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.

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MICHAEL SANTOLI'S MARKET COLUMN

THE WEEK AHEAD

YOUR WEEKEND BRIEFING