Cramer's 'Mad Money' Recap: Play by the Rules

He said he loved this stock as it had a "great" secular growth story, its fundamentals were "beautiful," and he thought it would be "the single biggest beneficiary of the new-at-the-time Medicare drug benefit."

However, after riding UnitedHealth up to $63 by late December 2005, the stock sunk to $44 and change by May. It didn't matter that the company had great growth and earnings because the first half of 2006 was a great time to own cyclical stocks as the "economy was steaming," Cramer said.

Although UnitedHealth had "one of the worst options backdating scandals," most of the stock's decline was because "people were selling it in order to buy the cyclical stocks that kick butt in a strong economy," he said.

In the end, it doesn't matter what Cramer thought of the company. "What drives a stock is what the money managers think, and the money managers obey the cycle," he said.

Moving on to the next rule, the analysts that cover a given sector -- a group commonly referred to as the Street -- are "never bullish enough on good stocks, and ... never bearish enough on bad stocks," Cramer said. This means that market players can actually follow the Street's lead and still make money.

The reason analysts are never bullish or bearish enough is because they don't just cover individual stocks but cover an entire sector, he explained.