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

Cramer's third rule pretty much means exactly what it sounds like: "Don't be a snob." It doesn't matter if people are snobs in their personal lives, he said. But if they're a snob about investing and are too busy looking at Neiman Marcus rather than Target (TGT Quote), they could be missing "great opportunities" to make money.

"The Street will almost always be late to picking up trends in low-end or even midgrade products, because everybody on the Street lives in an upper-class bubble," Cramer said.

Therefore, even an analyst, whose job it is to cover the restaurant industry, might not understand a casual-dining play such as Darden Restaurants (DRI Quote) as much as a higher-end stock like Morton's (MRT Quote) or Ruth's Chris Steakhouse (RUTH Quote), he said.

In fact, most big institutional players on Wall Street missed about a 50% gain with the big move Darden had between March 2005 and January 2006 because they were snobs and didn't want to go to Olive Garden or Red Lobster, Cramer said.

When to Believe the Hype

Rule No. 4 : Whenever a stock is being heavily shorted and heavily hyped at the same time, it's time to sell that stock, he said.

"Hype can be many things, but what I'm talking about here are analyst recommendations, celebrity endorsements and much-touted facts in the media that don't actually mean anything for a company's bottom line," Cramer explained.

To find the percentage of shares in a company that are shorted, or bet against, people can go to Yahoo! Finance, Google or TheStreet.com, where Cramer is a shareholder and director, and look up the stock.