Here's a short summary of the state of our economy, courtesy of some recent Wall Street Journal headlines:

  • "Markets Shake As Credit Fears Grow"
  • "Economists Say Recession Is Here"
  • "S&P's Grim Subprime Report"

With yesterday's news of Bear Stearns (NYSE: BSC) deteriorating liquidity, stocks sank across the board -- with other investment banks such as Lehman Brothers (NYSE: LEH) and Morgan Stanley (NYSE: MS) feeling significant pain.

Experts agree: Now is the time to panic
What's more, events may very well take a turn for the worse. Economists surveyed by the Federal Open Market Committee now see a 38% chance of recession -- a three-year high.

Against that dire backdrop, however, a very interesting trend is emerging. Insiders at many large companies have been buying stock ... in spades.

That's right ... spades
According to a recent report from Thomson Financial, insiders in the battered finance sector picked up $91.7 million worth of shares in November.

Buying, however, is not confined to the financial sector. A recent report from Bloomberg revealed that insiders at AT&T and Monsanto have also been purchasing stock -- as has Aubrey McClendon of Chesapeake Energy (NYSE: CHK), Mitch Rales of Danaher (NYSE: DHR), and Mark Fetting of Legg Mason (NYSE: LM). In fact, "senior officials in corporate America are buying more of their companies' shares than they're selling for the first time since 1995."

The insiders here are taking a stand against market sentiment, even if they won't be proved right in the near term. That's the point, of course. To the insiders -- the people in the know -- these stocks look cheap. And rather than panic at the onslaught of bad news, they're preparing their portfolios to profit for the long term.

Time for you to choose
Insiders aren't the only ones starting to snap up their hated issues; some smart money managers are doing the same.

Legg Mason Value Trust guru Bill Miller wrote in his most recent shareholder letter that he's looking closely at this very sector:

The new [market] leadership will be U.S., large-cap, dollar-based, and grow to encompass what no one wants to own today, especially financials and consumer. ... Just as the right thing to do in 2002 was to buy what everyone was panicked about, I think the greatest gains over the next five years will be made in those securities people are panicked about today.

Of course, saying you'll buy what no one wants to own and actually doing so are two very different things. And I'd say it's even more difficult today than it was in 2002.

A brave new world
Buying stocks today and in the near future will take courage. Fortunately, insiders appear to be leading the way.

At Motley Fool Stock Advisor, Fool co-founders David and Tom Gardner have made a practice of buying the best operators in the most-hated industries and profiting while others panic. So if you're looking for someone to help you navigate this panicky but potentially very profitable market, click here to join Stock Advisor free for 30 days.

There is no obligation to subscribe.

This article was first published Dec. 18, 2007. It has been updated.

Tim Hanson does not own shares of any company mentioned. Chesapeake Energy and Legg Mason are Motley Fool Inside Value recommendations. The Fool has a disclosure policy ... and its next move is to make some hot chocolate.