Editor's note: TheStreet.com TV Correspondent Alix Steel recently met with Stephen Brown, the David S. Loeb Professor of Finance at the New York University Stern School of Business, to discuss how he approaches teaching his students about finance and investing. The following is a transcript of the first part of the interview.

Steel: One of the first questions your students probably ask you is "Where do I start?" What do you tell them?

Professor Brown: I think a lot of people who have no knowledge of finance come into a class like the one I teach and they think that I'm going to give them the secret to great wealth, because a lot of people want to come to NYU Stern to study finance because, of course, that's where the money is -- and the finance major is the most popular major at the undergraduate college.

And they're kind of disappointed when they come and they learn that I'm not going to tell them how to make a great deal of money without any effort, because that's not possible.

The purpose of my classes is to teach financial rhetoric, to explain that finance is a life skill that unfortunately is not taught anywhere.

I was once at a cocktail party, where there was a little old lady who came up to me and asked me about her options spread position. And I said, "Where did you learn about options spread positions?" She replied, "My broker told me." And I said, "You're learning about finance from your broker? That's like learning how to drive from a used car salesman."

The ironic thing is that it's coming to a point in life in America that you really have to know finance because it's becoming a very important life skill, but it's not taught anywhere.

Steel: So, what kind of homework can your students do outside of class that can help them understand how to invest?

Brown: I can give them kind of general guidelines. I explain to them that finance is hard work and people who work in the finance sector work long hours. It's not an easy job. It's a hard job. And I explain to them that there are some general guidelines that are important to know that if you're going to invest, you're investing for the long term. And given that you're investing for the long term, you can afford to take risk . And a large part of my course is trying to explain to them about the trade-off of return for risk. That risk is something that's very natural when they invest in the markets -- it's something that goes along with that.

Yes, it's like gambling in a casino, but it's a casino where the house odds are in your favor. And so you can actually become wealthy investing in the markets -- but wealthy slowly, not wealthy quickly -- and that there are certain guidelines, which you must understand. And, you must be willing to take risk, but you take risk prudently.

There is a misconception that if "I just take risk, I'll make a lot of money." Well, if that were true then everyone who goes down to Atlantic City would be a millionaire. That isn't true. But it is true -- in order to earn a high return, you have to take risk. And the question is how do you prudently take risk? And there are several guidelines that we teach that explain how to deal with the risk that you face.

And the first guideline is to understand the risks involved in any investment and to educate yourself about the process and the financial instruments that you're investing in.

And the second rule is to understand the importance of diversification -- that you don't put all your eggs in one basket and that you spread your investments over many different kinds of securities . And this way, you can prudently bear the risk.

And a third and I think the most important lesson that we can teach is that nothing comes easily - that you should be particularly careful when you hear stories about large returns with no money down or that it's possible to make a lot of money without any effort, without any risk. That's fairy tale.

If I teach anything to my students, it's the old adage that if something is too good to be true, it probably is.

Next: In subsequent parts of this interview, Professor Brown discusses buying into the efficient market hypothesis versus seeking out value opportunities, dealing with volatility and the investment lesson we can learn from the story of Odysseus and the sirens in Homer's epic The Odyssey.