You can't roam the jungle of financial musings without having to hack through opinions on whether investors should hold gold, equities, or cash. Get out your machete again, this time for the quarterly letter from famous short-seller David Einhorn's Greenlight Capital, and its view on holding cash.

If you don't know Einhorn's history, he's famous for calling the precarious state of Lehman Brothers prior to its bankruptcy. Recently, he shorted Green Mountain Coffee Roasters (Nasdaq: GMCR) before its stock dropped 45% after the company issued poor earnings guidance. Since starting Greenlight Capital with $900,000, it now commands $5 billion in assets.

With a track record like that, Einhorn is encroaching into Warren Buffett territory, and his recent remarks on whether investors should hold cash took on a Buffett-esque feel as well.

Buffett style
In Buffett's latest letter to shareholders, he described melding all the available gold in the world together into a cube that fit within a baseball infield worth $9.6 trillion, and then compared it to buying all the cropland in the U.S. and companies worth roughly the same amount as the gold (specifically, 16 ExxonMobils). His goal was to show that in 100 years, the pile of real estate and business purchased would have much greater returns than the inanimate gold cube. As Buffett writes, "You can fondle the cube, but it will not respond."

Even with his example, Buffett left $1 trillion in cash after spending it on all the cropland and Exxon's. Einhorn thinks that would be a poor decision:

If you wrapped up all the $100 bills in circulation, it would form a cube about 74 feet per side. If you stacked the money seven feet high, you could store it in a warehouse roughly the size of a football field. The value of all that cash would be about a trillion dollars. In a hundred years, that money will have produced nothing. In a thousand years, it is likely that the cash will either be worthless or worth very little. It will not pay you interest or dividends and it won't grow earnings, though you could burn it for heat. You'd have to pay someone to guard it. You could fondle the money. Alternatively, you could take every U.S. note in circulation, lay them end to end, and cover the entire 116 square miles of Omaha, Nebraska. Of course, if you managed to assemble all that money into your own private stash, the Federal Reserve could simply order more to be printed for the rest of us.

In short, Einhorn thinks that any cash would be much better placed in gold because gold cannot be manipulated like currency can. This isn't the first time Einhorn has criticized the Fed's policies.

Giving the economy repeated sugar highs
Earlier this year, Einhorn describes how "Chairman Bernanke is presently force-feeding us what seems like the 36th Jelly Donut of easy money and wondering why it isn't giving us energy or making us feel better." He also calls gold "a Jelly Donut antidote" for his portfolio. To Einhorn, cash should be avoided as long as the Fed continues to prop up the market with its quantitative easing policies.

Where has Einhorn placed his cash other than in gold?

  • Apple (Nasdaq: AAPL), which Greenlight defends against those saying it would have to be $1 trillion company to double. As written, "We've scoured the Nasdaq listing rules, reviewed the Securities Exchange Act of 1934, and engaged a leading numerologist. We can't find any prohibition on trillion dollar market capitalizations."
  • Arkema, an international chemical producer that saw sales rise 14% increase in sales in the latest quarter but had a 28% drop in net income. The company expects to close its vinyl operations -- which had a significant drag on net income -- by mid-year.
  • General Motors (NYSE: GM), the auto market leader in the U.S. and China that trades at a forward price-earnings of less than five. Fool Brendan Byrnes believes these are a few of the reasons to purchase GM. However, the company is still 30% owned by the U.S. government, and still faces tough conditions in Europe after losing $15 billion in that market since 1999.
  • Seagate Technology (Nasdaq: STX), which forecast sales of $20 billion for the year while analysts believed it would earn less than $15 billion. Seagate also has a stock repurchase program that aims to reduce the number of shares by 25%.

Einhorn may be upset over Bernanke's moves, but government policy could also spell some huge gains for certain stocks depending on how November's election turns out. For an idea of just which stocks I mean, read our free report: "These Stocks Could Skyrocket After the 2012 Presidential Election."