“Apple now makes a phone, and that’s pretty much all they do,” said Motamed. “They do a great job, but they’re about to become the fourth largest phone manufacturer in the world. You’ll get to the point where people will say they don’t want to spend $1,200 on a phone when they can get the same thing from a competitor for $300. If that happens, Apple is done. They have nothing, nothing at all. It’s at $1 trillion and it could go to $30 billion. Be ready to run like hell when it turns against you.”
Yet Motamed does not currently short Apple because of its policy of ongoing massive share buybacks.
One reason stocks like Apple have remained popular is that, as they age, they have become dependable dividend payers. Over the past decade, as bond yields have plummeted, many investors have turned to dividend-paying equities to create cash-flow-generating portfolios.
“Because of the investors’ increased interest in dividends, many companies have changed their dividend policies,” said Motamed. “Back five to 10 years ago, dividend payout ratios were in the 30s. Now we find payout ratios in the 50s.”