Empire Records was a Greek Tragedy

But nobody knew it at the time

Remember the 1995 movie Empire Records? It was a commercial and critical flop. But I think about it all the time.

Riding a wave of early 90’s coming-of-age slacker films popularized by the likes of Kevin Smith and Richard Linklater, the story revolves around the young, ragtag employees of Empire Records, a local, independent music store. Music Town, a national music chain store mega-corporation (evil), is secretly planning to buy the shop from its aging owner. In a dramatic climax reminiscent of every Mickey Rooney film ever made, the kids put on a show to raise the money to save Empire Records from selling out (good).

This movie was so gloriously 90’s. It was also a Greek tragedy. But nobody knew it at the time.

A distinguishing characteristic of a Greek tragedy is its utter lack of a surprise ending. The Greeks would tell you how the story ends right at the beginning. Why? Because when you know that someone’s going to die (it’s almost always death), all their happiness and optimism throughout the story is, well, tragic. How depressing to watch someone go through life joyously full of hope, knowing it’s all going to end in ruin. It’s like watching old episodes of The Partridge Family knowing how Danny Bonaduce turned out.

That’s Empire Records. Not just because it was peak Liv Tyler. But because those kids went to great financial lengths to save a record store in 1995. Napster, iTunes and Spotify would soon, in rapid succession, make the leveraged buyout of an independent record store an epically bad allocation of one’s entire life savings.

I probably think about Empire Records way more often than is normal or recommended by the medical community. To me it perfectly captures the oblivious hope and optimism of being a young adult in the 1990’s, blissfully unaware that 9/11, Facebook and the iPhone would soon transform every aspect of human life on the entire planet, with no going back ever.

So what’s the lesson here? It’s a shocker: you can’t tell the future. Massive, paradigm-shifting change can happen really fast. Companies that seem immune to failure may suddenly get disrupted out of nowhere. Polaroid was the Apple of its day. Ask your grandparents what it was like to own Polaroid stock in their retirement accounts.

Today’s hope and optimism can too easily become tomorrow’s Greek tragedy. Follow Apollo’s maxims to avoid the worst consequences of overconfidence and concentration risk. Seek diversification and guarantees. Spread risk across asset types, industries and strategies. Use guaranteed, non-correlated assets to offset downside risk when you need to protect your asset base. For extra credit, get to know something called the Sharpe Ratio, a measurement of risk-adjusted return probability.

But above all, plan for your own goals. You don’t need to take the advice of every kibbitzer who gets in your ear. Especially if they’re the type to wager your financial future on a crapshoot.