Investors must reckon with unknowns

[SINGAPORE] In a classic example of impenetrable political doublespeak, former US defence secretary Donald Rumsfeld once rambled on about “known knowns”, “known unknowns” and “unknown unknowns” when referring to the state of the world, Iraq, Osama bin Laden and terrorism.

Rather than try and figure out what he was talking about, what’s interesting is to ask whether his framework can be applied to the stock market as we head into 2026.

If you were to ask equity strategists for their views, the answer would likely follow these lines: The outlook is positive because the US economy looks okay, inflation looks to be under control, interest rates are heading down, and earnings will surprise on the upside because of artificial intelligence (AI).