In setting up the fund, Mr. Li said he's experiencing firsthand the capitalism and democracy he was fighting for in his homeland. "Free man, free market," is a phrase he invokes often.

Mr. Li is 32 years old. He wears Armani suits that he buys at a factory outlet; he lives in one of those bland modern towers on the East Side. While other Wall Street hotshots his age may have endured the trauma of not getting into the business schools or investment banks of their choice, Mr. Li has survived poverty, separation from his family (his parents were forced into labor camps) and a devastating earthquake. When he escaped to America after hundreds of his fellow protestors were killed in Beijing, he was one of the most wanted dissidents in China.

His clients hope they'll see big profits, but they also seem to be investing in the future of Mr. Li himself. Jerome Kohlberg Jr., a founder of the leverage buyout monolith Kohlberg, Kravis, Roberts & Company, said his decision to invest with Mr. Li "wasn't my usual cautionary thing, but my admiration prevailed … I don't know about others, but I would like to see him succeed and eventually help bring China into the 21st century and be a democracy, and I think he, by then, will be uniquely qualified."

Others who have invested in Mr. Li's new hedge fund include: Stanley Shuman, executive vice president at Rupert Murdoch's deal maker, Allen & Company; Jack Nash, co-founder of Odyssey Partners L.P.; Robert Shaye, chief executive of New Line Cinema Corporation; Robert Bernstein, former chief executive of Random House Inc. and a founding chairman of Human Rights Watch; and his son, Tom Bernstein, president of Chelsea Piers Management Inc. And proving that it's a chic investment, there is also Sting, the sensitive rock star and rain forest activist, who has kicked in with at least a million of his own.

The glittering client roster seems not to intimidate Mr. Li. "You prove to them you're good, people trust you," he said over iced tea at Sofia's Fabulous Grill on the Upper East Side. "They don't ask how many years I've managed a fund. The question is, Can you make me money? Show me the money! This is one area where, if you really believe you're smart and you're unique and you're different, this can be challenging-this is it. Because if you're right, you make a lot. If you're wrong, you lose a bundle."

With the Dow Jones average rising above 9,000, the latest financial district jokes and clichés liken good investing to good sex. Mr. Li considered the comparison. "This market is not a man's sex drive," he said. "If you had to compare it, this market is a woman's sex drive. It is really experiencing a multiple climax, but even the woman has downtime. The traditional Chinese sentiment is that the woman has the capacity to climax 15 times. The market is turning into the traditional description of the woman's sex drive. My girlfriend is around that number."

So how long can it last? "Nothing goes forever," Mr. Li said. "As I say, even if you compare it with the woman's sexual capability, it has an end. This market is capable of multiple climaxes, but there is a recession."

Born in 1966, the year Mao Zedong initiated the Cultural Revolution, Mr. Li was separated from his parents when he was less than a year old. He passed through half a dozen adoptive families during the first decade of his life. Mao's regime condemned his mother, a botanist and the daughter of a wealthy landowner, and his father, an engineer, as bourgeois intellectuals-and therefore enemies of the state. They were sent to separate labor re-engineering camps. Facing a life of hard labor, Mr. Li's mother was forced into having to choose one of her children to keep with her. She kept Mr. Li's older brother.

"Mao Zedong's way was to make people crazy," Mr. Li said. "It was like a religious cult. You cut all the culture, you kill or jail all the people with learned minds who think independently. Anything that remotely reminded you of humanity was destroyed."

On the eve of Mao Zedong's death in 1976, Mr. Li survived an earthquake in Tangshan, China, that killed the adoptive family whom he had grown to love. In the earthquake's rubble, the 10-year-old boy ran through the city; the dead bodies overwhelmed him and he blacked out. When he came to, he saw a woman giving birth and heard her cries.

Days after the earthquake, radio propaganda claimed that Mao Zedong's administration was helping his ravaged town-something that ran counter to what he saw. "The soldiers and party officials are grabbing all the things available for relief for themselves or their family," he recalled. "Older people just don't get anything. So I developed a tremendous aversion, you know, hatred toward those people."

He was living with his blood family again and came under the guidance of his grandmother, a founder of elementary schools in the 1930's. She told him the only way he could beat the government and help people was, first of all, to educate himself. Mr. Li immersed himself in books, which gave him the idea that "other people have lived a different life, a better life, so should I-so should everybody."

