Editor's note: The following is a transcript of Part 2 of TheStreet.com TV Correspondent Alix Steel's video interview with Stephen Brown, the David S. Loeb Professor of Finance at the New York University Stern School of Business. (To see Part 1, click here . To read a transcript of Part 1, click here .)

Steel: How does your approach to investment education for your Stern students (or other business- or finance-savvy individuals) differ from the way that you would educate a "non-Stern" student about investing?

Professor Brown: My sense is that people who live their lives, often live their lives long way from the financial markets. A lot of people work one job very hard -- maybe they work two or three jobs. These days, it's a very hard job to raise a family and a have a good life. A lot of people don't have very much money and in these uncertain economic times, how much money you have to invest may be very small.

For these kinds of people, they may as well assume that the capital markets are working perfectly -- that there are no hidden values there, that prices of securities fully reflect all the information that is available to the market. Academics refer to this as the " efficient market hypothesis." And rather than being an article of faith, it's more like a "practical guide to practical people" that says if you're a long way from the markets and you don't have the time and the energy or the money, then you ought to be careful about investing -- taking advantage of small opportunities. That's not to say that you don't invest in the markets -- far from it. You can invest in the markets through funds , mutual funds and other diversified investments.

Yes, with these investments you take on risk but as I said, the "house odds" are in your favor . So if you're willing to wait -- if you're a long term investor, willing to wait for your returns , you should be invested in the equity markets.

That's the approach for the uninformed student -- the "non-Stern" student, let's say.

For the Stern students (and finance is the most popular major here at Stern), the people who have the knowledge to invest -- they're working in the financial sector, they typically, either directly through their own account or work for people who have large amounts of money to invest -- those people are in a position to take advantage of the value spreads , which would be unavailable to somebody who doesn't have the knowledge, time, experience or money to take advantage of those things. For those students, we would urge a completely different approach to investing.

For the financially savvy, we would say, "Yes, you should be diversified (every investor should be diversified)," but they should be prepared to seek out value opportunities as they arise. And in that way, they can earn a lot more money than they could earn just from investing in funds. But that's a full-time job and you earn a good income doing that.

Steel: There's a lot of homework to be done with that.

Brown: You have to do homework. It doesn't come easy and that's the most important lesson.

Next: In Part 3 of this interview, Professor Brown discusses how to deal with market volatility and the investment lesson we can learn from the story of Odysseus and the sirens in Homer's epic The Odyssey.