ONCE, the legendary US banker J. P. Morgan was asked to predict the market. He made the right forecast: ''It will fluctuate.'' The point is, don't spend too much time trying to guess whether the market will go up or down. This is particularly the case in Hongkong, where the market is emotional and susceptible to surprises - of both a positive and negative nature - that few people could have foreseen. Generally, it's more rewarding to invest based on a careful selection of individual stocks. Stocks should be regarded as just another form of merchandise - if it's cheap, buy it and don't lose any sleep over market forecasts. Keep an eye, especially, on the unfashionable shares, because they generally offer the best bargains. Some examples of attractive merchandise: Chow Sang Sang. One of Hongkong's best established jewellery chains. Because of a craze for gold and jewellery in China, visitors from the mainland now account for a quarter to a third of Chow Sang Sang's customers. Investors have yet to recognise the company as a ''China play'', and the stock remains cheap, offering a dividend yield of around seven per cent. Because many of the company's stores are self-owned, overheads are under control. Winton Holdings. The market leader in providing financing for buyers of taxis in Hongkong. Winton has a long record of strong earnings and it benefits from high barriers to entry in its business. Yet the stock remains cheap, on a price-to-earnings ratioof around 6.5, with a dividend yield in excess of eight per cent. Fountain Set. This company has survived several bad years in its business, which involves fabric dyeing, knitting and production of yarn. Lesser competitors have given up, while Fountain Set has emerged stronger, with $2 billion in annual sales. Although earnings are set to rise sharply, the stock remains unfashionable, trading at less than six times earnings. Wong's International (Holdings). A leading manufacturer of printed-circuit boards, this is another example of a bombed-out stock with attractive fundamentals. The dividend yield alone is in excess of eight per cent and can be maintained, given the company's strong balance sheet. The printed-circuit board business is steady, while the company owns undervalued properties in Kwun Tong. ABC Communications. A leader in the market for pagers. Although the local market is approaching saturation, earnings will grow from diversification into China and the Philippines, where ABC has an associated company. ABC is characterised by excellent management and strong cash flows. Cheah Cheng Hye is a research director at Morgan Grenfell Securities.