GM and FNM could be good buys if done right

Everyone is afraid of GM and FNM and no one wants to touch them because both companies have the risk of going under. They can still provide opportunities if you know how to manage the risk.

With these stocks, there is a possibility of that these stocks will go to zero, but if they succeed, you will be greatly rewarded. The risk can be managed with proper diversification.

I am not a big fan of diversification, but when you have securities that can go to zero, it is essential to protect yourself. Don't risk capital that you aren't afraid of losing.

I think that these stocks are good buys because there expected value is probably higher than its current price. A simplified way of calculating of the expected value is :

(% chance of losing all)*(0) + (% chance of succeeding)*(price if it succeeds)

If the expected value is significantly lower than its current price, given you a large margin of safety, then these could be good buys. Just make sure you manage the risk properly by making them just a small holding in your portfolio. These should be treated more like options than actual stocks.