ONE DAY early last fall, a man walked into the Adams-Davidson Gallery in Georgetown and said he wanted to cash in $100,000 worth of stock and invest in art.

Gallery owner Ted Cooper, who deals in long-neglected 19th-century Americans, selected three works totalling $70,000: an oil by a little-known Luminist painter, Sanford Gifford; and two small works by the now famous Frederick Church. It was just before Church's painting "Icebergs" sold at auction for a record-shattering $2.5 Million -- the highest price ever paid for an American painting.

Three months later the paintings were reap-praised -- this time at $170,000.

"I've never seen this happen before -- so much money in the art market, and during a recession," says Cooper. "My clients, who normally would hesitate a month before making a decision, now buy from a color transparency. There seems to be a mania about acquiring works that will hold their value against inflation."

Cooper, who says he has "around 40" clients buying solely for investment, admits this was an extraordinary case. But he agrees that there are many other individuals -- mostly doctors, lawyers and new real-estate millionaires -- who are looking to art for a hedge against inflation. Pension funds are also a new factor in the American market, along with big corporate buying (both for decoration and investment), and companies like Citibank which willl invest in art for anyone who can cough up $1-million a year for the purpose.

"Think of it this way," says Cooper. "A savings bank offers 5 percent and 13 percent. If you can earn 60 percent -- not an outrageous figure -- why not not invest in art? The investors we're working with should expect, and get, a 60 percent return within a year. But don't forget, we're talking about dead artists of established reputation, who have produced a finite amount of work."

Art dealers never tell anybody that business is bad. It's bad for business. But Washington dealers claims now is better than ever, following the widely acknowledged national and international boom. Even the most conservative Washington dealers admit that sales are "ahead of last year."

It was news last year when the two biggest auction houses in the world -- Sotheby's and Christie's -- netted an astounding $702 million, setting sales price records almost daily. But it is bigger news in Washington that Adams-Davidson Gallery expects to gross over $1 million this year, that Middendorf/Lane expects to do the same; and that Harry Lunn, ever ahead of the pack, anticipates hitting $2 million. The Baumgartner Gallery, after only seven months in business, expects to gross a surprising half million.

Even when taken with the necessary dose salt, these figures are impressive. But not to many local artists who, peradoxically, are benefitting little from the boom. That is because some dealers are doing better than others, and there are certain hotspots in the market here, including the aforementioned paintings by 19th-century Americans, so long undervalued; and early 20th-century American prints, long a favorite in this great print-collecting city.

"Print collecting here is a fewer," says Chris Middendorf. "We can't get enought to satisfy the demand." Betty Duffy of the Bethesda Art Gallery and Jem Hom of the Hom Gallery, who have been trading in this market for years, cocur. "In 1973 we couldn't sell Martin Lewis prints for $100. Now the best ones sell for up to $1,000, when we can get them," says Hom. Prints by Bellows, Benton and John Sloan have also skyrocketed, most of them doubling, at least, within the past two years.

Hom also deals in one other hot, if rare, aspect of the market here -- turn-of-the-century and early 20th century Europeans, like Toulouse-Lautrec, Matisse and Picasso. One Matisee lithograph sold by Hom just a year ago for $11,500 was recently auctioned off for $16,500, plus the 10-percent buyer's fee.

Last October Hom put out a catalogue of prints for sale, and the results are revealing: "People here are buying high-priced work than before, and only work of the highest quality. Of all the prints in our catalogue, all those priced over $5,000 -- in other words, the best ones -- are gone."

"Five years ago you could sell people anything as long as the price was right," says Jane Haslem. "now they know more, and they've buying finer, higher-priced work." Abstraction seems to be out and realism in, she says.

Another paradox in the local art market is that the same inflation which is rpomoting sales is also raising costs for gallery owners. Chris Middendorf says that "other than Harry Lunn, I don't think any dealer in Washington is getting rich." Haslem concurs: "The expense of running a gallery is high -- often as high as $20,000 to $30,000 per month. With the cost of printing, mailing and everything else rising, cutbacks have to be made." In fact, gallery mailings do seem to have abated somewhat within the past few months.

"For a dealer to make a lot of money, he must have money to buy work by artists on the way up and hold it," adds Middendorf, who has just bought two paintings by Gregory Gillepie with that in mind.

Lunn did precisely that in 1974-75, when he loaded up on all the 19th-century photographic material he could find, and in addition bought 1,000 photographs from Ansel Adams at a unit cost of $300 apiece. Many are now sold but Lunn retains several hundred which currently bring an average of $2,200, apiece, "Moonrise-Hernandez," the Adams photograph that brought $16,000 at a recent auction, belonged to Lunn. He has several more.

"We sit around talking about which will be the first $50,000 photograph," says Lunn. "I'm trying to spot them and put them aside for myself with every spare dine that doesn't go into the house in Normandy.

Ask a young Washington artist what the boom is doing for him, and the answer is apt to be "what boom?" "a boom caused by inflation and investors in the market has to do with bluechip art. Younger artists are not affected by it," says Jack Rasmussen, who deals chiefly in contemporary work. "Our best sellers are the more established artists, Reginald Pollack and Robert Gates."

"It's true, says Haslem. "I'm convinced that the real bucks are with dead Europeans and dead Americans like Church. I don't think the boom effects young artists."

"But it filters down," insists Middendorf, "and almost anybody with any reputation, making works of quality, sells."

When speaking of contemporaries, it gets harder it distinguish rhetoric from fact, but Middendorf points justifiably to an artist like Sam Gilliam, now at the peak of his career, who recently sold out two shows here and in New York. "The huge corporations and banks in the market only invest in $50,000 works and over. They will eventually have to move into contemporary art because there will be nothing else to buy. And if people stick with top examples by artists of established reputation, they can't lose. They can always give them to a museum and take a tax deduction."

Everything isn't selling, and among the works gathering dust are some surprises, among them lesser examples by Jasper Johns, Robert Rauschenberg, Robert Motherwell, Andy Warhol, Ken Noland, Robert Indiana and others. Their prices are up only for the very best examples. Otherwise, they are down from the overinflated highs of the '60s.

Also not selling well are the mass-producted "limited editions" by big-name artists like Calder, Chagall and Miro, which gorged the marked in the early '70s. "They simple made too many of them, and too much Op, Pop and Vasarely," says Barbara Fendrick, that people are now more interested in unique works -- drawings, watercolors and paintings -- than in the limited-edition-crazed decade just past.

Contemporary photography is moving along, but very slowly. One gallery banking on that boom recently closed. Another is threatened constantly with rising rents.

Several dealers warns that "investing" in art can be risky. Haslem and Franz Bader don't believe in it. "If they came to me, I'd sent them to a stock broker," says Bader. "More and more the art world has become a marketplace," says Middendorf, "and you have to know it to play around in it. If you buy wisely, and buy things that you like, they will probably outpace inflation, but anyone who promises more is crazy."

And though most dealers in town -- in fact, good dealers everywhere -- condemn art investing as disruptive to the market, and sterile compared to real collecting, most admit they'd be happy to give it a try, should another client with $100,000 turn up on their doorstep.