WSJ: You should totally buy the yacht. (RobW_, flickr)

Of all the worries and existential dilemmas that keep America's rich and powerful up at night, tossing in their Frette sheets, few are quite so urgent as the decision to buy a yacht.

Indeed, the wealthy elite of the world have grappled with the question of yacht ownership for as long as humans have sailed the seas. There are endless things to consider: Will my young wife like it? Will it help me get a young wife? Is it a bad investment or a good one? Does it matter?

The answer has been as unknowable as the vast depths of the ocean until now. For its Wealth Adviser video segment, The Wall Street Journal sent an intrepid reporter and cameraman to the ends of the earth (Newport, Rhode Island) to find out once and for all if buying a yacht is a good investment.

T0 investigate, reporter Veronica Dagher climbs aboard the sailing vessel of Jack Desmond, CEO of Cox Engineering. Also aboard: Mr. Desmond's financial adviser TJ Stowers, a partner at Newmar Private Risk Management. What? Don't you always take your financial adviser along when you go sailing?

But it turns out that taking Mr. Stowers along was a terrible idea! He immediately starts shooting down rich people's dreams that buying a boat will be a good investment. "A boat is not an investment; it's a lifestyle choice," Mr. Stowers tells The Journal. "A boat will always depreciate in value."

Mr. Stowers, bearer of bad news, warns viewers to make sure that a yacht is something they really want before they buy it.  Because boats are like cake. You can have your cake and eat it too, but then all you have is a dirty plate.

Still, if you have more than a few hundred thousand lying around, and you pinch your pennies to keep maintenance costs down— Mr. Desmond recommends sailing to the Caribbean every winter because it is cheaper than storing the boat in Rhode Island—you can totally buy a yacht.

And, as the Journal explains, rich people are allowed to buy things that are not good financial investments. Because money may be one of the most important things in life, but it is not the only important thing. Breezing around Newport, the reporter has an epiphany: buying a yacht is an investment.

"It's an investment in your mental health. Owning a yacht is reserved for the wealthy. And many times that wealth comes with lots of stress," Ms. Dagher concludes.

kvelsey@observer.com

Last December, the Israel-American Chamber of Commerce hosted a half-day seminar, "Commercial Real Estate in the U.S.—Yes, No and How," in Tel Aviv, chaired by investors from Israel and the U.S. Panelists included Jeffrey Goldberg, managing partner of the New York City-based Milestone Group; Eitan Bar Zeev, CEO of Big Centers; Uzi Levy of PBC (the IDB Group); and Gadi Ben Haim, head of real estate activity at Harel Insurance. It is very important to gain insight on the companies who participated as speakers at the seminar in Tel Aviv.

The Milestone Group is a Manhattan-based investment and management company with more than $2.5 billion of multifamily assets under management, representing in excess of 40,000 multifamily units.

Big Centers is a publicly traded company and a large owner of retail centers in Israel. The company owns malls in India and is developing a chain of shopping centers throughout Serbia. Over the past 18 months, it has joined hands with leading U.S. companies, including Kimco, to locate and purchase shopping centers in the U.S. The company has recently purchased ownership interests in 17 shopping centers in the U.S.

The IDB Group is Israel's largest, leading diversified business group, with total assets of more than $30 billion. The publicly traded company is made up of several holding companies, including Property & Buildings Corp., one of Israel's largest real estate corporations. It owns more than 1.1 million square meters of income-producing properties in Israel and approximately 600,000 square meters of hotels and income-producing properties worldwide.

Harel Insurance Company is owned by Harel Insurance Investments and Financial Services, one of Israel's largest public companies, whose shares are traded on the Tel Aviv Stock Exchange. Harel Group is the third-largest insurance group in Israel. Harel Insurance has been a very active player securing commercial real estate in the U.S.

In December, Harel Insurance Investment and Finance Services signed an agreement for an investment of $28.5 million, together with SL Green and Jeff Sutton. The joint-venture partnership will develop a building featuring high-end retail space on the lower four floors and 23 floors of dormitories rented to Pace University. SL Green and Mr. Sutton will retain a 51 percent controlling interest in the properties, at 180-182 Broadway and 2 John Street.

In November, Harel acquired two office buildings in Houston, Texas, for $85.2 million.

In October, Harel Insurance and Gaia Real Estate Company announced it had partnered to invest in real estate in the U.S., including the tristate area. It announced the acquisition of several residential units in three separate transactions. The properties include a six-story elevator building with 48 residential units at 5 West 91st Street in Manhattan, constructed in 1974.

