Jim Cramer says investors are in uncharted territory right now. The market has never had interest rates stay low for so long, and it will be a shock once the Fed decides to tighten.

That is why he decided to provide Cramerica with a guide on what to expect once they go up, and how to both survive and thrive.

Why does it cause such turmoil when the Fed raises rates?

Because when the Fed decides to raise rates, it's all about reining in the economy. Thus, it can be harder to profit from a decline, though not impossible. It just means returning to the principles of how to make money in the long term, regardless of the Fed.

Looking back to the Great Recession, Cramer saw that Ben Bernanke misread the economy and thought it was stronger than it actually was. This was because he was looking at the housing market, which was way too hot, and raising rates repeatedly to cool off the market even though other parts of the economy were not that strong.

As a result, the Fed raised short-term rates 17 times between 2003 and 2006. By 2007 the Fed turned a blind eye to the impact on the housing market and it became very clear to Wall Street that things had gone wrong.

It took until last year for the Fed to get comfortable enough to raise rates again.

"It wasn't until oil prices were suddenly cut in half by a glut driven in part by U.S. production that had increased dramatically because of technology, that we got employment and some wage gains that made it so the Fed could declare victory," Cramer said

In Cramer's opinion, those who think that it is bad for the market to go down when job growth is strong do not have a clear understanding of how the Fed works long term. It is good news when more people have jobs. The country is wealthier and the economy is strong.

The first misconception, he said, is that some think that stocks are up right now because they are just vehicles that are being used for income and thus they will lose this status if rates go up. However, Cramer does not agree with that point of view unless there have been several rate increases already, because a stock that yields even 3 percent is still more attractive versus bonds.

The second is the belief that the economy will fall apart as soon as rates increase, because it is too weak to handle even the slightest move. Yet, Cramer has seen the economy experience whole quarters with dramatically lower growth.

And while some stocks may be hurt from stronger bond market competition when rates go higher, Cramer warned to not sell all of your stocks.

Stocks can still be a fabulous generator of wealth, he said. While there may be times when it is not great to hold them, there are also times when holding them long-term pays off.

Cramer famously told investors to sell all of their stocks right before the market crashed in the Great Recession. He did this because he perceived systematic risk to the economy and the stock market. It just wasn't worth owning stocks when the fate of the banking system was in question.

"A period where the Fed is raising rates, however, is not one where there is systematic risk," Cramer explained.

Rather, the Fed is merely trying to slow down the economy before inflation damages the purchasing power of the market.

Cramer anticipates there will be various three-day selloffs whenever a piece of news comes out about a rate hike. On day one, all stocks will go down in a broad market selloff that is led by hedge funds and mutual funds that short the .

In the old days, Cramer used to buy bond market equivalent stocks on day two. That should no longer be the case. Instead, Cramer foresees money will gravitate to the bank stocks and the highest growth stocks that have earnings that will go higher on interest rates.

Higher rates also mean housing stocks will get hit because mortgage money will cost more. That means homebuilders will have to hope for high employment rates, and that banks will ease terms to lend money.

People also tend to buy gold when interest rates go higher, because it will retain its purchasing power when inflation is higher. Thus, if investors think inflation is imminent, they will all flock to gold.

With this in mind, many investors will want to create short positions against the market. And while Cramer is not allowed to create short positions in his Charitable trust, he did short almost every day when he worked at his hedge fund.

Cramer shared his rules for short-selling in the market:

Rule No. 1: Called the Business Week cover rule. At the time, this publication often featured companies on the cover and their stocks would often jump following the issue's release. Thus the rule to never short a company that could be on the cover of a big publication was born.

"I have augmented this rule and it's very simple: never short a best-of-breed company. There are so many crummy, awful companies out there, why bother to short a company that is a standout that could be considered among the best of the best just because you are hearing a negative story? Move on," Jim Cramer said.