A line has been drawn in the sand, and anyone with an interest in banking stocks will have to pick a side.
On the one side is Bill Miller, chief investment officer of
On the other side is Meredith Whitney, a former
Miller has been loyal to financial stocks even as they continued to slide, and has been betting everything that they will recover quickly. In April 2008, he mistakenly called the bottom in financials, and his unwavering faith in
"Financials have the biggest potential to outperform," Miller said recently.
Whitney thinks banks will return to negative earnings after they post their first-quarter profits because their gains don't mirror improvements in their businesses. "The underlying core earnings power of these banks is negligible," Whitney said.
Investors are torn over who to believe. Just about everybody wants banks to recover, but most aren't as confident as Miller that a recovery will come soon.
"It could be Bill is right and the vast majority of banks will earn their way out of this," William Stone, chief investment strategist at
"[Miller] made massive best in institutions that were wiped off the face of the exchange," said Frederic Dickson, chief market strategist at