Preheat oven to 425°.
In a large sauté pan, cook the bacon and diced onions, stirring frequently, until the bacon is cooked and the onions are brown.
Remove the bacon and onions and set aside, reserving the bacon fat in the pan.
Pat the meat dry with a paper towel and season each piece well with salt and pepper.
Heat the bacon fat and 1 Tbsp. vegetable oil over medium high heat.
Working in batches, brown the meat in the hot oil. (It is important not to overcrowd the meat. The pieces should not touch each other or they will “steam” instead of brown).
Remove the meat to a large, oven-proof casserole dish or dutch oven with a lid.
Discard the cooking oil.
Toss the meat with the flour and place the casserole in the oven, uncovered, for 5 minutes to brown the flour.
Remove the casserole from the oven.
Turn the oven down to 325°.
Stir in the bacon and onions, beef stock, red wine, tomato paste and bouquet garni.
Put the casserole back in the oven, cover with the lid, and bake for 1 and 1/2 hours.
Remove the dish from the oven, discard the bouquet garni and stir in the pearl onions. (If quite a bit of fat on the surface of the sauce, skim it off before adding the onions).
Cover and cook for 30 minutes more.
Meanwhile, heat the butter over medium high heat. Add the mushrooms and sauté until they release their juices and start to turn brown. Add the cognac and let the alcohol reduce by half.
Remove the beef bourguignon from the oven. The meat should be very tender and the sauce should have reduced into a thick, velvety consistency. Stir in the mushrooms and their juice.
Simmer on the stove for a few minutes and season with more salt if necessary.
Serve, garnished with chopped parsley over egg noodles, rice, or accompanied by oven roasted potatoes.
SLOW COOKER VARIATION: Cook the bacon & onions and brown the beef according to the directions above. In a 4 to 5 quart slow cooker, stir together the bacon & onions, beef, beef stock, red wine, tomato paste, bouquet garni and pearl onions (omit the flour). Cook on low for 6 to 8 hours or until the beef is very tender and the sauce has thickened. Skim off any excess fat that has come to the surface. Prepare the mushrooms and cognac according to the recipe above and add to the pot just before serving.