Cut the onion in half, chop the ends, then peel the onion and cut into thin slices (cut parallel to the onion).
In a large heavy bottomed saucepan or Dutch oven over medium heat, add 2 tablespoons olive oil and 2 tablespoons butter. Add the chopped onion and fry without a lid, stirring occasionally, for 10 minutes.
Sprinkle ½ teaspoon of sugar over the onions, which helps the onions caramelize faster. Fry, uncovered, for another 30-40 minutes, stirring occasionally, until the onions are caramelized and browned. Stir frequently to prevent scalding or burning of the onion.
Once the onions are caramelized, add the chopped garlic and fry for another minute.
Add 1/2 cup sherry and remove bowl by scraping bottom. Keep stirring until the sherry is fully cooked (about 3 minutes over medium heat).
Add 8 cups of beef broth, bay leaf, thyme, and 1 teaspoon salt. Partially cover and simmer for 30 minutes, until flavors blend. Add 1/2 teaspoon salt and 1/2 teaspoon black pepper, or season to taste, then remove from heat.