The Gunners re-signed Luiz, 33, on a new one-year contract and brought in fellow Brazilian Willian, 32, from Chelsea on a free transfer.
Arsenal also completed a £27million deal to sign Gabriel and activated Thomas Partey’s £45m release clause on deadline day.
However, the new signings have been hit and miss. Centre-back Gabriel has been the most consistent recruit so far while Partey’s start to his career at the Emirates has been blighted by fitness issues.
The Ghana international was rushed back from a thigh injury for Sunday’s north London derby defeat to Tottenham and staggered off the pitch in the first half during the build-up for Spurs’ second goal.
Willian has also struggled for form while Luiz made a whole host of high-profile errors in his first season at the club.
And former Gunners striker Smith feels Arteta made an error of judgement in handing the experienced pair lucrative deals.
‘Arteta is a good coach we all accept that [but] he has made mistakes I think,’ Smith told the Evening Standard.
‘I was surprised when he re-signed David Luiz and I was surprised when he brought Willian in.
‘I thought that was a mistake by him but as a young manager, he is going to make them along the way.’