Many people don’t realize that the global bond market is actually larger than the global stock market. The estimated total worth of all bonds is more than $100 trillion, while global stocks add up to around $64 trillion.

The amazing part about the global bond market is that, according to some estimates, it has tripled in size over the last 15 years. Tripled!

The U.S. accounts for 40% of the global bond market alone. That’s $40 trillion in U.S. bonds versus a $20 trillion U.S. stock market.

As investors, we have to pay attention to bond markets because what happens there affects stocks too. When bond yields fall, stocks are more attractive by comparison. The opposite is also true.

Corporate bonds make up about $9 trillion of the U.S. bond market. That’s nearly 25% of the overall market. That’s a lot of debt – about half what the entire U.S. stock market is worth.

Thanks to recent Federal Reserve interest rate hikes, the mainstream media is suddenly paying attention to the corporate credit bubble.

Bloomberg just ran an article headlined “Corporate Debt Crises Could Come Faster and Harder in 2019.” I agree, and I have a feeling this discussion is just getting started.

So, how big of a problem is corporate debt in the U.S.?

Pretty darn big. Let’s look at some examples.

Toys R Us got itself neck-deep in debt. Then it had a weak period of sales and went bankrupt.

J.C. Penney has $4 billion in debt and weak sales, and it looks to be on the brink. Its shares are trading at $1, giving it a valuation of just $345 million.

General Electric (GE) has an astounding $114 billion in debt and is selling off valuable parts of its business to stay afloat. Shares of GE are trading around $7.50, down from around $31 in July of 2016.

Disturbingly, the Fed’s interest rate hikes (small as they have been) appear to have contributed to their woes.

J.C. Penney and GE are not alone. Companies are beginning to struggle with debt, even though rates are still well below normal levels. All this debt means an economic slowdown could push a lot of companies over the edge.

Frankly, some of these debt zombies do need to go away. We need companies that took on too much debt to be punished by the markets. That’s what market-based, normal interest rates would do. That’s what markets are supposed to do. Yet for many years now, companies have been rewarded for taking on more debt, buying back more shares and earning fat stock option bonuses thanks to share buybacks.

Hopefully this nonsense will peak soon. But many companies still seem wedded to the idea of doing more share buybacks rather than paying off debt.

Bottom line: Don’t own companies with too much debt in this market. If they’re highly leveraged, they’re inherently fragile. And if companies spend most of their earnings on buybacks, I would avoid those too.

Companies with lots of cash sitting around and no debt, however, could do very well. They may be able to acquire some bargain-priced assets if credit conditions keep tightening.

I have a feeling this is one of the reasons Google is holding $100 billion in cash and Apple is holding $237 billion. They’re simply waiting for the markets to dive and give them bargains.

It’s a bold move, if that is what their thinking is. It requires patience. But it could pay off in a big way for those who time things right. American stock investors might be wise to take a similar approach in this market. Wait for the bargains to come to you and have some cash sitting around for when they do.