Cramer's 'Mad Money' Recap: Back to Basics

Buy and hold might have made sense 30 or 40 years ago, "when taxes were high and commissions were even higher," he continued. But now it's a "form of false consciousness that stands between you and your ability to make money."

On the other hand, if market players study up on the stocks and do their homework, they'll be prepared and know when it's smart to buy and when it makes sense to sell, Cramer said. For those people who don't have time to do their homework on a stock before they buy and while they own it, he suggested they put their money into mutual funds instead.

Don't Dwell on Regrets

The second worst mistake people make when they invest is harboring regrets, he continued. In his Real Money book, Cramer made this rule No. 13: "There are no woulda, shoulda, couldas." And even though people know it's unproductive and bad to dwell on missed opportunities or past mistakes, they still do it, he said.

"Every second that you spend wistfully wishing you'd made different decisions is a second wasted," Cramer said. "It's just human nature: We want lots of money, and when we miss an opportunity or make a mistake, we can spend hours or even days beating ourselves up over it."

In fact, Cramer said he's the worst trespasser when it comes to this rule. When he worked at a hedge fund and got something wrong, he'd "just sit there, totally mesmerized" and totally hating himself, he said. But market players "cannot afford to get thrown off their game" like that.