His convictions led him to Nanjing University and Tiananmen Square. He was deputy commander of the student movement, second to Chai Ling, who is now at Harvard Business School. He saw many of his fellow student protesters shattered by the massacres. "They couldn't get over this sense of loss and failure and guilt," he said. "It was terrible and I had some of it."

He arrived in Manhattan in December 1989. By 1996, he had earned a B.A., M.B.A. and J.D. from Columbia University, and written a memoir of his experiences in China ( Moving the Mountain , Macmillan London). With royalties from the book, as well as fees earned from giving lectures, he made investments and rode the bull market to the $125,000 he needed to pay his living costs and the tuition not covered by his scholarship.

"Early on," he said, "I know I gotta make money work. The whole thing is, really, money makes money. That's the whole thing about capitalism. Without the capital, there is no -ism."

His early success in investing, linked with his abysmal experience with communism, made him a true believer in the free market. "But the precondition of capitalism is a free man," he said. "With free market and free man, if you remove one of them, it is not called capitalism in my dictionary. Without a free man, there is no free market. That's called exploitation. In China, there's not capitalism. It's official corruption, that's what it is."

Before striking out on his own, Mr. Li worked for a summer at the white-shoe law firm Simpson, Thacher & Bartlett, put in four months at the media investment-banking firm Allen & Company and spent two years as a corporate finance associate at another investment banking firm, Donaldson, Lufkin & Jenrette. The chores that go with pleasing clients didn't sit well with him. "It's very hard for me in the service business," he said. "I want to make up a decision and do it. I'm a doer rather than just giving ideas."

Mr. Li's liberation from corporate hell came on the red-eye from San Francisco to New York last year. On the flight, he saw Rena Shulsky, a Manhattan real estate magnate whom he had met while giving a lecture. She encouraged him to start a fund. "I thought he could do better than working at D.L.J.," she said. She also, according to Mr. Li, gave him something better than advice-namely, $2 million in seed money. (Ms. Shulsky would not comment on how much she invested with him.)

Tom Bernstein, who helped Mr. Li gain asylum in the United States in his role as board president of the Lawyers Committee for Human Rights, was another early investor. "We kid about Li Lu," Mr. Bernstein said. "If you said that someone was going to make a billion dollars and be the head of the largest country in the world, all in one lifetime, he could be the guy."

Two investors said John Kluge, chairman of Metromedia Company, had invested in Mr. Li's fund this past January. Which seemed odd, given Mr. Kluge's recent meeting with Chinese President Jiang Zemin concerning the possibility of expanding his company into China. (Mr. Li at first would not comment on Mr. Kluge; in a later interview, he said Mr. Kluge was not one of his clients. Mr. Kluge did not return calls seeking comment on the matter.)

Mr. Li said he likes to buy stocks that are undervalued, in his estimation. That goes against the currently fashionable "momentum" theory used by investors who believe they can ride an overvalued stock that is still soaring in price, and then jump out before the stock comes crashing back down.

"If you're right, ultimately it will prove you're right, but you look stupid for a long time," he said of his own gambits. "It is what I'm all about. It's revolutionary. It is about trusting yourself. It's about challenging the conventional wisdom. That's what we did in Tiananmen."

There are so many strip clubs in N.Y.C. that the Mayor has declared alternate-side-of-the-street lap dancing.…

It's Presidents' Day-everybody gets an intern! …

Forget Heather Has Two Mommies . Now the kids in N.Y.C. have to read The President Has a Girlfriend ….

George Pataki the lover is a lot like George Pataki the politician. He takes an unimaginative position and he sticks to it ….

These two nuns go to the Bronx Zoo. They're watching a couple of baboons making love. One nun says, "I wish I could do that." Other nun says, "So go ask if you can join in." …

Boy, are these politicians horny. The other day Chuck Schumer and Mark Green were seen pumping the flesh in midtown!