The entity also purchased a 20-story, 337,455-square-foot building with 265 residential units and ground-floor commercial space at 320 South Harrison Street in East Orange, N.J. The third property was 92 townhouse units in seven buildings located in Colchester, Conn.

Local investors are also joining forces with Israeli investors to acquire sites as well as distressed debt. Over the past 18 months, New York City-based investor Ziel Feldman, principal of HFZ Capital Group, has acquired distressed debt in Manhattan. Earlier in the year, HFZ and Israeli-based Acro Group won the tender for the $147 million construction loan from Anglo Irish Bank Corporation on the unsold condominiums at the 34-story residential tower conversion at 40 Broad Street. The Wall Street Journal reported that they paid approximately $80 million to acquire 65 percent of the Setai Wall Street, a property that has 159 residential condos.

Acro Group is an Israeli-based private group owned by Arbov Investments Ltd. and Virometal Investments Ltd. Acro specializes in initiating unique real estate projects of residential and business construction in Israel and the United States.

Last year, HFZ and Acro acquired distressed debt, and subsequently the ownership, in two New York properties. The company acquired the construction development at the corner of Second Avenue and East 51st Street where 150 apartments are scheduled to be completed. (This is the site of the crane accident of 2008.) Also, last year, the joint venture acquired the development site on West 40th Street between Fifth and Sixth avenues, across from Bryant Park.

Last month, Israeli developer Moshe Shuster, through his company Victor Homes, acquired a development site on 29th Street in Chelsea between 10th and 11th avenues. Mr. Shuster, no stranger to the New York City condo market, with a successful development a few years ago on 23rd Street between First and Second avenues, paid about $12 million for the site. According to Israeli publication Globes, Mr. Shuster plans to build a 12-story building with 65 condos, which can be increased to 100 after the building rights are increased.
In October 2009, Property & Building, a subsidiary of Nochi Dankner-controlled IDB Holding and its sister company, Koor Industries, purchased the HSBC tower at 452 Fifth Avenue for $330 million. In January, these Israeli investors traveled to Chicago to buy a commercial property for $121.5 million.

Last December, another Israeli publicly traded company, Aviv Arlon Global Ltd., closed on the purchase of a 170,000-square-foot shopping center in the Windy City. The company paid $17.5 million through BAI Century LLC, its joint venture with Bon Investments, through which they own other properties in the U.S.

A number of people have considered Jersey City the sixth borough. It was reported that Israel Phoenix Assurance Ltd. and Menorah Mivtachim Holding Ltd. were in advanced talks to purchase an office building there for $80 million.

In January 2010, Norfolk, Va.-based Harbor Group International purchased the 25-story, 1.1 million-square-foot office building at 4 New York Plaza in Lower Manhattan. In December, Harbor Group and two Israeli insurance companies, Midgdal Insurance and Financial Holdings Ltd. and Menorah Mivtachim Holdings, purchased the 24-story, 415,000-square-foot office building at 1412 Broadway. The joint venture, whose ownership includes Midgal with 33 percent, Menorah with 32 percent and Harbor Group with the rest, paid $150 million for the tower.

In November, Fishman Holdings' real estate unit Darban Investments (traded on the Tel Aviv Stock Exchange) purchased a residential building under construction on Franklin Street in Tribeca for $21 million. When completed, the 18-story building will have a total of 84 apartments. In September, Darban purchased a 12-story building in Manhattan for $44.5 million.

Darban CEO Yig
al Lavie was quoted in Globes saying, "Despite the crisis, we see great potential in Manhattan. New York is a city that is keeping its status as one of the great cities of the world. That's why we're focusing on deals at good prices with strong betterment potential. We're examining other deals in New York, and we will continue to do so."

Many people consider Miami a sister city of Manhattan. In February, Optibase Real Estate Miami, a wholly owned subsidiary of an Israeli-based real estate investment firm, paid $8.6 million to purchase 21 luxury condos at the Marquis Residences at 1100 Biscayne Boulevard. The seller was Leviev Boymelgreen Marquis Developers LLC. Earlier this year, another Israeli group, W Capital Group, closed on the purchase of an $8.7 million note, in which the note was secured by 32 residential and eight retail units in Coral Gables, Fla.

The stock market has its highs and lows, yet real estate continues to appreciate in value. With rising values in commercial real estate, expect foreign investors from around the world to continue to seek investment opportunities in the commercial real estate of the U.S. and especially in New York City.

mstoler@madisonrealtycapital.com

Michael Stoler is a managing director at Madison Realty Capital and president of New York Real Estate TV LLC.

