Is Citigroup Even Worse Than Bank of America?

However, the hardest thing about the financial sector is making sense of all the noise. In October, there were rather shady earnings from BofA, Citi and JPMorgan Chase(JPM) that moved numbers around a spreadsheet to magically create profits for the companies. Citigroup in particular benefited in the third quarter from a "paper gain" of $1.9 billion, thanks to an increase in the perceived riskiness of its debt and not true business operations.

Defenders will point out that in 2010, Citigroup achieved its first profitable year since 2007 -- and has stayed in the black ever since. Also, late in 2010, the government sold its remaining stake in the company, so Uncle Sam is no longer looming large over the operations.

But that doesn't necessarily mean the bank is safe and will never need federal aid again. And next time, given the dire straits of the government's own finances and the focus on federal spending, a bailout may be very difficult to come by.

What's more, BofA CEO Brian Moynihan recently opined about the "new normal" in retail banking that will lead to much smaller profits. That's even as proposed and planned regulations -- such as the Basel III capital requirements and the so called Volker Rule limiting speculative investments -- have yet to full take effect.

It all ads up to a whole lot of uncertainty for the financial sector, and for Citi.

Since the financial crisis, this market has showed us time and time again that investors can get burned very quickly if they make the wrong moves. Right now, the financial sector has too many disturbing signs and unknowns.

And like Bank of America, Citigroup is one of the biggest offenders -- and, therefore, your worst investment.

Jeff Reeves is the editor of InvestorPlace.com. Write him at [e-mail], follow him on Twitter via @JeffReevesIP and become a fan of InvestorPlace on Facebook . As of this writing, he did not own a position in any of the aforementioned stocks.

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