When a wave of hot-stock thinking overruns the stock market, as it does from time to time and is doing now, it is easy to forget what sensible investing is all about.

The truth of the observation was illustrated recently when an investment guru grew enthusiastic about a "contrarian" mutual fund, basing his support for it on the belief you should do the opposite of what the crowd is doing.Contrarian thinking has many supporters, but it is only in hot-stock times like these that the fund mentioned could be considered contrarian.

The fund's recipe for winning includes:

1. Finding companies offering products or services that people want.

2. Determining if better management of a company could turn it around.

3. Finding companies with undervalued assets that might be sold to pay down debt and enable the company to focus on profitable areas.

4. Determining a company's earnings potential and time needed to realize that potential.

Contrarian? All four would be criteria on any basic investor's list. That is, at times other than now, when investment analysts have forsaken many of the fundamentals while searching for the next takeover candidate.

Signs of the times can always be found in hot investment markets, since it is here that people's frustrations, dreams, ambitions, greed and follies become focused. Add fear to that list; it's been there since the market crash.

Reflecting the insecurity of today's investment markets, newsletter writers are promoting almost any conceivable scenario. Millions of people can attest to it, since they are recipients of the promotional literature.

Here's one with a message so urgent it begins on the outside of the envelope:

"Imagine: The prime rate will reach 35 percent. Gold will surpass $1,800 an ounce. Real estate will fall to 1 cent on the dollar. Oil at 25 cents a barrel."

The message continues inside. An overnight real estate crash, it states, might make your $175,000 home worth just $1,750. In one day! "Don't scoff," says the writer, "it's happened before and will happen again."

You'd better hurry if you want to get this inside information.

What, you say, no way! Well, perhaps you'll reconsider when you find that this same seer foresees a Dow Jones industrial average, now more than 2,000 points, falling to 41.

Wherever money is being saved, spent or invested you can find the signs and portents. Did you know that there is a direct correlation between new-home lot sizes and interest rates? It's being touted as almost infallible.

U.S. Housing Markets, a publication of Lomas Mortgage USA, traced the relationship for the past 11 calendar years and found it happens every time: When interest rates fall, lot sizes go up. When they rise, lot sizes fall.

In 1982, for example, conventional mortgages averaged 15.14 percent, and lot size was only 8,265 square feet, the lowest between 1977 and 1987. Last year, the mortgage rate fell to 9.31 percent, and lot size rose to 9,295 feet.