Just after Puerto Rico defaulted for the first time in history, reports came in that Canada is on "the verge of recession," due to the shrinking of the Canadian economy and the increasing housing bubble in some key cities.
In a recent report in CNN Money, Canada's looming recession is seen from the latest economic data after they "posted its fifth straight month of contraction."
An economist said it is a sour result.
According to the report, Statistics Canada said on July 31 that the country's economy shrank by 0.2 percent in May on an annualized basis, causing Canada to possibly lead to a recession.
"There is no sugar-coating this one," said BMO chief economist Douglas Porter in the report. "It's a sour result."
Canada's recession threat reportedly may or may not have plunged into recession this year but CNN Money said it is facing "some serious headwinds."
Aside from economic slowdown, the rising housing bubble in key areas such as Toronto and Vancouver is also seen as a cause of this possible Canada recession.
So how can investors avoid this trap, if it happens some time in the future? Website Investopedia tells investors to stay ahead.
Some investors "take advantage" of the declining markets by selling stocks. But Investopedia warns that this technique, despite investors profiting from stock value decline, has many downsides and must only be practiced by the more experienced ones.
Another option is said to be "value investing." According to the website, this technique involves viewing a declining stock not as a hopeless venture, but as a bargain opportunity. These kinds of investors are taking advantage of the recession for instance to buy, as they expect that good economic times will return again.
There are also investors, as the website further noted, that barely change track during recession. He or she is the investor who looks at the big picture. He or she knows that short-term problems will just be a part of a long-term horizon, Investopedia says.
"The bottom line is that recession is a normal part of the business cycle," the website explains. "We can't say what the best course is for you - that's a personal decision. However, understanding both the business cycle and your individual investment style is key to surviving a recession."