An attack on the nation's basic infrastructure is pretty scary, so it was comforting when a spokesperson told AFP that neither customer service nor trading appeared to have been hit. Rather, hackers went after  Nasdaq's Director's Desk software, which helps directors at big companies share information related to board meetings. Why would they do that? A subsequent Wall Street Journal report gives us a hint:

The fact that the Web-based service, called Directors Desk, was penetrated could lend credence to one theory that law-enforcement authorities investigating the matter are considering, namely that hackers may be aiming to extract nonpublic inside information that could be used illegally to gain a trading edge.

Insider trading! Although it's unclear what exactly the hackers were after, one thing is clear: short-term trades in the stock market are not for guys with a Strategy Desk in the basement office or the babies in Super Bowl commercials. Faster, smarter and less scrupulous people are out there to take money from those people. Just stop trying, everyone. Give up (unless you're hackers).

mtaylor [at] observer.com | @mbrookstaylor

Sixty-nine percent said Facebook is overvalued at that price, 10 percent said $50 billion is a fair value for Facebook, and 4 percent are bullish even at these levels. It's perhaps not surprising that industry types find Facebook a tad overpriced, since by one measurement it's one of the most expensive stocks available right now. Plus, there's some skittishness out there about doing business with Goldman Sachs. As one client told Bloomberg, “There’s too little financial information and track history to value the company like this. Besides, you do not want to buy any of Goldman’s proprietary positions that they’re willing to sell.”

Meanwhile, shares in Facebook have declined 7 percent in SecondMarket trading, down to a $65.5 billion valuation vs. $70 billion a week ago, according to TechCrunch. There's another share auction slated for next week, so perhaps we'll get some more price discovery out of that.

mtaylor [at] observer.com | @mbrookstaylor

Let's take a very rough look at Facebook's earnings compared with its valuation. (These comparisons aren't apples-to-apples, but if The Wall Street Journal can have fun with this kind of stuff, so can we.) According to Facebook documents distributed to Goldman Sachs investors and leaked to Reuters, the company made $350 million in profit for the first three quarters of 2010. Assuming the same rate of profit for the fourth quarter, that translates into $466.7 million in net income for 2010. Since Facebook commands a $50 billion valuation, the ratio of its price to the past year's earnings is 107.

Most companies don't command anywhere near that premium. Even consumer-electronics giant Apple has a price to earnings ratio of only 18. But there are two companies that trump Facebook in these terms. Ladies and gentelemen, meet VMWare, a company specializing in virtualization software. It trades with a trailing price-to-earnings ratio of 127, much higher than almighty Facebook.

The other firm that trumps Facebook is a true shocker. A. H. Belo, dying media institution and parent of the Dallas Morning News -- a newspaper! -- currently trades at a mind-boggling 215 times trailing earnings -- more than twice the premium shareholders are paying for Facebook. Maybe there's hope for traditional media after all.

Of course, VMWare doesn't carry the exhorbitant carry cost Goldman is charging for its private placement, but it's still pretty impressive to see any company command a price that comes close to that of Facebook. As for Belo, we frankly can't explain why that stock is so unbelievably expensive; only two people like it on Facebook. Anyway, that's our conclusion. Can anyone explain why we might be wrong?

Now Check Out Which Web Startup Is Worth The Most Per User >>

mtaylor [at] observer.com | @mbrookstaylor

"Everyone wants to be Johnny Appleseed," an executive at one of NY's biggest VC firms told The Observer earlier this week, punning on early stage investments, also known as seed funding. "The mentality is, you're going to strike out a lot, so you better have a few companies that pay off huge."

Fred Wilson took to his blog this morning to argue that it's bad business to invest in a ton of companies, expecting most will fail and some will generate huge returns.

Startup returns are not bimodal. They exhibit more of a power law curve. There will certainly be one or two venture deals every year that generate 100x or more. And there will certainly be quite a few total busts. But there are a lot of outcomes in the middle of those two. And you can make a great return investing in startups without being in the 100x deal.

Wilson published this chart of Union Square Ventures' current returns on their 2004 fund to illustrate this point. Over the past 15 years, he argues, he's made a name for himself without investing in a single huge winner.

Wilson's advice to newer VCs is to avoid the trap of trying to invest in every deal, because invetably you'll miss some and make a lot of bad bets in the process. "I've spent my entire career playing the middle ground of this curve."

Of course Wilson, who invested early in growing giants like Twitter and Zynga, doesn't mind admitting he sees a few home runs in the the future. "With the exception of Geocities, which my partner Jerry led at Flatiron, I have never seen a 100x return. I suspect our first Union Square Ventures fund will change that."

bpopper [at] observer.com | @benpopper