Investing Club: How to think about buying and selling stocks during a volatile week

Published Fri, Feb 25 20224:44 PM ESTUpdated Thu, Mar 24 20229:47 AM EDT

The major averages had another turbulent week, as Russia — undeterred by the threat of Western sanctions — invaded neighboring Ukraine. Despite a sharp selloff in the futures market Wednesday night on news of the invasion, however, the markets manage to bottom, reverse and close well in the green on Thursday. In line with our previous commentary that we wanted to be ready to buy the stocks of high-quality companies that were beaten down — despite no direct impact from the conflict — we stepped in on Thursday morning to do some buying. Often when an event is widely anticipated, when it finally happens, the move made ahead of that event is then reversed. This is something we saw this week as the names that were sold before the Russian attack went on to rally once the invasion started; meanwhile, the energy stocks that were bid up ahead of the invasion were sold off once the troops started to advance. While we could never have anticipated such a sharp intraday turnaround, this week provided yet another example of being rewarded for sticking to our discipline and not letting our emotions get the better of us. We have no control over market swings. However, our trusty S & P Short-Range Oscillator was registering oversold conditions. So what we could control was stepping in — as painful as it may have felt at the time — to do some buying once our predetermined levels were hit. By determining these levels ahead of time and waiting for the shares to "come to us" (not chasing them and paying whatever the market was asking) we were able to act without emotion. We are not out of the woods yet. Russia is still in Ukraine, the event may have emboldened China to make a move on Taiwan, and we are still on the verge of a monetary tightening cycle that puts all high-flying stocks — think high p/e or sales-based valuations — at risk. Given these risks, just as our discipline dictated that we buy beaten-down stocks once they hit our levels, we also used spikes higher to raise cash and replenish our dry powder. We sold some Chevron (CVX) as it pushed to a new 52-week high on Thursday to help fund purchases. We then again took profits in Chevron as well as Nucor (NUE) and United Parcel Service (UPS) on Friday's rally, cycling a portion of that cash raise into the beaten-down PayPal (PYPL), while holding on to some of the cash in case we see another reversal to the downside next week. (Jim Cramer's Charitable Trust is long CVX, NUE, UPS. 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 . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Ukrainian servicemen gesture as they ride on tanks towards the front line with Russian forces in the Lugansk region of Ukraine on February 25, 2022.

Anatolii Stepanov | AFP | Getty Images