That ageless advice, "You've got to take the bitter with the better," was not invented on Wall Street. But it certainly has found a home on Wall Street as stock pickers watch their most carefully cherished stocks melt away, along with the money of investors who took their advice.

A case in point: The annual Thanksgiving list issued by Legg Mason Inc., the Baltimore brokerage firm. For each of the past 12 years, the stock pickers at Legg Mason have chosen a dozen stocks they believed would be winners in the year ahead.

And for most of those years, there was been plenty to brag about. From 1979 through 1986, when the markets were soaring, the Legg Mason seers saw their stocks gain an average of 36.2 percent a year.

The Thanksgiving list for 1987, the year of the stock market crash, lost 4 percent, but the stock pickers came back with a strong 1988 showing of 40.1 percent, followed by a modest 1989 gain of 10.7 percent.

Even with that turmoil, the average annual gain was 30.6 percent for the years from 1979 to 1989.

Then, of course, came this year, and disaster.

The 12 stocks Legg Mason selected a year ago fell an average of 24.6 percent, after including dividends. A $1,000 investment a year ago would be worth only $754 today.

That outcome was a bitter experience indeed, and the Legg Mason folks who generally have been happy to send out the good news were less than enthusiastic about trumpeting the unfavorable results.

Seeking solace, Legg Mason pointed out that the Value Line index of 1,700 stocks lost 27.2 percent, without dividends, in the same period.

Overall for the 12 years, Legg Mason stocks gained an average of 26 percent while the Dow Jones industrial average picked up 16.8 percent.

The worst loser on last year's Legg Mason list was MNC Financial Inc. of Baltimore, the holding company for Maryland National Bank, American Security Bank and Equitable Bancorporation. MNC, caught in the commercial real estate crunch, was recommended at $24.623 and closed at $4 a share, a loss of 79 percent, including dividends.

Other losers included the Witco Corp., a petroleum and chemicals firm, down 30.1 percent; Ametek Inc., manufacturer of instruments and motors, down 28.5 percent; the New York Times Co., down 26.4 percent; and Beckman Instruments Inc., down 26.4 percent. Eleven of the 12 selections lost.

In a curious way, the stock pickers at Legg Mason fell into a trap of their own making. Their rules called for the selection of 12 promising stocks, with an equal amount of money invested in each. All stocks were to be held for one year.

Alas, that meant the researchers had to sit back and watch the fiery descent of MNC Financial, unable to purge the stock.

But live and learn. Henceforth, Legg Mason has decided, its research department "reserves the right to sell a stock or stocks during the year either to lock in profits or minimize a problem."

That could be a mistake. During the good years, when stocks were booming, there probably were dozens of times when the Legg Mason researchers would have taken their profits too soon, reinvesting their money in stocks that did not do as well.

Be that as it may, the Legg Mason stock pickers have not given up on trying to outguess the future. Just a few days ago, they published their new Thanksgiving list, with nary a word about turkeys.

Only one company was a repeat choice and that was Beckman Instruments.

The other selections for the coming year were CPI Corp., which operates photo studios; Greyhound Corp., consumer services and bus manufacturing; Heilig-Meyers Co., retail furniture stores; Johnson Controls Inc., building controls; MCI Communications Corp., the Washington-based long-distance company; and Mylan Laboratories Inc., pharmaceuticals.

Also, Ogden Corp., plant and building maintenance; PHH Corp., auto fleet and employee relocation services; Premark International Inc., maker of Tupperware; Primerica Corp., financial services; and Wallace Computer Services, business forms.

The stocks were chosen, Legg Mason said, in line with the firm's long-held belief in "value investing."

This is a philosophy that calls for buying a stock that appears to be worth more than it is selling for in the market. Value investors love to spend 50 cents to buy a share in a company that they figure is worth $1.

Value investors use several yardsticks to judge the worth of a company, including comparing the price of the stock to the company's earnings and the company's resale value.

Legg Mason and other money managers have put a heavy emphasis on value investing -- and for a long time they did well. But for a variety of reasons, that technique has not worked well in recent years. Value investing may return to favor eventually, but for now the results are more bitter than better.

Insituform East Inc. of Landover, which repairs sewer pipes without digging them up, was once a fast-moving company with a stock that matched. Indeed, the stock traded as high as $27.50 during the past five years. It is now at about $2.

In recent years, the company has had a number of problems, not the least of which was the indictment of President Arthur G. Lang III and former chief financial officer Thomas C. Trexler of charges of criminal fraud and insider trading.

On top of that event, Insituform East recently reported a sharp drop in profits for the first quarter of its 1991 fiscal year, which ended Sept. 30. Sales declined to $4.6 million from $5.4 million a year earlier. Profits dropped to $172,000 (4 cents a share) from $730,000 (16 cents).

One of the main reasons for the slide, according to the company, was a decrease in the amount of work it did for its most significant customer, the Washington Suburban Sanitary Commission.

Philip Hannan, head of the commission's maintenance reconstruction division, noted that Insituform East was being affected by two factors. First, its three-year, $4 million-a-year contract with the commission has been completed. Second, Insituform East is running into increasing competition from new companies in the pipeline reconstruction business -- including firms that offer different technologies.

As a result, Hannan said, Insituform East got only $1 million worth of work in the current fiscal year, which began July 1, instead of the $4 million it had in earlier years.

Moreover, when two other contracts are put up for bid in the coming months, Insituform East will face added competition for $3 million worth of work.

Cliff Ransom, research director at Ferris, Baker Watts Inc. in Baltimore, said he was disappointed with Insituform East's first quarter report but thinks the next several quarters should be better.

Ransom said he believes the company is doing well with the rest of its customers and that if "the competitive onslaught can be weathered, Insituform East should perform well over the balance of this fiscal year."

After 20 years as the manager of the A.G. Edwards & Sons Inc. brokerage office in the District's Spring Valley area, Ruth G. Adler has decided to devote full time to working with clients and managing money.

Taking Adler's place as branch manager is William C. Mitchell, who formerly worked for Prudential-Bache Securities Inc.

During recent years, Adler has worked closely with her daughter, broker Alison Adler, and assistant branch manager Christine Maxa. The trio will continue to work together, Adler said.

Acknowledging that times are tough for brokers, Adler said that while commissions from trading stocks are down, revenue from the trading of tax-free bonds is up.

Noting that many stocks are selling at bargain prices, Adler said she had observed, over the years, that many investors were psychologically unprepared to buy when prices were down. "They only want to buy when stocks are high," she said.

Unfortunately, Adler added, "We're not like a department store. When there's a sale, people don't come to us."