Each year at this time this space is devoted to the distinctive sayings, slip-ups and observations of President Reagan, which reveal him at his best and his most befuddled. Here now are the "Reaganisms" of the year:

The Iran-contra affair cast a long shadow over the presidency and depressed Reagan. Meeting with the New York Giants football team on Feb. 13, the president said supporters of the team were "our fans," then added, "Your fans, I should say. I don't have many fans anymore." But by April 1, Reagan had bounced back enough to joke about his changing versions of events on the Iran-contra affair. "For me, politics is forgive, and as you may have heard sometimes, forget," he told a Philadelphia audience.

Reagan tried to avoid questions from reporters about the Iran-contra affair. But on March 26 he told a sixth-grade class in Columbia, Mo., "It sort of settled down to just trading arms for hostages, and that's a little like paying ransom to a kidnaper. If you do it, then the kidnaper's just encouraged to go kidnap someone else." It was Reagan's version of the explanation crafted by speechwriter Landon Parvin and delivered by Reagan in a nationally televised speech on March 4: "A few months ago I told the American people I did not trade arms for hostages. My heart and my best intentions still tell me that is true, but the facts and the evidence tell me it is not."

On other issues Reagan was less sensitive. He poked fun at his work habits in a March 28 speech to the Gridiron Club, saying, "It's true hard work never killed anybody, but I figure why take the chance?"

The administration took plenty of chances with the deficit, which Reagan said several years ago was "big enough to take care of itself." But the president remained bullish on the economy. Speaking to Harley-Davidson employes on May 6, he said, "We're on our way to unprecedented prosperity, and we'll get there on a Harley."

Even the Oct. 19 stock market plunge did not shake Reagan's optimism. "The underlying economy remains sound," he said after the crash. "We are in the longest peacetime expansion in history." Three days later, he added, "I think this was a long-overdue correction and what factors led to its kind of getting in the panic stage, I don't know."

While the economic outlook became more uncertain, U.S.-Soviet relations improved. "Wouldn't it be a wonderful sight for the world to see, if someday General Secretary {Mikhail} Gorbachev and I could meet in Berlin and take down the first bricks of that wall, and we could continue taking down walls until the distrust between our peoples and the scars of the past are forgotten?" he said in a speech to Europe on Nov. 4.

Asked by a reporter while posing with conservative leaders on March 25 whether he would be "selling them down the river" on arms control, Reagan replied, "I'm not selling anybody down the river. I grew up on a river." On Dec. 1, the president told Florida high school students that he wasn't concerned about Gorbachev's positive image in this country. "I don't resent his popularity or anything else," Reagan said. "Good Lord, I costarred with Errol Flynn once," he said in a reference to one of Hollywood's most accomplished scene-stealers.

Reagan, along with the rest of us, had his share of verbal slip-ups in 1987. My favorite was a remark on Feb. 9, when he defended his welfare reform program in these words, "Even though there may be some misguided critics of what we're trying to do, I think we're on the wrong path." But Reagan was trying for a laugh and got one when he told educators on Oct. 5 that he favored school prayer and added, "Actually, as long as there are final exams, there will be prayer in schools."

The president also spoke out on sex education, telling reporters on April 28, "How do you start talking about sex to children and to young people without the moral side of that question being brought up? Just treat it like a physical thing, such as eating a ham sandwich?"

And in a quintessential Reaganism on June 24, the president said to high-school student ambassadors, "And yes, it's all right to have an affinity for what was the mother country for all of us, because if a man takes a wife unto himself, he doesn't stop loving his mother because of that. But at the same time, we're all Americans."

Reaganism of the Year: Asked on Sept. 30 if the late CIA Director William J. Casey had engaged in covert activities without his knowledge, the president replied, "Not that I know of."