Investing in France's Sideways Market: A 22-Year Review

France has a powerhouse economy—the second-largest in the EU and seventh globally, with a GDP right around 3 trillion Euros. Back in the '80s and '90s, a wave of economic liberalization, combined with deeper EU integration, sent its stock market soaring. But around the year 2000, things hit a wall.

For more than two decades, the French stock market, represented by the CAC40 index, essentially moved sideways. It wasn't until 2021 that the index finally pushed past the highs it set at the turn of the millennium. Why the long pause? The debate in France is ongoing, but most fingers point to a slowdown in reforms, a complex labor market, and an aging pension system. While some have suggested adopting the euro in 2002 was the culprit, there’s little hard evidence to back that up.

This prolonged stagnation makes for a fascinating case study in . When an entire market goes nowhere for twenty years, is it still possible to make money?

Our Strategy vs. a Flat Market

We put our strategy to the test on the CAC40 from 2001 to 2023. While the index's overall performance was modest—it only grew 10% from its 2000 peak by mid-2023—our approach told a different story. The core of is finding value even when broad trends look bleak.

Here’s how it broke down: we started with an initial investment of $20,000. Over 22 years, we made just eight carefully timed ETF purchases, averaging about one trade every three years. That initial $20,000 nearly doubled, growing to $39,590. This experience is a practical example of the patience required when for the long term.

Interestingly, our single most profitable trade came during the pandemic in June 2020, delivering an impressive 15.46% annualized return. This particular success in might signal that the French economy is finally starting to see some positive momentum, even if it’s not yet in a full-blown recovery.

Ultimately, our experiment with the French shows that even in a challenging, sideways environment, a disciplined and patient strategy can generate solid results. It reinforces the idea that successful isn't always about riding a bull market; sometimes it’s about making smart moves while you wait.