I have been lurking mostly in this thread (or completely, can't remember) but the DM philosophy resonates with me. It is a sophistication on top of the buy & hold strategy and would love more discussion on it. Due to tax consequences and different tax regimes here in the Netherlands, for any privately owned securities avoiding a big drawdown is extremely important and a standard buy&hold doesn't really fit that well. As such I am considering such a strategy for my privately owned securities.
Below I point out a couple of my takes on the subject, and I can be massively wrong on them of course. I am just a learning investor and trying to make sense of contradicting views on a complicated subject.
I like B&H for it's simplicity and a bold belief in the broad stroked economy, but I also believe it's major pitfall - behavioral aspects - are the same thing that fuel the DM's edge over B&H in terms of avoiding a large drawdown. I see B&H proponents on other parts of the forum warn novice investors for their risk tolerance, and tell them they may just react differently to a large fall in the market than they think they do now (after a major bull market). This irrational (or unintelligent according to Benjamin Graham) is the reason individual investors tend to compared to the market.
Essentially B&H investors is a special case of the absolute momentum strategy, specifying a lookback period of infinite (or at least 20+ years). Stocks have historically shown to have the best results, and as such, we extrapolate that to the future and pick stocks as the asset class of choice for returns. A risk reducing method of introducing bonds is then added, as historically bonds are loosely negatively correlated with stock performance and historically has shown to reduce risk and volatility at the expense of relatively little performance. B&H expects a reversion to the mean for many aspects of the markets, but doesn't attempt to explain or posit why it will do this. From a theoretical point of view, it can be argued that stocks provide the best return at the expense of the highest risk. At the same time, this is not true for all stocks, just as it isn't true for all bonds that they have a lower risk/return compared to stocks.
The DM school is more about figuring out when the shoeshine boy is talking about buying stocks. It attempts to find an edge in human behavioral psychology and the performance of the financial markets. When are we deluding our collective selfs on financial market performance? It won't catch the exact tipping point, but it will catch the changes in mindset and behaviour at a relatively early stage. The explanation for the what and why would have to be found in psychology, which in and of itself is not an exact science. Neither is economics, and as such, standard scientific methods are difficult to justify as the reason a particular strategy should or should not work alone.
Basically, in summary:
B&H - investment strategy that relies solely on the return to the mean for all financial markets
DM/Technical analysis - investment strategy that relies solely on the behavioural psychological aspects of the markets
Fundamental Analysis - investment strategy that relies on parameters relative between securities and compared to the mean
B&H works as it is simple and the easiest strategy to stick to. As such it is suggested by Buffett and Bogle as the go-to strategy to match the market for the individual investor with a message to not try and strive for different results. That takes behavioural aspects into account and it doesn't even begin to suggest that it is the optimal theoretical strategy - only the most effective one for the most people. If anyone asks me what to do, this is also what I tell them to do, if they can spare the amount of money invested. (and people in the Netherlands are extremely risk averse, so this is already a paradigm shift for most).
DM obviously has a difficulty suggesting which lookback period to use and which asset classes to consider. The more asset classes, the more trading and switching occurs. Depending on the lookback period, the historically observed maximum drawdown also changes. One can always question whether or not a strategy will work in the future compared to history, and in the end, there is only one saying "Only time will tell". It makes sense that there is an extended period of time for major players to be selling their positions to the shoeshine boys and that during this period there is not a major appreciation or decline in price. It also makes sense you need particular period of time, and some leeway to avoid acting on noise (e.g. the 10% correction in October 2014) and at the same time to be able to act on signal (e.g. the 50%+ correction in 2008). In order to determine the right variables, it makes sense to look at the past, rather than approaching it theoretically. As long as the concepts on which the strategy is built, can be found as concepts in other parts of science as well.
But that's just my 2 cents ;-)