Not long ago, the Buenos Aires stock market was a bull's paradise and an inspiration for markets in other developing countries. Now it is mentioned as a cautionary tale.

The Argentine market grew 400 percent in dollar terms in 1991, making it the world's leader.Success bred more success and a touch of craziness. In early 1991, the market had a daily turnover of less than $1 million. A year later, it was trading $100 million a day.

It looked like a no-lose situation. The years of military dictatorship were fading into history. President Carlos Menem was taming hyperinflation. The peso started to stabilize. Companies that needed streamlining were being sold off.

The government sold 30 percent of a government-owned telephone company, Telefonica de Argentina. Investors included Citicorp. The stock prices doubled in four months, unheard of for what analysts call a "widows and orphans" stock. The country abounded with stories of inexperienced investors who turned a few thousand dollars into a fortune.

Then, in the second half of 1992, the bubble of speculation burst. The market dropped by 50 percent. Analysts say everyone should have foreseen the crash.

Companies remain closely held, so few stocks are sold to the public, a practice common in Latin America. A lot of money chased after a few stocks. Stock prices soared. Caught in the frenzy, some people snapped up shares of companies without realizing management was in bankruptcy proceedings.

When a second telephone company, Telecom Argentina, was privatized, its price zoomed up 20 percent.

Small investors, encouraged by Mr. Menem's plan for "popular capitalism," bought stocks on credit. When payments on loans were due three months later, many people sold out at a loss. Share prices of Telecom and other companies collapsed as investors became jittery.

This year, Argentina's economy is growing by 6 percent, and inflation is down to 11 percent. And the $25.6 billion Buenos Aires market is up by 17.2 percent.

Argentina hasn't been the only warning signal amid the Latin American equities boom. In Venezuela, the Caracas stock market index has slid 22 percent this year, largely because of coup rumors, bombings and instability as the country awaits Dec. 5 presidential elections.

In Dallas, Ken Bingham, vice president of Paine Webber Group Inc., advises investors that such ups and downs are normal for emerging markets. The era of coups and other turmoil isn't over yet, he said.

"I'm sure there are going to be some disruptions in Latin America," he said. "It's not like investing in the United States, where we've had capitalism for 200 years."