Finance
‘A little goes a long way’
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Katherine Dowling has an analogy that may be useful for investors thinking of buying cryptocurrency like bitcoin and wondering what amount is appropriate.
It’s “like cayenne pepper,” said Dowling, general counsel and chief compliance officer at Bitwise Asset Management, a crypto money manager. “A little goes a long way” in a portfolio, she explained earlier this month at Financial Advisor Magazine’s annual Invest in Women conference in West Palm Beach, Florida.
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Ivory Johnson, a certified financial planner and member of CNBC’s Financial Advisor Council, said the description is apt.
“The more volatile an asset class is, the less of it that you need,” said Johnson, who founded Delancey Wealth Management, based in Washington, D.C.
A 2% or 3% allocation is ‘more than enough’
Cryptocurrencies are digital assets, a category that should be considered an “alternative investment,” Johnson said.
Other types of alts may include private equity, hedge funds and venture capital, for example. Financial advisors generally consider them separate from traditional portfolio holdings like stocks, bonds and cash.
Allocating 2% or 3% of one’s investment portfolio to crypto is “more than enough,” Johnson said.
Let’s say an asset grows by 50% this year, and an investor holds a 1% position. That’s like having a 5% position in another asset that grew 10%, Johnson said.
Whether investors buy in to crypto — and how much they hold — will depend on their tolerance and capacity for risk, Johnson said.
For example, long-term investors in their mid-20s can afford to take more risk because they have ample time to make up for losses. Such a person may be able to stomach substantial financial losses and may reasonably hold 5% to 7% of their portfolio in crypto, Johnson added.
However, that allocation would most likely not be appropriate for a 70-year-old investor who can’t afford to subject their nest egg to major losses, he said.
“Bitcoin and other cryptocurrencies are a very speculative investment and involves a high degree of risk,” investment strategists at Wells Fargo Advisors wrote in a note last year. “Investors must have the financial ability, sophistication/experience and willingness to bear the risks of an investment, and a potential total loss of their investment.”
Crypto is ‘an incredibly volatile asset’
Crypto prices have been on a wild ride lately.
Bitcoin, for example, surged to an all-time high earlier in March. It topped $73,000 at its peak, though it has since retreated to less than $69,000.
Bitcoin prices had collapsed heading into 2022, and shed about 64% that year to below $20,000. By comparison, the S&P 500 stock index lost 19.4%.
Prices have since quadrupled from their low point in November 2022, as of late Wednesday. They’ve soared more than 50% year to date, while the S&P 500 is up about 9%.
Bitcoin is about eight times as volatile as the S&P 500, Johnson wrote in a Journal of Financial Planning article in December 2022, citing data from the Digital Asset Council for Financial Professionals.
The Crypto Volatility Index was about six times higher than the CBOE Volatility Index as of Wednesday.
“It’s still an incredibly volatile asset,” Bitwise’s Dowling said. “It’s not for everybody.”
Investing in crypto became easier for many investors after the Securities and Exchange Commission approved a slew of spot bitcoin exchange-traded funds in January, in a first for the asset class.
Investors may wish to consider dollar-cost averaging into crypto, Johnson said. This entails buying a little bit at a time, until reaching one’s target allocation. Investors should also rebalance periodically to ensure big crypto profits or losses don’t tweak one’s target allocation over time, he said.
Chinese e-commerce company Alibaba has invested heavily in its fast-growing international business as growth slows for its China-focused Taobao and Tmall business.
Nurphoto | Nurphoto | Getty Images
BEIJING — Chinese e-commerce giant Alibaba‘s international arm on Wednesday launched an updated version of its artificial intelligence-powered translation tool that, it says, is better than products offered by Google, DeepL and ChatGPT.
That’s based on an assessment of Alibaba International’s new model, Marco MT, by translation benchmark framework Flores, the Chinese company said.
Alibaba’s fast-growing international unit released the AI translation product as an update to one unveiled about a year ago, which it says already has 500,000 merchant users. Sellers based in one country can use the translation tool to create product pages in the language of the target market.
The new version is based only on large language models, allowing it to draw on contextual clues such as culture or industry-specific terms, Kaifu Zhang, vice president of Alibaba International Digital Commerce Group and head of the business’ artificial intelligence initiative, told CNBC in an interview Tuesday.
“The idea is that we want this AI tool to help the bottom line of the merchants, because if the merchants are doing well, the platform will be doing well,” he said.
Large language models power artificial intelligence applications such as OpenAI’s ChatGPT, which can also translate text. The models, trained on massive amounts of data, can generate humanlike responses to user prompts.
Alibaba’s translation tool is based on its own model called Qwen. The product supports 15 languages: Arabic, Chinese, Dutch, English, French, German, Italian, Japanese, Korean, Polish, Portuguese, Russian, Spanish, Turkish and Ukrainian.
Zhang said he expects “substantial demand” for the tool from Europe and the Americas. He also expects emerging markets to be a significant area of use.
When users of Alibaba.com — a site for suppliers to sell to businesses — are categorized by country, developing countries account for about half of the top 20 active AI tool users, Zhang said.
Chinese companies have increasingly looked abroad for growth opportunities, especially e-commerce merchants. PDD Holdings‘ Temu, fast fashion seller Shein and ByteDance’s TikTok are among the recent global market entrants. Many China-based merchants also sell on Amazon.com.
Contextual clues
Since Alibaba launched the first version of its AI translation tool last fall, the company said merchants have used it for more than 100 million product listings. Similar to other AI-based services, the basic pricing charges merchants by the amount of translated text.
Zhang declined to share how much the updated version would cost. He said it was included in some service bundles for merchants wanting simple exposure to overseas users.
His thinking is that contextual translation makes it much more likely that consumers decide to buy. He shared an example in which a colloquial Chinese description for a slipper would have turned off English-speaking consumers if it was only translated literally, without getting at the implied meaning.
“The updated translation engine is going to make Double 11 a better experience for consumers because of more authentic expression,” Zhang said, in reference to the Alibaba-led shopping festival that centers on Nov. 11 each year.
Alibaba’s international business includes platforms such as AliExpress and Lazada, which primarily targets Southeast Asia. The international unit reported sales growth of 32% to $4.03 billion in the quarter ended June from a year ago.
That’s in contrast to a 1% year-on-year drop in sales to $15.6 billion for Alibaba’s main Taobao and Tmall e-commerce business, which has focused on China.
The Taobao app is also popular with consumers in Singapore. In September, the app launched an AI-powered English version for users in the country.
Nomura analysts expect that Alibaba’s international revenue slowed slightly to 29% year-on-year growth in the quarter ended September, while operating losses narrowed, according to an Oct. 10 report. Alibaba has yet to announce when it will release quarterly earnings.
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