Don’t let Iran war-induced market volatility scare you out of stocks

CNBC’s Jim Cramer on Thursday warned panicked investors tempted to dump their portfolios due to Iran war-induced market volatility: Don’t follow the crowd off the ledge.

“Even if the current situation is terrifying, remember that under almost all circumstances, it makes sense to stick with the market, if only because you’ll have a better chance to make back your losses once peace breaks out,” Cramer said on “Mad Money.” “Believe me, you’ll be kicking yourself if you sell everything and then you have to watch this market rebound without you.”

It’s tough to keep your emotions in check on a day when the S&P 500 and Nasdaq dropped roughly 1.5% and 1.8%, respectively, and U.S. oil prices soared more than 9.5% and settled back above $95 per barrel. With crude inversely impacting stocks, it was no wonder prices soared on Iran’s new supreme leader, Mojtaba Khamenei, saying the Strait of Hormuz will remain closed as a “tool to pressure the enemy.” The surge in international benchmark Brent crude settled above $100 for the first time since 2022.

If investors decide to completely exit the market on declines like these, then it will be difficult to correctly time the lows to get back in. “It would be amazing if you could sell everything today, right now, avoid the pain you’ll most likely experience in the coming days, and then get back in the day before the war ends,” Cramer said. “That would be ideal, but we have no idea when the war will end.”

One point of reassurance in this sea of negativity, according to Cramer, is that President Donald Trump does not want a bear market in stocks on his hands. Historically, the president has viewed the stock market as a barometer of success. While it’s painful to see three down sessions in a row on the S&P 500, the index is only 4.7% off its most recent record highs. That’s not even a correction, which is defined as at least a 10% drop from highs. A bear market is 20% lower.

To avoid sliding to those depths, it means the Trump administration may be more inclined to resolve the conflict faster in order to prevent a prolonged decline in stock prices. Cramer pointed to the sell-off following Trump’s “liberation day” announcement of huge tariffs on top U.S. trading partners in April 2025. When the White House paused many of those levies just a week later, stocks immediately rebounded.

“Trump’s pattern has been pretty clear in this presidency. He’s willing to make hard choices that could send the market down, but if it gets hit too hard, he’s also willing to change plans,” Cramer added. “That means there could be a deal.”

It’s unclear what a deal to end the Iran war would look like, according to Cramer, who speculated that a potential back channel through Qatar could give Trump the chance to claim a win. “I’m not a military strategist. I’m a stock strategist. And, what I know is that, sooner or later, this war will end,” Cramer said. “You’ll most likely lose money if you don’t own any stock ahead of the ceasefire.”