Value manager Bill Miller says that 2010 will be another good year for stocks, but that investors need to be very careful of ways that government actions could impact their portfolios.

“The outlook for both the stock market and the economy is considerably better than the consensus forecasts,” Miller, Legg Mason Capital Management’s chairman, tells Canada’s Globe & Mail. “There ought to be strong returns in U.S. equities this year. I don’t think that the risks … are anywhere near as great as what the consensus believes.” He’s very bullish on certain financial stocks, saying that some still have 40% to 50% of upside left in them.

But Miller — who beat the S&P 500 a record 15 straight years, struggled from 2006-2008, and bounced back strong in ’09 — says that policy makers could throw a kink into his forecast. (Poor Treasury Department policy was a key factor in the crash of 2008, he says.) “Investors have to be extremely sensitive to government policy and react quickly when that policy is not capital friendly,” Miller warns. “People declare the all-clear too soon and decide they’re going to attack the fiscal deficits. And that then sends the economy over a cliff. That’s a very real risk.”