Listen to Blackstone: Don't Buy Big Banks

If there is anything that the current crisis should have taught retail investors it is this: Do not invest in large financial institutions, ever.

Over the past year, we have seen countless large companies widely thought to be rock solid run into serious distress or go out of business. The distress is not merely the result of the bursting of a real estate bubble. It is also the result of fear of the unknown and unknowable entities that are the balance sheets of giant financial companies -- including insurers, like AIG (AIG), and hedge funds disguised as steady industrial conglomerates like General Electric(GE).

Still, I know there are people reading this article wondering if they should take a flier on Bank of America (BAC), or maybe a stronger player like JPMorgan Chase (JPM) or Goldman Sachs (JPM).

Those people are probably beyond hope, but in case they are not, let me point them to statements made Wednesday by Hamilton "Tony" James, President and COO of The Blackstone Group (BX), possibly the largest private equity firm in the world and one of the savviest.

"The 19 largest banks that you're reading about that might need more money as a result of the stress test is probably not a place you'll see us," James told reporters during a Q&A session to discuss the company's first quarter earnings. "The ability to go in and do due diligence on a massive institution like Citigroup (C) -- I'm not sure there's enough private equity people in the universe to spend a year doing it and really know what you need to know. All these organizations are so huge and so complicated and so global, and with financial institution investing you really need to get down to the individual asset, the individual liability, the individual counterparty level. It's a massively intensive diligence requirement."