Cruise ships sail to the top of the S&P 500

Here are three of the week’s top pieces of financial insight, gathered from around the web:

ARMs lose their allure

Adjustable-rate mortgages are a losing proposition for most homebuyers right now, said Veronica Dagher in The Wall Street Journal. The average rate on ARMs is currently “nearly equivalent to the average 30-year fixed rate of 6.95%,” wiping out any advantage borrowers had in choosing a loan with a shorter-term fixed rate. ARM borrowers used to get a lower starting rate in exchange for “shouldering the risk” of higher rates later on. Now, though, you will save very little money in the early years, while taking on the same risk if rates rise. You do stand to benefit if rates fall in the reset period. But a better homebuying strategy now is simply to get a fixed 30-year rate and refinance if interest rates decline.

A very expensive thumbs-up

Sometimes, an emoji can be just as binding as any contract, said Madeline Garfinkle in Entrepreneur. A Canadian judge ruled recently that a “thumbs-up” emoji could be a legally valid signal of agreement after a grain buyer sued a Saskatchewan farmer for failing to deliver 87 metric tons of flax. The farmer argued that his thumbs-up text was “mere confirmation that he had received the document.” The judge disagreed, saying that the emoji could be considered a “nontraditional means to ‘sign’ a document.” The two parties had worked together before, and the farmer had previously agreed to contracts with “similarly short responses such as ‘ok’ or ‘yup.'” But never an emoji. The decision meant that the farmer, Chris Achter, had to pay the difference in the value of the flax between the day he sent his emoji and the day it should have been delivered — about $61,000.

Cruise ship shares surge

Cruise company stocks have experienced a remarkable change of fortune, said Jeff Sommer in The New York Times. Shares of Carnival are up 134% since the start of the year, Royal Caribbean is up 110%, and Norwegian Cruise line is up 78%. That puts all three companies “among the top 10 stocks in the S&P 500” based on their first-half performance, alongside tech giants like Nvidia and Meta. Cruise line shares are still down significantly from pre-pandemic highs, but “pent-up demand for pleasure trips” has brought the companies back from the brink. It’s a good reminder of the benefits of diversification, since even sectors once seen as hopeless can surprise you by bouncing back.

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