Cramer's 'Mad Money' Recap: Tools of Cramer's Trade

Plus, significant insider buying after a huge decline is a "sure sign" that people should buy more.

At the same time, Cramer warned viewers that these things are difficult to bet on and that they don't always happen at the bottom. "That's why my best advice is still that you shouldn't try to call bottoms in individual stocks," he said.

"Instead just use wide scales as the stock falls, buying in larger and larger increments as the stock declines," he said.

Furthermore, Cramer urged viewers to look for broken stocks, not broken companies. "When we get hit with a decline of sufficient magnitude, almost everything gets knocked down, every stock gets punished," he said. "But not every stock deserves the beating."

People tend to assume that when a stock gets knocked down, the company deserves it, but this is wrong. "Plenty of great companies are unfairly sold off by investors who simply don't get it," Cramer said.

This is why investors must do their homework, he stressed. "It's not hard to tell the difference between a damaged stock and damaged goods if you've listened to the conference calls and read all the findings."

Suppose "the market is getting hammered and Cramer's nowhere to be seen," he said. At this time, the "discipline" or method that will let people take advantage of all the stocks that the market's breaking in spite of the fact that they belong to great companies is "the shopping list."

"While the selloff is happening, you put together a shopping list of stocks you like that are going down," Cramer said. "These are the stocks you've done the homework on and know belong to strong companies."

Keep an eye on these stocks as they decline, he advised. But "don't look for the biggest decliners and assume they're the cheapest and that they should be bought," Cramer said. "Most of those companies are damaged goods, and you don't want to waste your time."

In addition, don't put alleged "blue chip" names on the shopping list under the assumption that they couldn't possibly be broken companies, he pleaded. "There's no such thing as a blue chip," Cramer said.