How I Invest with David Weisburd

E189: Inside the Goldman Sachs Prop Desk: Lessons from a Top Trader w/Nancy Davis

Jul 21, 2025
Nancy Davis, founder of Quadratic Capital and a former Goldman Sachs trader, shares her insights from nearly a decade on the prestigious prop desk. She discusses her options-based investment strategies and the common pitfalls investors face. Nancy emphasizes the importance of humility and coachability in finance. She also warns about the potential return of stagflation and critiques how the market currently prices inflation. With unique thoughts on risk management and trading psychology, her approach flips traditional models on their head.
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ANECDOTE

Nancy's Goldman Prop Desk Experience

  • Nancy Davis worked on Goldman Sachs' Risk Arbitrage desk managing only the firm's own capital.
  • They traded like a hedge fund with external parties but without client exposure, which was a unique privilege.
ADVICE

Manage Risk Upfront with Options

  • Manage risk upfront by sizing positions to your maximum loss when buying options, avoiding stop losses.
  • Take profits as investments gain value instead of reacting only after losses occur.
INSIGHT

Options Offer Asymmetric Payoff

  • Stop losses cause selling at the worst time, whereas buying options caps maximum loss upfront.
  • Options provide asymmetry allowing multiple times profit when right and controlled loss when wrong.
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