The market would rally, they said. It always did ...

Like millions of other mortgage payers, Dean Mitchell felt he had little to worry about as the fireworks to celebrate the millennium burst into the sky on New Year's Eve in 1999.

After the bull market of the 1990s, Mr Mitchell was confident his monthly payments into an endowment policy would comfortably pay off his home loan. That, after all, was what the salesman had told him.

What Mr Mitchell did not know was that the British stock market had peaked the previous day at just shy of 7,000 points. Last night, as it closed at barely 50% of that level, the father of two from Wakefield was one of many counting the cost of the UK's longest bear market since the second world war.

The first whiff of trouble for Mr Mitchell came in the summer of 2000, following the market's first sudden lurch downwards. It took several months of that year for the market to realise that the party was over; the launch on the stock market of Lastminute.com in March was the first cold blast of reality for the overhyped IT sector. In the same month, the technology-laden Nasdaq index peaked at above 5,000 points and almost immediately started to fall.

Even so, investors had been inculcated with the first law of a bull market: to buy on the dips, and that was what they duly did. Even though the US Federal Reserve was raising interest rates in a belated attempt to deal with the bubble it had helped to create, the overriding mood was one of smug complacency. It was just a blip and the market would rally. Why? Because it always did. That's why.

In Wakefield, however, Mr Mitchell was having a few concerns. Since buying a two-bedroom bungalow in 1988, he had been paying £32.80 into a Scottish Equitable unit-linked endowment policy, which was due to pay off a £21,000 loan in 2013. Despite paying out £4,690 during the biggest bull market in history, the policy was worth only £6,355.

Like many other home buyers, Mr Mitchell had been told that an endowment mortgage was the best way to pay off the 25-year loan. At least that is what his local high street financial adviser told him.

Not only that, but he was advised to buy a policy that was unit-linked rather than the more conservative with-profits variety which withholds some of the profits from the good years to give some protection when the bad times hit - smoothing out the peaks and troughs of the stock market.

"I didn't know what kind of endowment it was, he didn't explain anything. Even now I'm not entirely sure how it all works," Mr Mitchell said.

Worse was to come. In the second half of 2000, a pattern emerged for the FTSE. There were rallies, but like an ebb tide each ended at a slightly lower level than the last. The Fed kept pushing up interest rates in the United States, and by the time 2001 dawned, the FTSE 100 index stood at 6,200 points. Investors put it down to experience; one bad harvest after all the years of plenty.

The new year began with a burst of optimism. Changing tack, the Fed cut interest rates by half a percentage point in an attempt to prevent the US economy from sliding into a full-scale recession. The belief in the Fed's septuagenarian chairman, Alan Greenspan, was still absolute. The central banker who could do no wrong had waved his magic wand. The markets duly rallied.

For all of a month. Then, as it became evident that the US was heading for a hard landing, the sell-off in equities began in earnest. By April, the FTSE was down to 5,400, then marked time during the summer. If the market appeared to lack direction, that all changed when City dealers still at their desks at lunchtime on September 11 watched the TV pictures of the jets crashing into the World Trade Centre towers. That took a further 1,000 points off the FTSE, and despite a vigorous end of year rally it proved impossible to recoup all the losses. The FTSE ended 2001 at just over 5,200.

The market flatlined until the summer of 2002, when Mr Mitchell was updated on the progress of his policy. By now he had paid £5,437 to Scottish Equitable, part of the Dutch insurance company Aegon, over the course of 14 years, but the value of his fund was only £4,787. "I believe I was missold the policy as it was not explained how it worked or what it consisted of," he said yesterday. "What they did show me was examples of how it would pay my mortgage off early."

This update said Mr Mitchell's policy was off track to the point where a historically high 8% growth rate would only deliver a fund worth £13,308. A more conservative final figure of £9,386 was given if the markets grew by 4%. It meant that even the best outlook would result in a near £8,000 shortfall.

Sadly for Mr Mitchell, the outlook for his investment was about to take another dramatic turn for the worse. The scandal at WorldCom triggered a fresh burst of selling, which pushed the FTSE to 3,800 by October. By this stage, Mr Mitchell had become so anxious about the prospects for the policy that he asked Scottish Equitable for a surrender value. He had contributed £5,640 by this stage but his fund value had fallen to £4,610.

Market falls are not the only contributors to Mr Mitchell's woes. Unit-linked endowments, like their with-profits cousins, carried high upfront charges. This would have had the effect of taking money out of his fund just as the stock market was rising to its peak. As a result he largely missed the bull run and his fund was just starting to reach a significant figure as the market reached its peak.

He is aggrieved that all the rules seem to be set against him. "The financial ombudsman will not help because the broker who sold me the policy no longer exists. The financial compensation service will not help because the policy was taken out before August 1988. The policy is worth less than the contributions I have made let alone the target amount of £21,000.

He was made redundant from his job as a car accident assessor at Norwich Union just before Christmas and is now trying to sell the policy and use the cash to reduce his mortgage payments.

Any hope that 2003 would mark a turn of the tide have quickly been dispelled by the stock market's performance. Shares have risen in only two of the trading days since January 1 and have fallen for a record 11-day stint.

Yesterday Scottish Equitable said the surrender value of his policy (with payments since 1988 of £5,770) had fallen again to £4,450. The FTSE 100 index closed last night at 3,480 points, just 50% of its value on December 30 1999.

"I don't want to ring them anymore," Mr Mitchell said last night.