Talk about a confusing and frustrating market. Following two days of gains fueled by optimism on an Iran war resolution, Wall Street went back in sell-off mode Thursday morning after President Donald Trump’s primetime address was filled with escalatory rhetoric. That sent oil prices higher and stocks lower to start the day — the inverse relationship we’ve come to know well since the war broke out Feb. 28. “Last night, the president once again showed you how difficult it is to own stocks here because he probably gave you the most hard-lined speech you could get, and that has caused people to say, ‘Look, I have to re-evaluate once again,'” Jim said during Thursday’s Monthly Meeting. But just as we were hesitant to ring the all-clear bell earlier this week, we’re not sure Thursday marks the start of a sustained decline for stocks. It is simply too difficult to make a call either way when the action is being driven by conflicting headlines out of Washington and Tehran. The tenor shifts quickly, and so does the market. Indeed, we saw some dip-buyers step in shortly after the Morning Meeting ended, with the S & P 500 briefly reversing into the green. An Iranian state news agency is reporting that Iran is drafting protocol with Oman to “monitor transit” of the Strait of Hormuz, which is helping calm the markets. Oil is well off its highs of the day as of 11:30 a.m. ET. Understandably, the temptation to bail on stocks until everything is resolved may be mounting. Who wants to keep up with a market changing by the minute, not just by the day? However, completely throwing in the towel is something that has historically hurt long-term investors more than it has protected them. Just think about if you sold everything on Monday when the market was under pressure, and the hopes of a resolution were dim. You would’ve missed Tuesday and Wednesday’s gains, which saw the S & P 500 advance a combined 3.65%. Of course, the index is still more than 5% below where it was when the war began. But the point is, trading in and out of the market is a tough game. If you had stepped aside on Monday, it would’ve been emotionally difficult to want to get back in over the past two days. Can you imagine the emotional toll of the last 12 hours if had you thrown up your hands and bought back into stocks Wednesday afternoon? It’s the kind of thing that causes people to walk away from the market all together, or at the very least, give up on the potential rewards of active investing. The famed fund manager Peter Lynch once said, “Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.” Of course, that doesn’t mean you shouldn’t adjust your exposure when risks increase, as demonstrated by our Cisco exit on Monday, which helped us rebuild our cash position following our annual charitable distribution. But Lynch’s remarks reinforce the pitfalls of trying to sidestep drawdowns by making dramatic moves. As long-term investors, the most important, but often the hardest, thing we must do is weather short-term pain to ensure we don’t miss the gains that await on the other side. Those gains could be delayed if the war ends up dragging on well beyond the two-to-three week timeline Trump offered Wednesday night. In that scenario, oil prices would likely stay elevated, if not rise even further, which could increase the likelihood of a major slowdown in economic growth that crimps corporate profits. Remember, earnings are the guiding light of the stock market. Over the long run, share prices tend to follow profits. We do acknowledge that the tail risk of a recession that pressures earnings is higher than it was a month ago. But the operative word is delayed, not destroyed. So, how are we supposed to navigate this volatile market? Next steps Start by identifying your top three to five stocks that you think are attractive now and only more so at lower levels. What you’re looking for is companies that can grow earnings despite the war — or, at least, ones that you would expect to handle the hit better than peers and can come out stronger when the conflict has ended and the Strait of Hormuz has reopened. Consider the case of glass maker Corning , which is one of our bets on the firehose of AI spending. At the moment, the Iran war doesn’t seem likely to derail the multiyear AI data center buildout, meaning the demand for Corning’s fiber optic cables should remain robust. “Can we start saying, ‘Is Corning really hurt by this?’ And sure enough, Corning opens down and then it rallies,” Jim said on Thursday’s Morning Meeting. Once you’ve identified the stock, start to identify key levels of interest. This will be more art than science, so be sure to use everything from the technical tools we’ve discussed in the past to what the stock’s valuation would be at certain levels. It can also be helpful to consider scenarios in which earnings estimates do need to be lowered by, say, 10% to 20% to provide yourself a margin of safety. As you go through this exercise, the overarching goal is for each buy to reduce your overall cost basis. You don’t want to use up all your dry powder at the same levels. Additionally, in volatile markets like we have now, we want to implement “wider scales” with our purchases. What that means in practice: If in a “normal” market our goal was to buy more every 3% to 5% lower, we may look to make additional buys only on 5% to 10% downward moves. Of course, scales will widen differently for different names, with more volatile stocks requiring we wait for larger declines before making additional purchases. This technique is especially true in light of the two-day rally this week. Plenty of stocks made big advances over Tuesday and Wednesday, which means even their early declines Thursday still keeps them above where they closed Monday. Club name Qnity Electronics is a good example. At its lows of Thursday morning around $112.57, it was still well above Monday’s close around $107. Don’t let these moves trick you into buying at the same level. If a stock falls 5% after a rally back to the level you recently purchased at, then that is not the 5% decline you’re looking for. You want to wait for a decline that is 5% to 10% below your previous buy, or maybe even your lowest overall purchase (depending on when you started the position). At the end of the day, we must remind ourselves that we have been through situations like this before. Maybe it wasn’t a war with Iran, but we have been through countless situations where the world was seemingly ending, and yet we managed to overcome them and make our ways to new highs — often much more quickly than seemed possible at the time. Not many would have guessed in March 2020 that we would end that year higher. Of course, 2022 was a bad year for the market, but the losses were largely gone by the end of 2023. And one year ago exactly, when Trump announced his “Liberation Day” tariffs that sent markets tumbling for a few days, most would have thought you were crazy if you said the market would close higher for the year. But that’s exactly what happened. Think back to how you felt in those markets. For many, it is probably not much different than you feel now. Those probably felt even worse given events like the Covid-19 pandemic were unlike anything anyone alive had ever seen before. Now consider that those who held on were rewarded for their pain tolerance, and those who bought into the decline were rewarded even more. Sure, some may have gotten out and back in. However, far more likely is that many more stories of those who got out (probably closer to the bottom than the top), witnessed the start of the rally, and waited for another major pullback that never came. (Jim Cramer’s Charitable Trust is long GLW and Q. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . 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