Anne Kast started her investment company in 1991 - following former US President George Bush's invasion into Iraq - when Bermuda was in a recession.

Ten years on Kast Investment Management Ltd. grows from strength to strength as the US looks likely to retaliate for last week's terrorism attacks in New York and Bermuda's economy - which is currently strong - seems poised to plummet into a recession.

Celebrating ten eventful years in business, Anne Kast spoke with The Royal Gazette this week about the past, present, and future of her company and the world economy.

Ms Kast started her company after working for the Bank of Bermuda's investment department for 15 years and the first obstacle was for her and lawyer Linda Milligan-Whyte to tackle the antiquated exchange controls that meant all Bermudians' assets had to be held by a local bank.

They pestered Malcolm Williams at the Bermuda Monetary Authority on a weekly basis until the controls were abolished and, after humble beginnings, Kast now manages $230 million for 430 account holders.

Ms Kast prefers her small operation and has no desire to grow to a large investment company.

A staff of five keeps their finger on the world's economic pulse and a director, outside accountant and after-school student allow her to out-source work rather than increasing the number of staff.

Following the abolition of exchange controls in 1992, competitors such as Lines Overseas Management, First Bermuda, Emerald and BIAS started to spring up.

In 1993, the trend was for more regulation in the industry and Kast had grown to serve 100 clients with $30 million under management.

In 1994 the big event was the reduction of overseas investment tax from ten percent to 0.25 percent which Ms Kast said: "opened the floodgates to Bermuda investors".

This event combined with the explosion of Mutual Funds in the US led business to pick up even more, and the company more than doubled the amount of money under management to $73 million.

Also in 1994, Kast started a very successful relationship, which continues today, after signing on as an advisor to Argus' pension fund.

In 1995, disaster stuck. This was the year that Barings bank collapsed following the Nick Leeson affair.

About $40 million was invested with Barings and Ms Kast said: "It was a scary time for a week, but we came out all right and no one lost any money."

What doesn't kill you only makes you stronger, and Ms Kast saw the near disaster as a challenge. She said: "We came out of it and it forced us to diversify which was a critical and good decision."

And by 1996, the company was back on their feet and in full swing.

Business and the markets continued to pick up in 1997, and in 1998 Kast started the only fund which they co-manage with Mutual Risk Management, the Bermuda Insurance Index Fund.

Ms Kast said 1999 was a volatile year for the insurance industry, followed by a great year in 2000, which is now followed by a crisis in 2001.

The markets have been in turmoil since the start of the new millennium and Ms Kast said she has seen two bubbles burst since then, the first was when technology started to dive last year, and more recently, the World Trade Center attack.

"The worst outcome is a replay of 1973 to 1974 which was the worst bear market in modern history," says Ms Kast.

1999 and 2000 were big transition years both personally and professionally for Ms Kast. Additional staff was hired and the amount of money under management was vastly increased to over $200 million.

Ms Kast also took a six- month sabbatical last year to allow herself to step back and ponder her future.

Rather than heeding the advice of friends to travel to exotic lands and pamper herself in luxury, she headed to Oxford in the UK for a month where she did a business management course and spent the next several months designing a new business plan to take her company to the next level.

Strange as it may have seemed to her friends, this was Ms Kast's idea of real fun and excitement, and her new plan aims to improve performance on all portfolios, increase profits, increase productivity and maintain or improve the client retention rate.

When asked if there had been an increase in everyday Bermudians investing in equities following the onslaught of online traders and advertising over the last couple of years, Ms Kast said that this, coupled with the pension legislation which requires all employees to have a defined contribution plan meant that everyone was now an investor.

She also said the consumer was now benefiting from upgraded products and lowered fees.

When asked when the current stock slide would end, Ms Kast was cautious and said she was not so sure, but when the markets hit the bottom, they usually level out for a few months and move sideways before some good earnings announcements would come out and drive the market higher.

However, when the markets start to climb higher, Ms Kast warned there would be real volatility and "big move days" which is why it pays to stay in the market.

She cites the example of the crash in 1987. Those who sold their positions lost money, those who maintained their position were fine, and those who made money were making really gutsy calls and buying stocks.

"There will be lots of volatility when the bull market evolves, especially in the areas that have been beaten down the most," said Ms Kast.

And she added: "There is now a much better balance between growth and value than we have seen in the past."

Prior to the technology bubble bursting, growth had been centered on TMTs (Technology, Media and Telecommunications), but Ms Kast believes growth in the future market will have a much broader base.

As far as effects from the World Trade Center bombing, Ms Kast said: "In the short term, the contraction or standing still of the financial centre of the US will take some of the growth out of GDP.

"The airline industry is under so much pressure, which will also take away from GDP, all of which will tip the US into recession." But she said a recession had been on the horizon for some time.

An expected cut back on travel and tourism combined with a weak dollar will also hurt global growth, but Ms Kast said the long-term direction of the economy depends on the US political and military strategy.

How do we recover from the recession? Ms Kast says the key is confidence: "A big driver will be consumer confidence and business confidence. The more quickly this recovers, the more quickly we will see the turnaround in the US."

She also said that insurance companies were seeing a firming in rates - especially since the World Trade Center attack - and were in a better position now than they were before hurricane Andrew, one of the costliest disasters of US history.

However, she warned: "What is unknown is how bad those claims are going to be."

Ms Kast is proud and thankful for her conservative investment strategy which has served her well for the past decade and looks forward to another ten years in business.