Big lessons from 12 stock exits, including Cramer's biggest-ever disappointment

For stock investors, 2026 has meant constantly adjusting to geopolitical and economic pressures — and most importantly, protecting profits.

Keeping the Club portfolio on track through the market volatility has required a mix of disciplined exits, strategic buys, and humbling missteps, including what Jim Cramer has called one of the worst blunders of his more than four decades picking stocks.

While the S & P 500 is up 13% year to date, the climb has been anything but steady. Not even three months into the new year, the U.S. and Iran went to war, sending oil prices surging and stocks into a tailspin. The S & P 500 bottomed for the year on March 30.

The index then roared back to life, igniting a blistering nine-week winning streak. Trading went sideways in June and July before the broad-based index hit an all-time high Aug. 13. It has since cooled off. The AI trade has been in and out of favor.

There have been rotations into the sleepier parts of the market, such as industrials, healthcare, and energy, all solidly in the green. Still, as we close the books on a strong August and head into the historically troublesome month of September, the Federal Reserve promises to be even more consequential following Chair Kevin Warsh 's hawkish inflation comments last Friday.

So far this year, the Club has executed 141 trades — 66 buys, including eight new positions, and 75 sales, including 12 exits. Looking back at those exits highlights both what we did well and where we can improve. During the August Monthly Meeting , Jim said: "Winners take care of themselves.

Mistakes don't. They throw you off your game. They can detract from performance. They can wipe out your gains." Here are big lessons from the 12 stocks we dumped in 2026.

Sometimes, you just get had. Let's start with what was beyond our control: the abysmal Honeywell Aerospace sale, which Jim called the "single-biggest disappointment" of his 46 years on Wall Street. Honeywell completed its much-anticipated spin-off of Honeywell Aerospace on June 29. Just over a month later, on the evening of Aug.

5, Honeywell Aerospace cut guidance during its first quarter as a standalone entity. The reason? Supply chain constraints caused factory volume growth to come in below estimates. The stock sank 23% the following day.

We were forced to cut our losses and sell the position at roughly a 15% loss. "We get the stock, and right out of the chute it guides down gigantically," Jim said during the August meeting. "The loss we took? Horrendous. Horrible.

Revolting. Infuriating. I am sick to my stomach thinking about it." But, as he pointed out, there was nothing investors like us could have done differently. "That was just management bagging us," Jim added.

"I tell these disparate stories because I want you to know the kinds of mistakes people can make. An honest mistake versus something that can't be prevented. Something that's just going to happen."

During the Club meeting, Jim told a story about a similar time when he was completely taken off guard and about what his then-hedge fund client and friend, actor Gene Hackman, said. "'Sometimes, you just get had,'" Jim recalled the Hollywood legend saying. Don't wait too long for a turnaround.

What was in our control? Well, Jim said we were far too patient with the turnarounds at Nike and Danaher. Registering a 40% loss on the Nike exit in July was a hard pill to swallow. It was a reminder to never lose sight of portfolio discipline.

We took two rounds of insider buying from Nike CEO Elliott Hill and Apple 's Tim Cook (who has served on Nike's board since 2005) as votes of confidence. We normally like it when insiders put their own money where their mouths are. It didn't work out that way this time.

The day after another muted quarter from Nike, we made the tough decision to bolt. Instead of following insider buying, we should have paid more attention to the stock's performance. It told us that something was very wrong.

"I regard it as a black mark; there is no consolation for a bad loss. But I will say this: I believed these insider buys were so important, so dispositive, that I let my discipline go," Jim admitted. "The simple fact is that the problems may be bigger than anyone thought, including two gentlemen whom I respect."

"I didn't get had by Elliott and Cook. I got it wrong because they and I both underestimated how damaged Nike really is and how the firmament shifted so quickly. It's highly unusual. You sell stock for many reasons, but you only buy them for one: to make money," Jim said.

"They haven't made money. And I lost money largely because I believed management knew more than me about turning the ship." Months before, there was Danaher . The Club took a 7% loss in February on shares acquired between 2023 and 2025. While not nearly as painful as Nike, it taught us why patience doesn't always pay off.

It would've been better to sell when shares reached 52-week highs just a month earlier. That's because our core thesis — that Danaher's bioprocessing business would normalize after its post-Covid inventory drawdown — failed to materialize. We continued to be let down by the lack of consistent, high-single-digit revenue growth.

Not all of our turnaround stories are busts. Just look at Wells Fargo. The Club started a position years ago on the belief that CEO Charlie Scharf could clean up the bank's past regulatory misdeeds. Wells did exactly that, culminating in the Fed lifting its long-standing $1.95 trillion asset cap in June 2025.

While the stock has had a rocky 2026, we're still sitting on paper gains of more than 100%. You don't have to hate a stock to leave ... Exiting Solstice Advanced Materials proved that a company can have great fundamentals but not be the right fit for the portfolio at the time.

The specialty materials maker was our very first exit of the year on Jan. 8. Rather than an issue with Solstice's financials, our exit was more about exercising caution following a big run. Plus, the position accounted for only 0.15% of the portfolio after receiving shares from Honeywell's split in October 2025.

