Wall Street purists would say it is.

The argument goes something like this: Cash isn’t for show. It’s for investors. Companies have an obligation to either use it for growth drivers like acquisitions and equipment, or give it back to the shareholders. We put money into public companies to earn a higher return than we could get from the bank – so we’re understandably annoyed when Steve Jobs rolls it in rubber bands and tosses it in the safe.

Several investors quizzed Jobs about Apple’s (AAPL) “war chest” at last month’s shareholder meeting, forcing him to defend his Scrooge-like ways. Their concern is understandable. But I still say Steve should just ignore the noise and continue doing his thing with that pile of money.

Why?

Because it’s working, for starters. If Apple stock were stagnant or dropping, investors would be justified in hauling out the pitchforks. But the stock hit an all-time high of $228 earlier this month, fueled by anticipation of the iPad launch next week. Mac sales are brisk in a down economy. The iTunes store rules in music and mobile apps, and Apple’s physical stores are the envy of modern retail. In short, no one can argue Steve Jobs is asleep at the wheel.

Some other reasons Steve shouldn’t give you any money:

Security

We know it will take cash to finance the various legal battles Apple is constantly waging. More important, though, Jobs says a fat bank account makes him feel better about taking risks and shopping for acquisitions. (He’s done quite a few little ones lately, including online music service Lala and mobile ad network Quattro Wireless.)

As he put it at Apple’s shareholder meeting last month, according to Reuters: “We know that if we needed to acquire something, a piece of the puzzle, to make something big and bold a reality, we could write a check for it.”

Dividends and buybacks are good and all. But hey, if an extra billion or 20 in the bank helps His Steveness rest easy enough to dream up the next iPhone, maybe everyone should be cool with that.

Competition

Plus, Apple isn’t the only Silicon Valley company that’s big on cash right now. One example: Down the road at Cisco (CSCO), CEO John Chambers also has about $40 billion to play with. Chambers isn’t apologizing for his stockpile, and he’s not paying a dividend either (though Cisco does buy back stock occasionally).

Here’s Chambers’ thinking on cash. Downturns are the time when strong companies get stronger through acquisitions and other bold moves. And in this game, boldness requires money. That’s why Cisco could snap up seven companies in 2009, and boast that it’s looking to have another big year in 2010. With Apple now competing with Cisco in video devices, Google (GOOG) and Microsoft (MSFT) in mobile advertising and operating systems, and practically the whole world in PCs and retail, Jobs can’t afford to limit his options by handing out greenbacks to shareholders willy-nilly.

Access

Besides, Apple is actually putting its cash to work in less than obvious ways. Because of the iPod and iPhone, Apple is the world’s biggest customer for flash memory, the chips that store data on the smallest gadgets. To guarantee their supply of flash at the best prices, Apple execs have made a habit of pre-paying the manufacturers – to the tune of half a billion dollars to Toshiba last July, as just one example.

Cash helps with other components, too. I heard through the grapevine that to lock in the iPad’s unique IPS display technology, Apple wrote a multi-million-dollar check to the manufacturer to quickly whip the factory into shape. And don’t forget: Apple is designing its own A4 chips now, which will go into the iPad and eventually the iPod and iPhone. You think designing, building and testing your own chips is cheap? It’s not.

Real Estate

Which brings us to the last reason Apple needs lots of cash: Real estate. I’m not talking condos in Miami here, I’m talking offices and stores. Several years back, the company announced plans to build a second campus up the road from its Cupertino headquarters, a long overdue project that’s sure to take many years and billions of dollars. Apple is also building a data center in North Carolina that’s going to end up costing more than $1 billion over several years once operating costs are factored in.

Then there are the retail stores. Apple plans to open 25 of them in China over the next two years, to say nothing of the others it has planned around the world. Seeing as Apple avoids carrying any debt, Steve is going to have to dip into savings quite a bit to make that happen.

Still not convinced? OK, fine. Apple probably could afford to pay a small dividend or buy back a few million shares without hurting its account balance too badly. But without dividends or buybacks the stock is worth about 10 times what it was worth a decade ago. That kind of performance earns you the benefit of the doubt. So as long as the track record holds up, Steve’s rainy day fund is probably safe.

Follow Jon Fortt on Twitter: twitter.com/jonfortt