No public document I have ever read is as chilling as the Brady Commission's report explaining why the stock market crashed 508 points on Black Monday, Oct. 19, 1987 -- and what happened as the entire financial system ''approached breakdown'' on the following day.

The nation was pushed to the brink of financial disaster, and nearly went over. If the Federal Reserve had not come to the rescue on Tuesday, the report says, there is no telling what might have happened to brokerage houses, banks and other financial institutions.

The lesson to be learned by the average American is that ''owning a piece of America'' by buying stocks is no longer a noble aspiration. Until some changes are made (and no one seems to be rushing to make them), the small investor ought to be out of the stock market.

A statistical annex to the Brady report reveals how high the odds are stacked against the small investor. In 1965 the number of big-block transactions on the New York Stock Exchange -- 10,000 shares or more -- averaged only nine a day. For the entire year 1965, there were 2,171 big blocks traded. In 1986, the daily average was 2,631 -- 20 percent more than for the whole year of 1965 -- accounting for 49.9 percent of total volume.

And do you suppose that the wheelers and dealers in Wall Street are interested in basic reforms? The best answer is that some of the key players thumbed their noses at the Brady task force, ordered by the president of the United States to find out what happened.

Amazingly, only five of 22 exchanges, two of 12 major discount brokers, 18 of 50 mutual-fund managers and 43 of 100 Fortune-listed chief executive officers deigned to respond to a questionnaire for information.

Nevertheless, the commission, headed by former New Jersey senator Nicholas F. Brady, was able to document the fact that the fate of the whole country, not just the stock market, was controlled by ''a handful of large investors'' (perhaps no more than 10 or 12) who dumped $20 billion to $30 billion worth of stock within a few trading days, regardless of price.

In the casino into which the stock exchanges have now been transformed by greed and technology, no one can count on stock prices representing a company's real value. Instead, a stock price is likely to represent the computer-gamesmanship of huge investors.

''To see Eastman Kodak at $90 one day, and $60 the next, or to see Morgan skip an entire decile {from the $40s to the $20s} is ridiculous,'' says a Wall Street expert.

Unhappily, after having had the courage to pull no punches in diagnosing the markets' illness, the Brady commission eased up in recommending a cure.

Correctly, the commission said that what had been seen as a group of markets -- for stocks, stock options and stock index futures -- was really one market that should be regulated by a single agency. And because it is really one market, the commission called for unification of clearing systems, consistent margin requirements, and ''circuit-breaker mechanisms'' to prevent a free fall in prices when the market is overwhelmed with selling pressure and there are no buyers.

But the commission failed to be specific. As Rep. John Dingell (D-Mich.), chairman of the House Energy and Commerce Committee (soon to hold hearings on the whole issue), said: ''{The Brady report} doesn't suggest anything that ought to scare anybody. What it does is suggest some rather mild palliatives.''

If it's really one market, asks Lazard Freres' Felix Rohatyn, and a 50 percent down payment (margin) is required to buy stocks, why shouldn't a 50 percent margin be applied to stock index futures, instead of the ridiculously small 10 percent that encourages wild speculation?

And it seems to me that if ''circuit breakers'' are needed to frustrate the ability of those 10 to 12 biggies to sell ''without regard to price,'' why not boldly impose some kind of daily limit of fluctuation on the NYSE, as now applies to commodities transactions in Chicago, or to stocks on the Tokyo exchange?

Brady acknowledged the commission discussed limits, but said that there was not enough time to work out details. There are other gaps in the Brady report. For example, it didn't come to grips with the critical question of whether the industry -- and the specialists who are supposed to maintain an orderly market -- are adequately capitalized.

Can Black Monday happen again? Asked about that last Sunday on ''Meet the Press,'' New York Stock Exchange Chairman John J. Phelan Jr. said: ''Well, I would hope not. Of course there is no guarantee. . . . I'm not confident it won't happen again. . . . If, in fact, 12 to 15 institutions {drove the market down}, what happens if 25 or 30 decide to do that? So, no, I don't think that we can rest assured that we have everything in place that will protect the public.''

Caveat emptor!