Buying more after the stock's climb felt unnecessarily risky. Instead, we booked profits and put it back in the Bullpen. After all, Solstice has a thriving refrigerant business that directly serves the lucrative data center liquid-cooling market, while its alternative-energy materials segment offers a long-term growth engine tied to modern nuclear power expansion.

Ultimately, we realized a 13% gain on shares acquired. Similarly, we exited BlackRock in March, not because we fell out of love with the asset manager, but because we needed to build up our cash pile. We wanted to rotate into more defensive names as tensions in the Middle East escalated, whipsawing global markets.

We redeployed those proceeds into Cardinal Health , a healthcare distribution powerhouse that generates almost all of its revenue within the U.S. The Club realized an average gain of about 7% on our BlackRock shares purchased between February and April 2025. ... Or you can switch into a more attractive rival.

Don't rule out a company's competitor when you're dumping its stock. We swapped our position in Bristol Myers Squibb for Johnson & Johnson . The decision came down to long-term outlooks for the drugmakers: J & J's setup simply looked much brighter.

The FDA's approval of Icotyde earlier this year positions J & J to aggressively capture market share from incumbent oral psoriasis treatments such as Amgen 's Otezla and Bristol's Sotyktu. Sure, both stocks are up about 15% since our April sale, but Bristol's got way too many roadblocks coming up for us to second-guess ourselves. We're not running a hedge fund chasing quick scraps.

We're playing the long game, and fundamentals come first. Bristol is staring down a patent cliff and still has a string of high-stakes clinical trials to pull off. We'd much rather lean on Johnson & Johnson's commercial execution than bet on binary events.

That's why we used Bristol's run in April to trim and lock in a 3.5% gain. Not every call is the right one. Sometimes you just have to take it on the chin. That's exactly what we did with our premature sales of Texas Roadhouse and Cisco Systems.

In February, Texas Roadhouse posted a triple miss: falling short of expectations on quarterly revenue, earnings per share (EPS), and same-store sales. While usually a death knell for the stock, shares went higher on strong traffic numbers, so we used that strength to exit the steakhouse chain. At the time, we saw limited upside potential due to stubbornly persistent beef inflation weighing on margins.

While we locked in a respectable 12% profit on shares accumulated throughout 2025, the stock has rallied another 8% higher since we walked away. Another misstep was Cisco Systems. It got kicked out a month later. We had originally been bullish on the technology company due to its accelerating AI networking order book.

However, the overall market pullback and our desire to hold more cash overruled our patience. We sold at $80.48, and the stock has since climbed to around $111 per share. We did still lock in an 18% profit on shares bought in July and August of 2025.

Hindsight is 20/20, but we clearly should have stayed in both names for longer. A bad quarter can be your cue to head for the door. Earnings disappointments led to our exits from Procter & Gamble and Dover .

It started with the consumer staples giant, which missed expectations for organic sales growth in July, sending the stock tumbling. We expected more growth from the company under CEO Shailesh Jejurikar, who took the top job in January. While we told investors not to write off Jejurikar's plans just yet, we decided to monitor his turnaround efforts from the sidelines.

We closed the position in late July, with a 1% loss on shares added between November 2025 and March 2026. A few weeks later, Dover's earnings similarly failed to inspire confidence. Facing a do-or-die quarter, the industrial conglomerate missed on sales due to issues ramping up production for its CO2 refrigeration business.

Rather than waiting around for another quarter of excuses, we took the release as our cue to exit and allocate capital to higher-conviction ideas, such as our initiation of Micron on Aug. 11. From the Dover sale, we realized an average gain of around 19% on stock purchased between December 2024 and July 2025.

Both were good calls. Plus, adding to our Micron position has already paid off, with shares of the memory maker up more than 10% since we initiated on Aug. 11. Bulls make money, bears make money, and pigs get slaughtered. Do not get greedy after a stock's big run.

This is Jim's No. 1 investing rule . It is crucial to protect your gains and avoid giving back major profits. Our July sale of Arm Holdings was a good reminder.

The high-flying chip designer was on a tear earlier in the year thanks to the AI trade, so we let the position run. But when things took a turn in late June, and AI-linked stocks like Arm began to get shaky, we had to make a move, especially as Wall Street grew anxious that custom silicon order backlogs might be reaching a cyclical peak.

While we don't share that view, the market noise created enough volatility to warrant taking profits. When the group bounced in July, we exited and locked in a 75% gain. We missed selling at the June top, but Arm is trading lower now.

Better late than never. "We had a great gain in an incredibly short period of time," said Jeff Marks, the Investing Club's director of portfolio analysis. "There were signs in early July that the AI trade was starting to wobble. It would have been a sin to give all of that back."

Our Corning exit on Monday is our latest example of how it's better to book gains than wait for a big mover that's fallen on hard times to come back. Much like Arm, Corning is tied to AI and had a massive run higher that ran into a brick wall. We had already been taking big profits this summer.

The final sale of our remaining Corning position yielded us an average gain of 52% on shares purchased from October 2025 to August 2026. We're still going to watch this one. So, we put it in the Bullpen. (See here for a full list of the stocks in Jim Cramer's Charitable Trust.)

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.

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