I hope everyone's been reading Don Luskin's series on deflation. At the office here in Maryland, we've been knocking the idea around since we made required reading of A. Gary Shilling's 1998 book, Deflation; Why It's Coming, Whether It's Good or Bad, and How It Will Affect Your Investments, Business, and Personal Affairs. Personally, I hope they're both wrong, but heck if Don doesn't make a strong case.

Related Stories

Defining Deflation: Debunking the Greenspan Myth

When Goldman Quits on Tech, Can Capitulation Be Far Behind?

Widely Lauded Easing at Odds With Fed's Lending Crackdown

Credit Firms' House of Cards Could Be Due for a Tumble

James Cramer once suggested that trading by corporate insiders might be considered what I believe he termed a "contra-indicator." Obviously, I think that's nonsense. But don't think for a moment that in all these years it hasn't crossed my mind. There's no denying that steady, moderate insider selling can go hand in hand with a strong stock chart. Nor that desperation hasn't more than once manifested as knee-jerk insider buying. That's why I look at these things closely, rather than jump to conclusions.

I mention all of this now in the context of a particularly compelling thread of Tuesday's Columnist Conversation that centered on a quote by John Kenneth Galbraith. In essence, Galbraith made the case that by doggedly supporting their stocks in the wake of the 1929 market collapse, companies (and in those days, this more easily extended to "insiders") "chose faster, though equally certain death." Believe me, just like deflation, this is a train we do not want to get on.

To these twin themes of spiraling doom, I would add a few points. First, by this argument, we should be relieved that technology insiders have not raced to the open market to defend their stocks. OK, so that's a joke. Seriously though, just because a company says that it will buy stock back doesn't necessarily mean that it will. I've seen this trick way too many times over the years to fall for it in this particular panic. Heck, Yahoo! (YHOO:Nasdaq - news - boards) and the rest of the Nasdaq Composite Index may well buy back their entire floats, but I'll believe it when I see it. Until then, if buyback talk calms the market a bit, who's complaining?

Second, I believe that Adam Lashinsky is spot on when he says that visibility is the key. And, as always, I defer on the subject of tech. Still, more than once over the years, I've been surprised by insiders who seem to spot value on the horizon when everyone else sees nothing but crashing waves. That's why I pay attention to what they do and not what they say. And on balance, I'd welcome a healthy dose of insider buying right about now -- all the better if the companies themselves repurchase in concert.

Outside of tech, I'm a bit put off by the insider selling in the financials. Every week it seems that insiders are surfacing to sell at yet another Wall Street firm, subprime lender or mortgage bank. Among the brokerages, already this year, insiders have sold Raymond James Financial (RJF:NYSE - news - boards), Merrill Lynch (MER:NYSE - news - boards), Bear Stearns (BSC:NYSE - news - boards) and Lehman Brothers Holdings (LEH:NYSE - news - boards).

In the subprime market, eight insiders recently filed to sell just under 900,000 shares of Americredit (ACF:NYSE - news - boards), the leading provider of subprime auto loans. At Capital One Financial (COF:NYSE - news - boards), eight insiders sold more than 2 million shares in the last week of January. In each case, the recent round of sales was the largest by insiders in the company's history.

The argument goes that subprime lenders can thrive in a slowing economy given their high fee structures and the likelihood that squeezed consumers will scramble for (more costly) financing alternatives. Talk about a death spiral. I could write a whole column on that particular argument. Suffice to say that in this case, I'm not convinced that these sales are a good thing.