The turmoil in the markets makes it too easy to justify selling any stock these days. Yet, while panic never helps investors, it's still a good idea to play devil's advocate with investments.

Consider beleaguered financial services firm Morgan Stanley (NYSE:MS). Though some see signs of a recovery, you'll find that more than a few of the 1,782 Motley Fool CAPS members weighing in on the company offer reasons to be bearish.

Here at the Motley Fool, we like to consider both the good and bad sides of an investment. In this article, I've highlighted three of the main bearish arguments on Morgan Stanley today. Be sure to read the bullish side as well, and then weigh in with your own comments below or rate Morgan Stanley in CAPS.

1. Regulatory crackdown
While Morgan Stanley looks to beef up its trading operations, a recent report by JPMorgan (NYSE:JPM) forecasts that global regulatory changes and a push to trade derivatives on exchanges could cut into the profit of investment banks. Governments around the world are stepping up oversight of banks, and proposals are gaining strong support in the U.S., which could carry significant ramifications for banks such as Deutsche Bank, Goldman Sachs (NYSE:GS), and Morgan Stanley.

2. Compensation costs
Goldman Sachs is partying like its 2007 again, distributing high payouts and bonuses to employees. That relative luster is putting pressure on Morgan Stanley to retain its own staff. Year to date, Morgan Stanley has paid or set aside pay and benefits of about 70% of its revenue, in comparison to its recent average of about 50%. The high compensation costs prompted a downgrade from a Bank of America (NYSE:BAC) analyst, since the costs are expected to squeeze near-term earnings.

3. Risks remain
One year after the failure of Lehman Brothers and the "rescues" of AIG (NYSE:AIG), Fannie Mae (NYSE:FNM), and Freddie Mac (NYSE:FRE), many CAPS members still see significant risks in the financial sector as a whole, and still think that much of what got the sector in a mess remains the same as it ever was.                                 

To see details of what CAPS members are saying now about the company, just click on over to Motley Fool CAPS and have a look -- or add your own thoughts directly to this story in the comments box below.