Disclaimer: I'm not an experienced value investor
Jesse Felder did an interview with Fred Hickey:
https://thefelderreport.com/2022/05/11/ ... ng-theirs/
In that interview, we hear a lot of parallels between the current environment and the dotcom bust. There were a lot of companies who paid a huge chunk of compensation in company stock, which dilutes shareholder value and leads to wonky accounting (the same thing has been happening with the growthy tech names today, all the way up to the big dogs). It works great when the stock value is climbing, not so much when stock drops. Hickey points out how Buffett complains about that practice because it ultimately ends up screwing over shareholders since companies will try to bail out their employees before shareholders in tough times.
Keep in mind that there were companies who are still very profitable and have been for decades, yet their prices have never returned to levels they reached during the dotcom bubble (look at a charts of INTC and CSCO*). Maybe that's where were headed with TSLA, GOOG, or AAPL? In particular I'm eyeing APPL because they got a huge boost from the work from home trend and all the extra liquidity sloshing around. TSLA is the ultimate retail baby, which means if retail gets crushed and has to panic sell, TSLA will go down with it. This selling will accelerate as passive funds are forced to sell the falling names to buy rising names to keep tracking the index (see Mike Green's thoughts on how passive dynamics can increase whipsaw effects). FB may have been the canary in the coal mine since we see it has pretty much reverted to pre-pandemic price levels.
P/E matters in a world where liquidity isn't sloshing around, which is what appears the world will look like for at least the next 6 months or so. I don't believe we will see another Powell pivot, but that's what would obviously invalidate this whole view.
* = It's even worse when you account for inflation, which has been 63% from 2001 to today.