ANDY'S ANSWER: What a bully loves most is a reaction. If they think they've gotten under your skin, it just encourages them so the key is to pretend whatever they've said to you hasn't bothered you a bit, or to shine a light on how nasty they are being, especially if they are with a group of people. Never get into a discussion about the actual things they are saying about you, because that just acknowledges it. What you want to address is the inappropriateness of what they are saying. That puts the spotlight back on them instead of you.
For instance, you could say, "Well, if your opinion was important to me, my feelings MIGHT be hurt by what you just said."
Or "I USED to think you were someone I'd like to be friends with, but now I realize that you're just not a nice person at all."
Or "Do you wake up every morning and say to yourself, who can I say mean things to today?"
Or, "Wow... if you're campaigning for the position of School Bully, you have my vote."
I hope you get the idea.
Below is the recording of Andy answering this question.