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The top 10 lessons learned from 2014

Cramer's lessons of 2014

With the market taking a nosedive on Monday, sellers came out of the woodwork to unload stocks.

What caused the decline? Was it the new low in the price of oil? The strong U.S. dollar? Maybe it's not that complicated, said Jim Cramer.

"After a 12 percent positive year, you have lots of investors just trying to lock down some good gains. I can't blame them," he said.

With the decline, the "Mad Money" host took the opportunity to review the Top 10 silly preconceptions that served as alibis to justify selling in 2014. These are lessons that can be applied on down days like Monday to keep investors grounded in discipline.

No. 1 Sweeping preconceptions lead to wrong conclusions
How many times did the S&P futures lead you in the wrong direction when you woke up in the morning? It was because they were based on news from Europe that spilled over into the U.S. The futures steered investors astray most of the time. Europe is nothing like the U.S. anymore.

Traders on the floor of the New York Stock Exchange.
Getty Images

No. 2 Don't sell too soon
The stocks that were strong at the beginning of the year were still great at the end of the year, for the most part. Retailers were a great example. Cramer noted that the trick was to hang on to your stocks as hard as you could on down days like Monday. Discipline pays.

"While Apple's stock came in for heavy profit taking at year end, the trick was to own it, not trade it. I think that's still the case as it was very much an Apple iPhone holiday season. "

No. 3 If you bet on a turnaround, you made a wrong decision
This includes any kind of a turnaround, whether it was a country like China or a stock like J.C. Penney or Avon. Heroes were punished; the key was to go with the flow.

"In 2014 bottom-fishing was for suckers; it will most likely be so again in 2015."

No. 4 Don't buy the stocks of companies in commodities that are going down
Seriously, it doesn't matter how well run the company was. The stocks got slaughtered. It's not worth it to buy a commodity on a decline, especially since China didn't grow very fast and Europe seems to have lost its growth.

No. 5 Dividends can't protect you
Big dividends in oil companies didn't protect investors. Even a low interest rate environment, they just weren't safe. Rather, Cramer uses the yield rate as a red flag for a stock. If the yield is more than the 10 year treasury, than it's a red flag. Same goes for master limited partnerships.

No. 6 Great growth stocks find ways to reinvent themselves
So don't sell them just because they appear to be expensive! Does Cramer need to remind you about Starbucks with its roaster, Disney with Frozen, CVS with its removal of cigarettes or Home Depot's online reinvention? These stocks were the gifts that kept giving in 2014.

No. 7 Great biotechs aren't one-trick ponies
Cramer faves Celgene, Biogen Idec and Regeneron kept coming out with more exciting pipeline developments. One after another, they paid off to own.

No. 8 Old dogs can learn new tricks
The best performers in the market were the old dogs, like utilities and transports. The airlines finally got their act together and merged, stopped the price wars and changed the game.

No. 9 Mergers help companies more than you think
The market loved when Actavis bought Forest Labs and Allergan, and now it is the king of pharma. Cable companies and airlines also merged, and made investors very happy with a positive impact on stocks.

No. 10 Buybacks do matter if they actually shrink the float
"Most buybacks didn't mean much because they barely dented the supply out there," Cramer said.
But the buybacks of solid companies like Home Depot and AutoZone had a positive impact, which Cramer encouraged investors to buy on a moment of weakness like Monday.

Read more from Mad Money with Jim Cramer
Cramer Remix: Avoid these 401(k) mistakes in 2015
Cramer: Do not putthis in your 401(k)
Cramer on retirement: Live a little!

So while there were plenty of lessons learned in 2014, these were the ones Cramer highlighted as the most important. What do all of these lessons have in common? Conventional wisdom.

In the end, it paid off to stick to your guns rather than to try to be a hero or make a wild and crazy move.

"You just needed to recognize that both the mundane and the tried and true paid off once again."

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