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Wall Street Waves Are a Riptide to Some, a Ripple to Others

By: Andrew Jacobs and Susan Sachs
New York Times, June 28, 2002

They winced in affluent Westchester, they shrugged on 125th Street in Harlem, and in suburban New Jersey they headed for the mall, though with a slight buzz of unease and a keen eye for bargains.

As the stock market whipsawed through a week of numbing losses, followed by a roaring one-day gain after two months of prolonged bleeding, the pain emanating from Wall Street has hit people in the New York City region in varying but distinct ways.

In Katonah, N.Y., a hamlet in northern Westchester County, investors bemoaned their losses and continued shifting their money into real estate. The well-to-do, however, kept on spending. On the streets of Harlem, there was mostly cynicism and ambivalence toward the turbulence of a distant world. And in Wayne, N.J., a citadel of middle-class comfort, many people said they had been bruised by the market but were more fearful that the continuing slump would choke the prosperity of recent years.

Many of the more than three dozen people who were interviewed in three very different communities last week said they were largely removed from the Dow's wild ride and expected few immediate changes in their spending or style of living. But from the streets of upper Manhattan to the boutiques of Katonah, nearly everyone expressed a growing unease, even outright panic, about what lay ahead. Even those without stock portfolios said they worried about what the market's ugly gyrations could mean for their lives.

The pain is not just on paper for those approaching retirement, no matter what their financial status. Many people in their 50's and 60's said they no longer open their 401 (k) statements; others have decided to keep working for a year or two longer than they had expected. "I know things could change, but if they keep going this way, we'll be eating cat food in our golden years," said Jane Perkinson, 61, a production manager at Business Week, as she strolled along Katonah Avenue, a street lined with designer gift shops and real estate companies with pictures in their windows of the million-dollar homes they are selling.

Across the region, there was little optimism that the markets or the economy would improve anytime soon. For many, like Susan Broer, 46, the mad plunges of July became too much to bear. Last week, said Ms. Broer, an administrator at Manhattanville College, she moved her entire savings out of stocks and into bonds. "It might be too little too late," said Ms. Broer, who lives in Somers, near Katonah, "but I just didn't have the guts to sit there and watch anymore."

While outsiders might imagine the village unruffled by the recent tumult on Wall Street, Katonah is not a solid bloc of extravagant wealth. Plenty of teachers, therapists and artists moved here before the boom of the 1980's, when quaint Katonah, an hour from Midtown, began drawing a more upscale crowd. There are old-timers, too, like Margaret Van Geldern, 43, a stay-at-home mother whose family occupies the Victorian house built by her great-grandfather. By most measures, the family has experienced little financial strain: they never played the stock market, their mortgage is nearly paid off, and Mr. Van Geldern, a construction manager, is still busy building $2 million homes throughout the county. But Ms. Van Geldern, whose teenage daughter is starting to look at colleges, knows how fickle the housing market is, and next year, she plans to go back to work. "My daughter wants to go to a good school," she said. "If people stop buying luxury homes, we're going to be in trouble."

That trouble has already arrived for many. Peter Vadnai, a freelance photographer who moved to Katonah three decades ago, discovered the lure of online stock trading in 1997. Most of his savings vanished with the pop of the dot-com bubble, and these days, Mr. Vadnai, 58, rarely turns on CNBC. "I guess as long as you don't bail out, you have a chance," he said hopefully, sitting at the Katonah Restaurant. "I just don't know if they'll come back in my lifetime."

It's not just the ailing stock market that plagues him. His livelihood, the commercial photography business, is sputtering, and he openly frets about the effect of terrorism on an already fragile economy. "All it takes is one person to blow himself up at a mall in Dubuque," he said, "and everyone will stop shopping at malls."

Still, neither terrorism nor the dropping Dow seems likely to stop the rich from spending. The Saab dealership on Bedford Road continues to thrive, and Bob Menin, a veteran real estate agent, said home sales remained brisk, though prices have begun leveling off after tripling in the 1990's. He said many clients were planning to invest in multifamily homes or condominiums.

