What-If Analysis

Name: SimpleFunctions
Author: SimpleFunctions

What-if analysis (scenario analysis) lets you explore how your thesis and edge calculations would change under different assumptions by temporarily modifying causal tree node probabilities.

CLI:sf what-if

Scenario Planning with What-If Analysis

What-if analysis answers questions like: "If unemployment spikes to 6%, how does my thesis change?" or "What happens to my portfolio if diplomatic talks succeed?"

How It Works

You temporarily override one or more node probabilities and see how it affects:

The root probability (thesis-implied price)
Edge calculations across all linked markets
Strategy trigger conditions
Portfolio-level P&L

Use Cases

Pre-event planning: Before a CPI release, run scenarios for CPI = 3.0%, 3.5%, and 4.0%. Pre-plan your trades for each outcome.

Risk assessment: "If my most uncertain node (n3, Fed policy error) turns out to be 0%, what happens to my portfolio?"

Position stress testing: "What's my worst-case P&L if nodes n1 AND n2 both go to 0%?"

What-If in SimpleFunctions

The sf what-if command lets you run scenarios interactively:

sf what-if --node n1.1 --prob 0.80

This temporarily sets "unemployment > 5%" to 80% and shows you the cascading effect on every linked market and strategy.

Systematic Scenario Generation

For important events, the agent can auto-generate scenarios based on historical data ranges and show you the full spectrum of outcomes. This is especially useful before FOMC meetings, jobs reports, and CPI releases.

Example

sf what-if --node n1.1 --prob 0.80

Scenario: "Unemployment will exceed 5%" at 80% (current: 42%)

Impact cascade:
  n1:   Labor deterioration    50% → 68%  (+18pt)
  Root: Recession              42% → 55%  (+13pt)

Market impact:
  KXRECSSNBER-26    Edge: +13pt → +26pt  (significantly underpriced)
  KXGDP-26Q2-TNEG   Edge: +8pt  → +18pt
  KXUNRATE-26JUN-T5  Edge: +5pt → +30pt  (now the #1 opportunity)

Strategy triggers:
  ⚠ Strategy S-002 would trigger (edge > 15pt threshold)
  ⚠ Strategy S-004 would trigger (n1 > 65% condition)

Related Terms

Causal Tree

A causal tree is a structured probabilistic model that breaks down a complex event into a hierarchy of independent, verifiable sub-conditions. Each node has a probability, and the tree computes the overall probability of the root event.

Thesis

A thesis is a structured investment argument that combines a directional view, a causal model of why the view is correct, and specific market positions that express the view. In SimpleFunctions, a thesis is the core unit of analysis.

Node Probability

Node probability is the estimated likelihood assigned to a specific node in a causal tree. Changes to leaf node probabilities cascade upward through the tree, updating the root probability and all derived edge calculations.

Risk Concentration

Risk concentration measures how much of your portfolio depends on the same underlying thesis or event. Correlated positions amplify both gains and losses, creating hidden portfolio risk.

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