One of Warren Buffett’s most famous sayings is about to come true

Good morning.

One of Warren Buffett’s most famous quotes is: “Only when the tide goes out do you learn who has been swimming naked.” Well, the tide is receding. So don’t be surprised as bare bodies start to appear.

Among companies, you can call them “zombies”—even if that mixes the metaphor. Real interest rates have been negative for the past 15 years, with only a few brief months of exception. So no surprise many companies have loaded up on debt. Now the Fed is determined to reverse the process. And as rates rise, the “zombies” will find they aren’t making enough money to service their debts.

How many? Well, a recent estimate from Goldman Sachs found that 13% of U.S.-listed companies “could be considered” zombies. Other estimates put it even higher. David Trainer, CEO of investment firm New Constructs, has a list of roughly 300 that includes Carvana, Peloton, AMC, and GameStop. (Read more here.)

As the zombies feel the pinch, expect pain to spread. That’s why some commentators—including my friend at the Yale School of Management, Jeff Sonnenfeld—are already calling on the Fed to ease up on raising rates. (Read his column here.) But unwinding the effects of 15 years of easy money doesn’t happen without pain. The only question is timing: Does the water go out rapidly—exposing the naked bodies all at once—or slowly and fitfully—prolonging the process?

More news below. And read why Melinda French Gates is investing not just in women in developing countries but also in the U.S. By the way, French Gates will be among the many attending the Fortune Most Powerful Women summit next week. I snagged the rare invite for my gender and will be reporting there.

Alan Murray
@alansmurray
alan.murray@fortune.com

This story was originally featured on Fortune.com