Jim Cramer explained Tuesday morning why the Investment Club is trying to strike a delicate balance with its moves during the fallout from the Iran war on the stock market. “Those who flee at times like this will never be able to get back in,” Jim stressed during the morning meeting, as Wall Street plunged sharply over the Middle East conflict after a surprisingly quiet day for stocks on Monday. Oil prices soared on Tuesday on supply disruption fears, reverberating through stock markets. Despite how Tuesday is shaping up, if there are eventually reports of “fewer drones” in the sky, the market will likely rise in response, Jim said. We don't want to miss a demonstration of help like that. “Remember, we're optimists,” Jim said. At the same time, Jim said that we are also not being too aggressive in putting money to work because the situation in Iran is fluid and the market is nowhere near oversold, as measured by the S&P short-range oscillator on Monday night. That's been Jim's momentum indicator for decades, and when oversold appears, we become more enthusiastic buyers. We haven't reached that point yet. Instead, our approach to the market is tactical, looking for buying opportunities when we see them and identifying places to cut back. The goal is to keep our cash position relatively constant, offsetting purchases with sales. “We're not investing new money. That's going to happen when we're really oversold. We're on the sidelines,” Jim said. Cardinal in, BlackRock out Our actions on Monday (initiating a position in Cardinal Health and then cutting our stake in BlackRock in half) demonstrate how we have avoided depleting our cash reserve. We basically hit the snooze button on Tuesday afternoon and bought more Cardinal Health with the money used to exit BlackRock entirely. CAH .SPX YTD rides Cardinal Health stock's year-to-date performance against the S&P 500. Why We Climb Also on Tuesday morning, we purchased additional shares of Google parent Alphabet, deepening the position we initiated in late December when the stock was trading around $313. With Alphabet stock below $300 at the time of our trade alert, we took the opportunity to reduce our cost base. It's the fourth time this year we've bought Alphabet. We have intentionally kept purchases on the smaller side during times like Tuesday. That's our tried and true approach to building positions because the market is unpredictable in the short term. With our thesis on Alphabet's leadership in AI still intact, we can see the stock decline opportunistically. Jim said that in his hedge fund days, he would have been aggressive by buying a lot of new stocks early on, and then “just taking them out doesn't work.” He stressed that “that's not what we're trying to do.” [with the Club]. What we're trying to do is build strong positions at great prices, and it's worked time and time again and again.” Upgrading a Winner Another move we made in the last two sessions was upgrading Nvidia back to our equivalent 1 Buy rating. The stock has basically been in consolidation mode since late summer, despite growing evidence that AI spending is increasing a lot, which should boost Nvidia's earnings. So far, as demonstrated last week, the company reported a booming quarter and guidance still better. We also wanted to update ahead of Nvidia's annual GTC conference later this month, when the AI chip maker is expected to announce a number of product previews and partnerships (Jim Cramer's Charitable Trust is NVDA, CAH and GOOGL. See here for a full list of stocks. As a subscriber to the CNBC Investing Club with Jim Cramer, you'll receive a trade alert before Jim makes a trade.) trade before buying or selling a stock, your charitable trust portfolio If Jim has discussed a stock on CNBC TV, please wait 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTMENT CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, TOGETHER WITH OUR DISCLAIMER OF ANY INFORMATION PROVIDED ON. RELATIONSHIP WITH THE INVESTMENT CLUB, NO SPECIFIC RESULTS OR BENEFITS ARE GUARANTEED.
