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Stocks are officially cool again! As I shared yesterday, everyday investors finally realized that we're in a bull market. And they've begun rotating out of bonds into equities.

Ever the contrarian, though, I should be alarmed, right? Especially considering that the S&P 500 Index is higher today than it was at the height of the dot-com and credit bubbles. And everyday investors are notorious for being late to the profit party. But I'm not alarmed one bit. Here's why - along with three more dangerous myths about the current bull market.

Anything But "Great" Yet

Although the "Great Rotation" is definitely underway, it's far from over. You see, investors don't rotate money out of bonds into stocks in one fell swoop. They wade back into stocks, instead of doing a cannonball. Or, more simply, they take their merry old time.

So even though a little more than $20 billion "rotated" out of bonds into stocks over the last two months, we've still got a long way to go.

Consider: Since the bull market began in March 2009, investors plowed $1.1 trillion into bond funds, but only $379 billion into stock funds, according to data from the Investment Company Institute. There's a whole lot of rotation left between those two numbers. (Just saying.) And as more retail money rotates into stocks, it'll naturally push prices higher, which leads me right into the first myth about the current bull market…

~ Myth #1: The Idiocy of the Too-Many-New-Record-Highs Camp

Many pundits want you to believe that you're a sucker if you buy stocks now.

Why? Because the stock market keeps hitting new record highs, and that simply can't continue. Fearmongers!

Or, as S&P Capital IQ's Chief Equity Strategist, Sam Stovall, says, "I don't know why they say that, other than to instill fear and thereby ensure that investors stay tuned. History, on the other hand, shows that new highs are typical in a maturing bull market."

Indeed!

Consider: As of July 19, the S&P 500 Index hit 22 new all-time highs. But during the average "secular" bull market, Stovall found that the S&P 500 notches 127 new all-time highs.

Now, we can save the "secular" versus "cyclical" bull market debate for another day. Suffice it to say, we've got 105 new all-time highs to hit before we need to start worrying, based on Stovall's research. If you want a second opinion, consider Bespoke Investment Group's… They crunched the numbers on all-time closing highs for the Dow during bull markets and found that the current tally of 28 new highs "is nothing out of the ordinary."

In fact, there have been 20 years with more than 28 record highs. The runaway record holder? That distinction belongs to 1995, when the Dow hit 70 new all-time highs. Again, we're nowhere close to that.

~ Myth #2: Low Volume? No Problem!

If we don't buy into the myth about too many new highs, the bears simply move on to spinning a tall tale about trading volumes.

You see, ever since this bull market began, bears warned that the rally has zero staying power. Why? Because trading volumes have been anemic, and that indicates a lack of conviction. Sounds plausible. But the numbers don't back up the theory.

As Bespoke found, if we only invested in stocks during days when trading volumes were above average, we'd be down 36.9% since March 9, 2009. On the other hand, if we only invested on low volume days, we'd be sitting on profits of 295.6%, roughly double the actual return for the S&P 500 during this bull market.

(click to enlarge)

So much for low volume days being a bad thing. By all means, Mr. Market, keep them coming!

~ Myth #3: Still Not a Snaggletooth

The last myth about the current bull market we need to address concerns its duration. Many contend that it's too long in the tooth. It's not.

Since 1920, there have actually been five bull markets that lasted longer and rose higher in percentage terms. With stock valuations still reasonable (the S&P 500 currently trades at 16 times earnings), there's strong fundamental support for even higher prices.

Especially considering that companies keep growing earnings…

The latest data from FactSet Research reveals that profits are up 1.8% for S&P 500 companies midway through the earnings reporting season. You'll recall, analysts only expected profit growth of 0.7% for the quarter. So they were way off the mark, which I told you to expect.

Bottom line: Stocks might be getting cool again. But investors are nowhere near euphoric. Nor are valuations overstretched. So stay invested and stick to the plan to keep putting new money to work in undervalued - but overlooked - fast-growing companies.