How one man learnt to put aside his dream

It is three in the afternoon and Norman MacDonald is waiting for his train home at Grand Central Station. An administrator at a Manhattan law firm, he gets out of work earlier than most. But he doesn't feel particularly lucky. At 68 years old, he should have escaped the daily grind by now.

"It isn't a good time to retire," remarks Mr MacDonald, who lives in Bronxville, a suburb about 25 minutes north. He hardly needs to explain. He is one of millions of older Americans who put their confidence – and their savings – in the stock market during the boom-boom 1990s, confident that their investments would yield ample money for retirement. But the swoon in share prices, including the dive seen on Wall Street in the last few days, has put paid to all that.

Mr MacDonald had planned to hang up the briefcase two years ago in early 2000, just when the markets were starting to change direction. Now his "401K" – a classic portfolio of investments set up to provide income after retirement – has lost two-thirds of its value.

"I would like to retire, but I can't," he says flatly. "I suppose I could afford to, but it would not be nearly as comfortable as we were expecting." This means putting on hold a life he had been looking forward to: reading and relaxing in his Catskills cottage, writing books on local history and enjoying the company of his wife, Barbara, who is an amateur watercolour painter.

With no word on when the slump might end, small investors across the country, older and younger, are at a loss what to do. The message from the experts was always take the long-term view and ride the valleys calmly. But with personal savings going through the shredder faster than a document at Enron, it is hard to stay sanguine.

"I just rang the broker this week to find out if we had anything left," joked Bill Masone, 73, who was catching a train back to Waterbury, Connecticut, after a day in the city with his wife, Barbara. Their broker said things could be worse – they had dropped $4,000 – and that they should sit tight. "He said that if things get bad, he would get us out of there and put the money in the bank."

If they get bad? In trading on Friday, the Dow Jones industrial index slipped below the levels reached just after the terrorist attacks of last September. Since June this year, after a brief period of rebound, it has lost 20 per cent of its value. By the close on Friday, the Dow had experienced its ninth straight week of often precipitate decline.

Much will need to happen for small investors to regain their confidence in the markets. There is widespread disgust with the accounting scandals at companies such as WorldCom, Global Crossing and, indeed, Enron. The outlook for company earnings isn't encouraging and why should anyone believe what companies say about themselves anyway? And every time President Bush opens his mouth on the subject, stocks just go down even further.

"The question is whether the love affair that Americans had with stocks is dead, or whether they're just adjusting their expectations," said Jeremy Siegel, a finance professor at the University of Pennsylvania. "There's a lot of confusion."

Look hard, however, and you will find some stoics. Among them is James Lebenthal, the chairman of the venerable Wall Street brokerage Lebenthal & Co. On his way to work last Tuesday, he paused for a second in front of the grand façade of the New York Stock Exchange to muse about what the day might bring. (The market cheered up briefly after a speech by Federal Reserve chairman Alan Greenspan, but closed 2 per cent down.)

Mr Lebenthal, 73, says investors should indeed stay in the saddle. He has seen all this before and the downturns have always given way to a recovery in prices. "It's just another war," he says with a reassuring smile, "and we will get through it. You'll see. In two years we will be reading about the people who held on and even bought during this time and how well they did."

Mr MacDonald is a veteran of stock slumps too. He recalls being in Grand Central on 19 October 1987 – "Black Monday" – when the Dow Jones suddenly imploded and lost 22 per cent of its value in a few hours. The station managers took all the train times off the departures boards and ran the stock numbers instead. Hundreds of New Yorkers crammed into the station to watch in stunned silence. "You could have heard a pin drop," Mr MacDonald says.

"Having lived through that, I know things will come up again," he says. But just when that will happen – and how long Mr MacDonald will have to delay writing his history books – is anyone's guess.