Due to the ongoing credit crisis, former Fed Chairman Alan Greenspan warned last week that the U.S. economy was "on the brink" of a recession, with the chances of entering recession being once again "over 50%." Greenspan added that "there are still very considerable structural problems remaining in the financial system. They will remain for a while. It's going to be very difficult. There are a lot of unexpected adverse events out in front of us."

Last Thursday, Goldman Sachs lowered the boom on brokerage stocks, adding Citigroup to its "conviction sell" list. GS said that Citigroup faces an additional $8.9 billion in second-quarter write-downs, while Merrill Lynch is facing $4.2 billion. The bottom line for Goldman's slicing and dicing: According to analysts, the sector's turnaround may not occur until 2009. And as long as the fundamentals for the major brokerages continue to deteriorate, most financial stocks won't be safe.

Goldman was especially harsh with Citigroup and made it clear that the financial giant will continue to face problems caused by a worsening consumer-credit climate and its riskier legacy assets.

As a result of this devastating report, Citigroup led financial stocks on a dramatic plunge last week. The situation worsened when Moody's Investors Service placed the long-term ratings of Morgan Stanley and its subsidiaries under review for a downgrade, which sent financial stocks further south. My advice: Stay away from most financial stocks! Use PortfolioGrader Pro to check my latest ratings and see which ones stocks the bill.