A High-Quality Problem

 | Apr 02, 2014 | 3:23 PM EDT
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Ever been annoyed when one of your stocks goes higher? Sometimes I am, simply because I ask: "What took you so long, stock? You had all of that good news and nothing happened to you. Now you have nothing new and you rally like you've gotten a bid?"

The Action Alerts PLUS charitable trust has two of them today: Timken (TKR) and Vale (VALE).

Timken's a break-up story; a company splitting into a value-added steel company and a basic one, and both are best-of-breed. It has done very little since it decided to split and then suddenly today it roars up a buck-and-a-half. Would it be too much if the stock had rallied when it reported the last good quarter? This random activity rankles me because it is so hard to game.

But if Timken isn't gameable, consider Vale. Here's a company that has done everything it can to bring out value: give a dividend, close underperforming businesses and produce the finest iron ore in the world. Almost every time something good happened, the stock got hammered.

Today, it's up gigantically. Today! The only news? A coal train of Vale's has been attacked in Mozambique. You can't make this stuff up.

I know these are high-quality problems. I know that I should be thrilled that these two dogs are at last hunting. It shows you that it pays to be patient. It's just that, in the end, you wish that stocks reacted to news and not just random buying and selling.

Today, random buying is more aggressive than random selling in Vale and Timken, and the charitable trust is the unwitting winner.

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