The Lloyds share price is falling again! Should I take advantage and buy?

The Lloyds (LSE: LLOY) share price has been falling again over the past week. Shares in the lender have declined just over 3% since Monday. It appears that concerns about the group’s exposure to the fragile UK economy are behind the decline. 

This decline is just the latest in a string of ups and downs. Over the past six months, the Lloyds share price has increased in value by around 25%. However, over the past 12 months, the stock is down 36%. Over the past five years, it is off 40% excluding dividends. 

Put simply, the bank has been a tough investment to hold over the past five years. But, with the outlook for the UK economy improving, should I make the most of the latest decline and buy the shares? 

Is the Lloyds share price on offer? 

Shares in Lloyds tend to move in tandem with the UK economic outlook. As one of the country’s largest lenders, that’s understandable. If the economy starts to stutter, the bank will likely be one of the first businesses to report a decline in sales and rising loan losses. 

I think this is the reason why the Lloyds share price has been so volatile over the past half-decade. Brexit and the coronavirus crisis have been two challenging headwinds for the UK economy. As such, it has been difficult to predict what the future holds for the economy and the country’s largest companies. 

However, at least one of these headwinds has now been removed. Brexit has happened, and while some sectors have suffered from the changes, overall, the economy seems to have taken the changes in its stride so far. 

That leaves coronavirus. So far, the pandemic’s impact has not been as bad on Lloyds and its peers as initially expected.

Unfortunately, we won’t know the crisis’s ultimate impact until it’s over. That suggests to me that this headwind will continue to weigh on the Lloyds share price in the near term. 

Mixed outlook

It’s difficult to predict how Lloyds will cope in the world after the pandemic and over the long term. It’s impossible to tell what the economy will look like 12 months from now, and how quickly it will recover. 

Therefore, while the stock might look attractive after its recent declines, projecting future growth is almost impossible. That makes it difficult for me to say whether it is worth buying the stock today.

On the one hand, the Lloyds share price could be a great way to play the UK economic recovery. But on the other hand, if it is impossible to tell what the future holds for the UK economy, it is also impossible to say what the future holds for the bank. 

Still, I am cautiously optimistic about Lloyds’ outlook, but I am wary of the risks involved. So, I would buy the stock for my portfolio today, but it wouldn’t be a large position.