INVESTORS are double-checking their lunar calendars to see if this really is the Year of the Bull. Judging from the local bourse's behaviour so far, the only bullish thing we can find is the stuff left over on the floor after the stampede. We are standing in it. Billions went up in smoke worldwide in equity values as the accident that has been waiting to happen on Wall Street finally did. Kneejerk-prone Hong Kong has proved once again that, although 1997 and reunification with China is just around the corner, it is the New York market that holds the emotional chain around the local bourse's neck. Retail investors bore the brunt of the losses. Did you notice how empty the securities counters were at the banks last week? Seems all the punters had to go back to work again, perhaps to cover their margin calls. We received several e-mails from readers asking for advice about what to do with the many warrants they had taken up in these past few months and wondering if what they owned was now only cheap wallpaper. Holding speculative counters at a time like this is a dangerous business. For some, cash is best. For us, as we are required by our self-imposed rules to hold shares, we have no choice but to remain invested in local equities and try to keep our heads down. We don't know what the market will do, but we do have a view. As we stated some weeks ago, some bargains will appear at 12,200 and, obviously, more at 11,800. Investors with a six-months-or-longer view can make some money buying at these levels. The market is now back to trading at a price-earnings ratio of about 13. At this level, you don't need 1996's 'historical re-rating that didn't last' to profit. Once the general malaise surrounding world equities markets dissipates - and it will - there will be some positive action here. In the short term, this depends on New York because Hong Kong is in the unfortunate position of being highly correlated to the Big Apple when the Dow falls and less so when it rises. The Dow looks moderately supported at 6,250 points and well-supported at 6,000 points. Once New York stabilises we expect Hong Kong to receive the attention of the larger institutions. Hong Kong, with an improving Chinese economy, excitement about the handover and attractive valuations, will have global equity allocators ringing Hong Kong's bell again. What we suggest investors do now is buy the stocks we like. For example, Cheung Kong Infrastructure and Citic, which have held up remarkably well during this latest collapse, remain attractive. The red-chip sector has come under heavy selling as it is ripe for profit-taking. Counters such as portfolio member China Merchants Hai Hong, which need urgent asset injections to support their current share price, should be avoided. In portfolio action, we take the punch squarely on the chin and dump some losers, although we are pleased to say we have outperformed the index since we started. We add more shares of Cheung Kong Infrastructure and Regal Hotels.