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Don't Take Cues From Inferior Companies

On Friday's "Mad Money," Cramer outlined his five rules to help investors make money in any environment.

Rule #1: "Don't dig in your heels when you're wrong"

Rule #2: "Price matters"

Rule #3: "Don't take your cue from an inferior company"

When a "worst of breed" name says things are bad for the entire sector, don't just take it on faith, Cramer said. Weak players always seek to pin their failings on the entire industry, he explained. It's important, then, that investors are able to recognize the excuses. If a company has gotten into the habit of serial underperformance and blames its shoddy results on a shoddy environment, Cramer said the odds are that its competitors will tell a different story.

At the same time, bad news for one company might not mean bad news for another company in the same sector. Investors can't just assume that all companies in the same industry are equivalent, he noted.

Read on for Rule #4

Call Cramer: 1-800-743-CNBC

Questions for Cramer? madmoney@cnbc.com

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