He's Mr. Bull Market! Phil Potter Rides Again

Philip Potter is the 25-year-old broker who cooperated with a small New York Times article that portrayed him as a baby Master of the Universe. Young Mr. Potter boasted that he had purchased a 50-inch TV set, a $3,500 Rolex watch, $800 suits and an $800 cellular phone. His employer-Morgan Stanley, Dean Witter, Discover & Company-was apparently shocked to be employing a materialist and sent the lad packing 24 hours after the Times article ran.

Everyone on Wall Street assumed that Mr. Potter was finished in this town. Bankers phoned bankers to gleefully discuss Mr. Potter's hubris and to sigh with relief that they were not in his $200 shoes. A minion at BT Alex. Brown Inc. pinned the Times article on his cubicle wall to remind himself not to grow too proud. Traders prank-called Mr. Potter. They asked if they could bid on his 50-inch TV or Rolex.

But like the seemingly endless bull market that gets knocked down only to get up again, Mr. Potter is back. He started working at Bear Stearns & Company in the beginning of '98. And he's no longer a mere associate, as he was at Morgan Stanley; nay, Bear Stearns liked his chutzpah and made him a vice president in its private-client services division. "He's one of us now," said Bear Stearns general counsel Mark Lehman, "and he's doing a fine job."

The Monica Diaries

Excerpts from several hundred loose pages, wrapped in brown paper and tied with string, which were dumped on The Observer's front stoop and labeled, "The atached (sic) is my story, the story of a white house intirn (sic) in my own words, not that bitch Linda. ML."

Oct. 12, 1996, 11:15 P.M.

dear diary,

Nancy wants me to come over monday and watch MP [presumably, the TV drama , Melrose Place -ed.] and I feel all conflicted cause Tracey told me how Nancy told her she thinks I'm a total bitch and that I'm conceeded about my looks and great job and my feelings are, like, why doesn't Tracey just like look in the mirror -hel-lo!-and maybe she'll see who's the b-i-t-c-h!!! Also I lent nancy my black pumps last year and she's never given them back!!! so now do i ask her for the pumps back and maybe cause a situation , or do i go out and buy new pumps?? ….saw ellen at the mall after that and she goes on and on about her bitch of a sister and i wish i was strong enough to tell ellen to tell her sister to bug off ! after the mall i stopped by the white house and gave the President a BJ (no swallowing) …

Oct. 19, 1996, 11:30 P.M.

dear diary,

nancy and i are now like totally close. i get over there to watch MP and there the pumps are, i mean like on her feet , so what am i supposed to do because maybe she's like sending me a secret unconscience signal, like, she wants me to say something, so on the first commercial i'm like hey nancy nice shoes and she's like omigod, omigod , these are like your shoes aren't they and i'm like you could say that and we cried and hugged and things are sooooo much better now.… so i called Big C and he said Mrs C and Little C were looking at colleges and so i asked if he wants it over the phone and he's like yeah and so i do it but then when i hear him start to get all emotional and talking about the mysteries of the flesh and that crap i'm just like, puh-leeze !

Nov. 3, 1996, 11:45 P.M.

dear diary,

God i want to like die!!! so yesterday was Janet's party? the one i've been so totally looking forward to? Because i am just slightly very much in total lust with janet's brother Tom? so i got my short black dress the one with the fur cuffs back from the cleaners and it's 5 PM and i'm drying my hair and the phone rings and wouldn't you know it's the Big He and he's like Come over I need you and i'm like i can't there's this party and he's not hearing , you know, he's like, I neeeed you, i can't get you out of my head, so i'm thinking he sounds pathetic, so i say Ok i'll come over after the party and he's like No, no, no, no that will be too late, i need you now , and for some dumb reason i'm like, Ok, so i do my makeup and put on my black dress and i will just have to get a cab from WH to the party and i go to WH and he's there in his office and sudenly he's like kissing me and telling me how much he cares about me and he's pushing meanwhile me down and he's got his thingy out so i go down and say better make it quick i have this party and he's like i know i know i'll have a car get you to the party and wouldn't you know he like pulls his thingy out and he spooges all over the collar of my dress and i'm like holy shit and i say why why why did you do that, you ruined my dress and i have the party and i'm crying a little and he seems to sinceerly feel bad and he's zipping up and being like sorry god i'm sorry i'm selfish i'm bad and doing what he always does which is grab for his friggin bible and then he says dont move i'll be right back so i like wipe off the spooge with a napkin that says president on it and i see the clock the party's already started and some slut has probably got tom by now and then he bursts back in and he's holding this, like, thoroughly heinus dress all flowery and dopey laura ashley and i'm like hel-lo , what is that? and he's like it's one of chelsea's dresses it will fit you quick put it on and i'm like are you friggin nuts i am not putting that crap on my body and he's like well suit yourself and i do calculations and realize that it's either me at the party in that ugly dress or no party so i say Ok, and i put it on and can't really even button it all the way and he's like saying he needs to be at this big meeting and i say will you get my black dress cleaned and he's like no it would arouse people's minds and he hands me like $5 and says it will pay for it and i didn't bother to argue and next thing i'm standing on P ave and there's no cabs and i'm in this loser dress and of course when i get to the party tom is nowhere in sight which might be good cause if he saw me in that dress he'd be like see ya …

