Sorry, but the former is not quite true.
You have 2 different kinds of Adiabatic lapse rates.
The first one is the DALR, which has a rate of -3degrees per 1000ft, and reaches until the temperature is at DEW POINT (which itself will decrease with 0,5deg./1000'). From that point, the DALR changes into the Saturated ALR, and has an original decrease rate of -1,5deg/1000' and as the air becomes dryer, it will increase its lapse rate until becomming back 3 degrees. At this piont, there is no more humidity.To calculate the transition point of DALR to SALR (the Condensation Level) us this simple formula: Heigth= (Temp- Temp dewpoint)*400.
If the ELR, so the Actual Environmental lapse rate is more than -3/1000' , there will be an Absolute Instability.
If the ELR is higher than the SALR but lower than the DALR , so say between 1,5 and 3/1000', there will be a Conditional Instability.
If the ELR is lower than the SALR, there is Absolute Stability.
I could tell you a lot more, but then I would get too deep and technical (like the different types of diagrams,...) but if you are really interested, buy a book like the Jeppeson one, which is very easy to understand, but the in-depth is a bit lacking compared with European ATPL books like Oxford or Four forces.