Earnings are also cyclical, just like prices. Imagine an industry whose earnings are especially sensitive to business cycles. On an upswing of the cycle, they l

Earnings are also cyclical, just like prices. Imagine an industry whose earnings are especially sensitive to business cycles. On an upswing of the cycle, they look like a good deal because their P/E might be low, but that's only because the market is reflecting the risk inherent in the industry. After earnings crash during a recession, investing in such a "value" company at the top starts to look like it was a bad idea.