To Be Continued.

The Times article on Mr. Potter-who was, until recently, an associate in the Private Client Services group at Morgan Stanley, Dean Witter, Discover & Company-appeared as part of a two-page spread in the Sunday, Oct. 19, paper. The whole package was headlined "Faces of the New York Economy." The section devoted to Mr. Potter was headlined "Big Earner, Big Spender, Little Burden."

It was a piece of reported social satire unusual for The Times , listing Mr. Potter's possessions and mentioning that he "drops $300" on tips and drinks in a given weekend. "He spends at a rapid clip," went the article, "whether at stylish restaurants in his Park Avenue South neighborhood, at downtown clubs like Lucky Strike or the 10th Street Lounge or in replenishing the Bombay Sapphire and single-malt Scotch in the bar at home."

Apparently, Mr. Potter didn't do much to dissuade the Times reporter, David M. Halbfinger, from thinking of him as anything but a materialistic mini-Master of the Universe. Mr. Potter told the reporter he wore custom-made $800 suits and custom-made $80 shirts and that he had an $800 cellular phone and a $3,500 Rolex watch. He posed with the cell phone for the photograph that ran alongside the story.

Mr. Potter's good fortune seemed palpable on the night of Oct. 18. He was at an engagement party, according to his friends, and he told people that he was going to appear in the next day's Times in an article on successful young New Yorkers. Some friends accompanied him to the newsstand at around 2 A.M. Soon after he got a look at the article, on page 15 of the Money & Business section, Mr. Potter didn't look too happy. He knew the piece made him look like a parody of a greedy young Wall Street guy on the make.

"He was completely torn up and terrified," a friend recalled.

"As soon as he read the article, he knew he was done," another friend of Mr. Potter's added.

Indeed, he was done. Kaput. Finished. At least in terms of his career at Morgan Stanley.

On Monday morning at work, Mr. Potter allegedly received a call from Morgan Stanley president and chief operating officer John Mack, who is known as Mack the Knife. Mr. Mack told Mr. Potter that the interview with The Times represented a lack of good judgment and could not be condoned by the firm.

A few hours later, after a phone call from his boss in the Private Client Services group, Mr. Potter was out of a job.

A Morgan Stanley spokesman would say only that Mr. Potter resigned.

Mr. Potter, who would not comment for this article, has no idea what he plans to do next, according to a friend. The friend added that he's still reeling from what he believes was an instance of exploitation by the press. Indeed, another person said Mr. Potter briefly had a greeting on his answering machine saying he was duped by The Times .

On the face of it, Mr. Potter did violate the firm's Code of Conduct by talking to the press about Morgan Stanley and his life and work without seeking permission from the corporate communications department. But one of Mr. Potter's friends said the reporter misrepresented what he was looking for. "It wasn't like Phil walked into the interview saying, 'Hey, see my TV, it's this much,'" said the friend. "I think [the reporter] pulled out the comments one by one in a long conversation to paint the picture."

"That's untrue," said Times spokeswoman Nancy Nielsen. "David represented exactly what the story was about."

Whatever happened, the young banker's friend said the article didn't capture Mr. Potter. "He's not a big-bravado, high-roller, talking-to-you-about-money type," said the friend. "He plays chess and hangs out and is smart."

In the Times article, Mr. Potter said he was confident he would survive any Wall Street bloodletting. He ended up not making it to the big plunge of Oct. 27.