At least ten times a day a kid will say to me, "Mr. Bowers, he called me dumb" (or short or fat or ugly...you get the idea). I always ask the kid, "Well, are you?" If they say "yes" then I tell them to tell the other kid, "thank you". If they say, "No, I am not", then I tell them to tell the other kid, "No I'm not!" The kid usually goes and tell them. Sometimes I tell the kids that if someone calls you name, you can always agree with them and try to defuse the situation. For instance...
JOHNNY: You're fat!
BILLY: I know, I weigh so much! It's awesome!
or like this...
JOHNNY: You're ugly!
BILLY: Iknow, I wish I were handsome--like you! :-)
or this instant classic...
JOHNNY: You're dumb!
BILLY: I know, sometimes, I can't even spell my own name!
The point is, I tell the kids, that bullies are looking for someone weak to pick on and someone who they can bother. If you let the bully bother you, then they win. If you know that you are a good person and you treat other people in a nice way, then it doesn't matter what a bully thinks of you, so don't let it bother you.