looking to buy homes with adjustable rate mortgages, which account for about 20% of all mortgages, the ARM rates increased to 5.41% in July from 4.03% at the beginning of the year.

That's the bad news, but savvy investors can still find some rewarding buys. One case in point: If you refinanced a 30-year fixed-rate mortgage in February at 7.2%, you came out ahead because by July the rate had risen to 8.59%.

Some industry analysts believe that because fixed mortgages are pegged to the rate on 30-year bonds, the rate could start back down by the end of the year to 8.25%. The drop of a half point in the fixed rate could mean a monthly savings of $50 on a mortgage of $100,000.

When the financial markets are as unpredictable as they have been in the first half of the year, industry seers agree that investors with diverse portfolios should look for shortterm instruments that offer liquidity and attractive yields.

If you have extra cash that you know you're going to need in the next three months, consider a money-market fund, which in July was paying about 4%.

One-to three-year Treasury bills and notes are another solid investment. In July a one-year T-bill yielded 5.3%. A three-year Treasury note carried a yield of 6.32%. With a minimum investment of $10,000 you can avoid brokerage fees and the majority of other third party costs by buying these conservative instruments directly from the Federal Reserve. Call the Federal Reserve Bank or branch nearest you for specific purchase information.

If you are an aggressive investor you know that even in the short term your portfolio should contain stocks.

According to Securities Data Co., a research database company based in Newark, N.J., the second quarter produced 10 industry sectors that have emerged as solid performers. Top among them are oil drillers, which gained 15.6% in the period from March to June. A companion sector, oil field equipment manufacturers, gained 11.2% during the same time. Medical supply manufacturers posted a modest gain of 8.4%. Finally, the Moneywise profile of pharmaceutical stocks ("A Pill for the Cure," August 1994) has been vindicated. SDC reports that sector is up 7.7%.

The bottom line is that buying opportunities and stable investment options always exist. No matter whose theory is in practice, it's all about money--and you can have some if you just know where to look.