Can holding gold in your left hand and U.S. stocks in your right hand really hedge risks? Former CICC Chief Risk Officer Li Xianglin teaches you how to use derivatives to identify and respond to "black swans."

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2025 is a year full of drama. On one hand, global liquidity is rebooting and market enthusiasm is heating up again—AI narratives continue to ferment, from computing power to application, from chips to algorithms, with every sub-sector being given the mission of “changing the world.” Global stock markets keep hitting new highs, the “liquidity-driven bull market” seems to bring people back to 2021. But on the other hand, risk appetite is rapidly declining— institutional funds are pouring into safe-haven assets like gold, increasing “defensive positions,” and pushing gold prices to new all-time highs several times throughout the year.

Global investors are betting on the future of AI in one hand and tightly holding the reality of gold in the other. This seemingly absurd situation has actually played out repeatedly in financial history.

The peak of the internet bubble in 2000. Global investors were addicted to the illusion that “technology will change everything,” the Nasdaq P/E ratios exceeded 100 times, and Silicon Valley was dubbed the “new golden age.” But when the bubble burst and the index halved within two years, the market realized—valuation is not a guarantee of growth; stories cannot replace cash flow.

2008—another drama unfolds on Wall Street. CDOs and CDSs seemed to perfectly split and repackage risk; financial engineering became a symbol of “modern wisdom.” The market thought risks could be controlled by models—until Lehman Brothers collapsed, triggering a domino effect worldwide, and models once considered “impeccable” became the fuse of the crisis.

Today’s global markets are filled with this same subtle discord—the feverish AI story coexists with the growing demand for safe-havens; record-breaking index highs go hand in hand with intensifying volatility in risk assets.

Throughout human financial history, every “rational boom” breeds the next bout of irrational collapse.

If the 2000 bubble came from “new stories” and the 2008 crisis from “model illusions,” then the current risk lies in intelligence itself. Algorithms make investing more precise and models make risk more visible, but they may also make the market more fragile under the surface of “collective intelligence.”

Everyone knows that with the Federal Reserve entering a rate-cut cycle and global liquidity flooding in, we are embracing an unprecedented financial bubble. But Wall Street elites have to straighten their backs again and again, pounding their chests to assure the world: “We have enough experience and tools to control risk, today's market is not like the past, we are very safe now.”

Yet little do they know: more information means more noise; the finer the calculation, the bigger the error.The real danger in the market is often not “invisible risk,” but “misjudged certainty.”

When the world believes it can control risk, perhaps it only means “the time hasn’t come”—risk is merely postponing its outbreak.

In this cycle, what investors truly lack is not judgment of the markets, but a framework for identifying and managing risk. In the past few years, you may have already experienced these:

Macro logic is frequently overturned, and policy signals constantly reverse;
Asset allocation is increasingly complex, but diversification no longer means safety;
Models seem to explain everything, yet they can’t predict “black swans”;
You know the market is changing, but you don’t know what to believe or not to believe.

This sense of confusion isn’t a knowledge gap—it’s a breakdown of logic.

On November 30, Professor Xianglin Li, invited by Wallstreetcn, will give a closed-door Alpha class in Shanghai, covering exactly the key skill needed for the current “gathering storm” in the market—how to rebuild a risk framework that stays clearheaded amid chaos.

Through this course, we hope to help you understand:

How is financial risk generated?
What signals can serve as leading indicators of risk?
How many means and tools do we have to deal with risk?
How have institutional investors survived one major financial crisis after another?

See the long poster for course details.

Why Professor Xianglin Li is the Best in China for Teaching Financial Risk Management

Professor Xianglin Li invented a model that could change the world, then watched as it destroyed half the financial world, just like Oppenheimer.

During Wall Street’s golden age, he led quantitative credit derivatives teams at Citigroup and Barclays Capital. He proposed the “Gaussian copula default function,” which became the math basis for complex credit products like CDS and CDO. For a time, all of Wall Street was using his formulas to price risk, and the market believed: risk could be calculated, cut, and tamed.

Yet in 2006, Li chose to leave. While CDO trading was peaking, he was clear-minded: “The model is being overused on mortgages, but nobody wants to listen.”

In 2008, Lehman collapsed, the subprime crisis broke out, and his formula became a scapegoat, labeled by the media as “the formula that destroyed Wall Street”. But he had already left Barclays and returned to China as Chief Risk Officer of CICC four months before the crisis—while all of Wall Street was obsessed with making money with his formula, he chose to exit.

After the crisis, he didn’t stay away from risk—instead, he dove into the front lines of risk governance. At CICC, he established China’s earliest risk limit system; he was invited to participate in Basel regulation revisions and China’s CRM (Credit Risk Mitigation) system design; he has served as advisor to the National University of Singapore Risk Management Center, and as an expert advisor to the International Association of Insurance Supervisors (IAIS) and the Institute of International Finance (IIF).

He’s consulted for “One Bank Three Commissions,” CIC, and SASAC, offering both a regulator’s and market perspective on risk transmission and culture.

What sets Li apart is his crossing all the boundaries in the financial system:

At CICC, he represented the “sell side” view of Chinese brokers;

At AIG, he led asset management modeling, representing the insurance and asset management system;

At Prudential, he was responsible for risk management methodology, delving into asset-liability management (ALM).

He is one of the very few who has worked in core risk roles at Chinese brokers, US insurers, and global investment banks. This lets him see differences in financial cultures: Wall Street champions model efficiency, Chinese institutions value compliance, insurers prioritize long-term stability—he has seen both the most radical innovations and guarded the most conservative bottom lines.

Xianglin Li is one of the rare people to have both created and later doubted models; to have experienced a global financial crisis and still work on the frontlines of risk governance.

We believe he is one of the best choices in China to teach this course topic.

Course Value

This course does not teach you to “predict” opportunity, but to “see through” risk.

The market will eventually return to rationality, yet rationality must be trained—every bubble ends at the renewed pursuit of reason. In this course, Professor Li will help you recognize risk anew, so you can “survive longer” in financial markets:

Macroscopic view of cycles: Understand how risk factors interact and identify “resonance points” in assets;
Microscopic view of human nature: Understand emotional structures and herding logic behind market behaviors;
Systemic view of investing: Learn to build your own “risk immune system.”

This is not defensive thinking but rational training—to stay calm in boom times and make judgements during panic. The tech dreams of 2000, financial innovation of 2008, and the 2025 AI wave—behind every great boom is humanity’s misreading of “certainty.”

Truly mature investors are not those who are always right, but those who know when they could be wrong.

In this noisy era, let’s relearn how to see market truth beneath the illusion of prosperity.

Kind Reminder

This Alpha private course will be held in Shanghai on November 30, 2025. Because seats are limited, interested friends can hurry up and sign up for the course via the poster above. For more course details, you can also scan the picture below with WeChat and consult the Alpha assistant.

Risk Warning and DisclaimerThe market carries risk, and investment must be done cautiously. This article does not constitute individual investment advice, nor does it take into account a specific user’s particular investment objectives, financial situation, or needs. Users should consider whether any opinions, views, or conclusions in this article fit their individual circumstances. Investing based on this is at your own risk. ```