Determine Exposure to Riskiest Bonds
Once you’ve identified the bond meltdown (ideally before any meltdown takes place), you need to figure out precisely what your level of exposure is to bonds. While this step may sound simple, you would be surprised to find out how many investors hold Treasury bonds in mutual funds, 401(k)s, IRAs, pensions, and other retirement accounts that they really didn’t even know they had.
If you have any kind of an income-oriented mutual fund, or any kind of fund that boasts of having a blend of stocks and bonds, then you likely have more exposure to Treasury bonds and other bonds than you are aware of. The more exposure you find out you have to the riskiest bonds, i.e. those that have the longest-dated maturities, the better equipped you’ll be to make sure you minimize that exposure before the bubble bursts.