After dumping nearly $100 billion of individual stocks before the bear market began in July, small investors have been on a bargain-hunting spree for the past two months, according to Money magazine's Small Investor Index.

Overall last week, the Index, which tracks the performance of the average individual's investment holdings, rose $592 to $42,380. Stocks gained $463, and bonds added $116.As the Dow Jones industrial average climbed toward the 3000 mark in the second quarter, small investors sold $99 billion of individual stocks, according to Money's analysis of statistics released last week by the Federal Reserve (the Index has been revised to reflect the new data). Then, as the Dow dropped below 2500 in August and September, small investors began buying heavily.

At Merrill Lynch, for example, the ratio of individual buyers vs. sellers reached a low in June when sellers outnumbered buyers by 33 percent. By late September, that ratio had reversed with buyers predominating by 50 percent. Similarly, in the second quarter small investors sold an average of 1.7 million more shares a day on the New York Stock Exchange than they bought, according to the Securities Industry Association. In July and August, however, individuals bought 5.2 million more shares a day than they sold.

By contrast, investors in stock mutual funds bought aggressively as the market rose in the second quarter, then sold heavily in August and September.

Some analysts think that small investors are wise to buy at today's depressed prices. "The best choices are the shares of companies with low debt and strong business franchises," said Kenneth Hackel, president of Systematic Financial Management in Fort Lee, N.J. "Once the recession is over, those companies will be even more dominant as weaker competitors fall by the wayside."