A few doors down at the Katonah General Store, June Goldfinger has had no trouble selling the $3,800 cashmere bathrobes and $5,000 silk dresses she designs. Like many of her customers and friends, she puts her extra cash into property, not stocks. Besides extensive holdings in Katonah, she said, she and her husband own real estate in Santa Fe, N.M., Manhattan and the Caribbean island of Anguilla. "I cater to the rich and the filthy rich," she said, showing off a $600 leather handbag. "They feel badly about what's happening to other people, but they're not feeling the pinch themselves."

The same might be said of Harlem, where declining blue chips are of little concern to many residents. People there are worried about getting a job, getting by and getting a good education for their children. A question about the market, in fact, usually brings a wry laugh. "On this side of 110th Street, we don't think of these things affecting us," said Kimathi Arnold, 32, as he walked home from work with a friend. "Our net worth is based on what we make. We don't have assets in the stock market, and the cynicism we have is learned through experience."

Mr. Arnold has an online trading account, but he said he had never used it. "I don't see the market as being a friendly place," he said, "especially if the money you lose means you don't put food on the table or have a place to live."

His friend, Jamal Goodridge, 28, said he kept his savings in bank certificates of deposit.

Both men work at Global Business Institutes, a private technical school where they counsel students. Many people they see have been struggling since Sept. 11, either because they lost jobs or family members did.

"After 9/11, no one has money to lose." Mr. Goodridge said.

Both men worry about the trickle-down effect from the difficulties on Wall Street. "The stock market is an indicator of how different sectors of the economy are doing, and if there's no confidence in the economy and corporations are going bankrupt at an alarming rate, then it makes a difference," Mr. Arnold said. "Honest hardworking Americans were told those 401 (k)s were going to be a revolution in how your money can grow. To us regular people, the stock market is something we are affected by but have no control over."

At Benjamin Optical, on 125th Street, business has been steady and good for the last few months. A stock market shiver, said a co-owner, Joel Minsky, does not show up right away and maybe not at all. "It hasn't affected the way anybody here behaves," said Dr. Minsky, 53, an optometrist who is carrying on a business his father founded 50 years ago. "It hasn't changed my thinking or planning for the future, either. I'm expecting it to turn around." He said he stayed away from stocks, and when it comes time to retire, he and his wife will draw on an I.R.A. and his wife's pension. "I'm 53 and I figure I'll work another 20 years," he said. "My father is still working and he's 84."

Across the Hudson River, in a middle-class swath of northeast New Jersey where many people try to live within their means, the last decade seemed to lift everyone's boat more or less equally. Jobs were plentiful and even blue-collar workers learned to embrace the market.

A soaring Nasdaq helped Allan Thiel buy a Harley-Davidson, but last Thursday, he and his wife, Rosemary, were prowling the Willowbrook Mall in Wayne trying to avoid pricier enticements like Abercrombie & Fitch and Banana Republic.

Mr. Thiel said he had been an avid stock trader but now curses high-tech names like Lucent and Cisco, which make up the bulk of his portfolio. "I've been so depressed about the market," said Mr. Thiel, 54, who installs heating systems. "I don't watch TV anymore. I'm sick of those red arrows pointing down."

Ms. Thiel lost her job recently with Omnipoint, but Mr. Thiel's business remains strong. Still, for now, the couple said they would stick to shopping at Sears and avoid using their credit cards. "We'll probably be fine if we're careful," Ms. Thiel said. "But what about our children's future? That's what I worry about."

Joan Danner, too, once enjoyed the fruits of a thriving stock market, which helped pay for her daughter's wedding and a big-screen TV. With the market gone bad, Ms. Danner, a receptionist, has given up the extras. She is increasingly anxious that the shrinking pot in her I.R.A. account will stall her retirement. "At this rate, we'll have nothing in a few months," said Ms. Danner, 54, as she scanned the aisles at Sears for summer clearance sales.

Her husband recently lost his job as an insurance underwriter but found another one, although at a lower salary. Her own job, she added, is far from ironclad. Beyond an early retirement, other dreams, like a renovated bathroom in their home in Fairfield, will have to be deferred. "It's been harvest gold since the 70's," she said with a laugh. "But that will have to wait. For now, we're going to live day to day."

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