If you could get a loan for many, many millions to invest ($25 million+), how much interest you would pay (at most)? A loan to invest in index ETFs. Maybe leveraged ETFs like DDM or SSO. For a long term investment. From 2 to 5+ years.
Approach it as if you were a private equity firm. Debt refinancing all good as long as the returns and profit margins are attractive.
Likewise, lots of investors finding it hard today to justify their rentals that have been bringing in less than their debt payments for the past 3 years.
Or approach it like a structured derivatives desk... it's whatever rate I need to hedge your position + some spread. Or... in this case, it's going to be the risk free rate (2%) + dividend rate on whatever he's buy (call it 4%) + cgarcia's counterparty risk (call it 100%). So.... figured 106% a year'll do it.
What scenario will offer a better return? Look beyond the smoke and mirrors. Study the facts, the numbers. How many small biz llcs think that their deductions/writeoffs are smarter than socking it away in tax-free retirement accounts? You spend it on fancy stuff it's gone poof, sock it away tax-free and compound and now your return on that money will be much more than that fancy new BMW.
There was a video on yahoo finance about the hidden dangers of leveraged ETFs. There can be a large divergence because of the way the algorithm works out (leveraged ETF are based on DAILY returns). In any case, I would take no leverage and invest in something like USO (crude oil). Riskier investments would be the leaps on USO or going long CAD/JPY currency pair.