What am I getting wrong, exactly? If a company is going to be a good long-term investment based on fundamentals, it needs to have a sensible P/E ratio. There are exceptions for companies that are growing or have a high probability of having higher earnings in the future. And of course a stock can make very big price movements with no change in fundamentals.

But in a long perspective, there needs to be a small ratio between what you paid for the stock and what the company earns if it is going to be a good investment. FYI I am heavily invested in Tesla Motors, which currently has an undefined/negative P/E ratio.