It's a great time of year for stocks | Santoli on hope and hype | How to trade the trade war

The S&P 500 is at record highs but stocks showing no clear path to profitability have been punished.

VIEW IN BROWSER | SUBSCRIBE SAT, NOV 02, 2019 WEEKEND BRIEF EDITOR'S NOTE Stocks hit record highs, but it was an unpleasant week for investors in Grubhub, Wayfair, Etsy and Pinterest, which were all down between 20% and 40% for the week.   Each of these businesses professed to be software companies, writes CNBC senior markets commentator Michael Santoli, but they're not. They simply don't enjoy the fat margins and massive economies of scale of software companies  and shouldn't be valued as if they do.    These companies are also set up to grow market share at the expense of profitability - which historically has only worked for a handful of startups, such as Amazon.   "When you're losing money on every transaction, you can't make it up in volume," notes David Sacks, co-founder of Craft Ventures and a former PayPal COO in a recent post on Medium.   The market, even as it hits new highs, is now embracing what would seem a basic concept, punishing companies with no clear path to profitability.   Call it a cleansing of what Santoli calls "hope-and-hype business models." The market is moving on.   The Federal Reserve has completed what seems to be it's third-and-done interest rate cut and we're about three quarters of the way through earnings season. The big remaining piece of market uncertainty is the trade war.   Even if President Donald Trump and China's Xi Jinping come to terms on phase one of a trade deal, there's still a lot to be ironed out, and the negotiating process - with its ongoing threats of tariffs - will weigh on markets.  CNBC's Yun Li  crunched some numbers for Weekend Brief to rank the S&P 500 companies most exposed to the trade war - with the most to win or lose, depending on how talks go. Not surprisingly, chip makers are on the list, but so are gaming resorts such as Las Vegas Sands and Wynn Resorts.   As long as there are no alarming headlines from the trade war, the Dow Jones Industrial Average is likely to join the S&P 500 in marking a new high, writes CNBC's Patti Domm. November and December are typically two of the best months for the market.   Thanks for reading Weekend Brief. Don't forget to set back your clocks on Sunday morning and make the most of the extra hour.  Email your thoughts at EveningBrief@nbcuni.com or message me on Twitter @tellittoal.     CNBC has launched CNBC Select, a financial site aimed at helping users take control of their money. By providing high-quality personal finance advice through product reviews, tips and best-of lists, CNBC Select users can make informed decisions and choose the right financial products for their lives.   Al Lewis | CNBC Markets Editor @tellittoal MICHAEL SANTOLI'S MARKET COLUMN Investors reassess the hope-and-hype business model, causing stocks like GrubHub to plunge   THE WEEK AHEAD It's getting to be the best time of year for stocks, and the Dow could soon set a new high   YOUR WEEKEND BRIEFING  The outcome of the US, China trade negotiations will make or break these stocks into year-end 7Qs: How this money manager uses his military background to maximize returns Here are the best calls of the week on Wall Street These companies reporting earnings in the week ahead almost always beat the Street     Unsubscribe Manage Newsletters Terms of Service Join the CNBC Panel Digital Products Feedback Privacy Policy   © 2019 CNBC LLC. All rights reserved. A property of NBCUniversal. 900 Sylvan Avenue, Englewood Cliffs, NJ 07632 Data is a real-time snapshot *Data is delayed at least 15 minutes. Global Business and Financial News, Stock Quotes and Market Data and Analysis. Data also provided by THOMSON REUTERS