I call FNM and FRE “toy stocks”.

Countrywide (CFC) became a toy stock before it disappeared. Bear Stearns (BSC) became a toy stock before it disappeared. Subprime lenders like Novastar and New Century became toy stocks before they got delisted.

When a stock no longer trades based upon fundamentals and gets in the hands of speculators that love to treat it like a plaything, it’s a “toy stock.”

On a day like today, with FNM and FRE up over 30% from their open to their intraday high based upon Freddie Mac being able to borrow more money, these toys made some people happy. Just don’t confuse an investment with a toy.