Don’t let Iran war-induced market volatility scare you out of stocks
CNBC’s Jim Cramer warned on Thursday that panicked investors are tempted to dump their portfolios amid market volatility caused by the war in Iran: Don’t follow the crowd over the edge.
“Remember that even if the current situation is scary, it makes sense to stay in the market under almost any circumstances, because you will have a better chance of recovering your losses when the peace is broken,” Cramer said on “Mad Money.” “Trust me, if you sell everything and then have to watch the market recover without you, you’re going to find yourself in a difficult situation.”
It’s hard to keep your emotions under control on a day like this. S&P 500 And Nasdaq fell by 1.5% and 1.8% respectively and US oil prices It rose more than 9.5% and is back above $95 a barrel. While crude oil had an adverse effect on stocks, it was not surprising that prices rose after Iran’s new religious leader Mojtaba Khamenei said that the Strait of Hormuz would remain closed as “a tool to put pressure on the enemy”. The increase in international benchmark Brent crude oil exceeded $ 100 for the first time since 2022.
If investors decide to exit the market completely during such declines, then it will be difficult to accurately time the lows to re-enter. “It would be great if you could sell everything today, right now, avoid the pain you’re probably going to experience in the coming days, and get back the day before the war ends,” Cramer said. “That would be ideal, but we have no idea when the war will end.”
One reassuring point in this sea of negativity, according to Cramer, is that President Donald Trump does not want a bear market in stocks. Historically, the president has viewed the stock market as a barometer of success. While it’s painful to see three consecutive sessions of decline in the S&P 500, the index is only 4.7% off its most recent record highs. This isn’t even a correction, defined as a decline of at least 10% from highs. A bear market is 20% lower.
To avoid sliding into those depths, this means the Trump administration may be tempted to resolve the conflict more quickly to avoid a prolonged decline in stock prices. Cramer drew attention to the sales following Trump’s “liberation day” announcement that he would impose large taxes on the United States’ leading trading partners in April 2025. When the White House paused most of these taxes just a week later, stocks immediately rebounded.
“Trump’s pattern this presidency has been pretty clear. He’s willing to make tough choices that could crash the market, but he’s also willing to change plans if he gets hit too hard,” Cramer added. “That means there could be a deal.”
It is unclear what an agreement to end the Iran war would look like, according to Cramer, who suggested that a potential back channel through Qatar could give Trump a chance to claim victory. “I’m not a military strategist. I’m a stock strategist. And what I do know is that sooner or later this war will end,” Cramer said. “If you didn’t own any stocks before the ceasefire, you’re likely going to lose money.”
